Why do so many short sales fail?
There are countless reasons why short sales fail. Clearly, in order for a short sale to succeed, it requires a buyer and seller agreeing on a contract price subject to the bank’s approval. Since there are so many moving parts to a short sale negotiation, including a foreclosure timeline, it requires a delicate balancing act of experienced players coming together to get the short sale through successfully.
We’ve identified the top 6 reasons why homes fail to sell on a short sale.
Agent is inexperienced with handling short sales. Most short sales fail to get approved because the real estate agent was not properly trained to put together a short sale package that the lender would consider approving. This could be from missing or omitted paperwork in the short sale package.
Lack of communication. The second major reason is due to the lack of communication. Either the bank is not following up or the real estate agent is failing to follow up on the file.
House gets auctioned off inadvertently. To the bank, a homeowner’s house is merely a file to them. A lot of banks are not organized enough to follow up nor properly track the stage of the foreclosure process in their file. A great real estate agent will effectively track the foreclosure process to prevent the house from being auctioned off inadvertently, while also keeping on top of the bank to push the file through their approval system.
Contract price is too low. The fourth major reason why short sales fail to get approved is because the bank’s appraisal of the property is substantially higher than the offer that is being considered. If the contract price is too low, the bank may deny the short sale. It is important to hire an agent who will properly appraise the property and bring an offer that corroborates with the bank’s appraisal.
Listing price is too high. The fifth reason why a short sale fails is because the listing agent listed the house substantially above market at a price that will never bring an offer. These listings expire out and usually the homeowner must find another agent who knows how to sell and close a short sale. It all starts with pricing the house right.
Buyer walks because the waiting period is too long. The sixth major reason why short sales fail is because the buyer may give up and find another buying opportunity somewhere else and walk away from the short sale before it closes.
If you have any other questions about short sales, please contact us.