Things can happen when waiting for bank approval on a short sale

jugglerShort sales are all about timing and perserverence.  And it takes more than one dedicated listing agent to make it happen.  It takes people at the bank whose approval is needed.  It takes the seller doing things in a timely fashion. It takes the buyer, buyer's agent and buyer's lender doing many, many things in a timely fashion.  And it only takes one of those involved to drop the ball, not follow up on a myriad of items, for the short sale to fail and the home to be foreclosed.  The seller does, however, definitely increase his chances of success is getting his home sold through a short sale by choosing an agent who has experience and has had success in getting short sales done, including those at www.SandToSeaProperties.com.

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Things can happen when waiting for bank approval on a short sale

  

Short sales do not always go smoothly. There are a number of things that can happen during the process that can extend it or even lead to foreclosure. Knowing what these issues are can help you avoid them and can prepare you so that you have a back-up plan if you need it.

 

A large percentage of short sales fall apart before escrow is ever opened. And once escrow is opened, they can still fall apart for a variety of causes.

 

Many sophisticated buyers that target short sales know that they can make offers on multiple properties at the same time in order to increase their chances of success. This is the one area of the real-estate market where this practice poses almost no financial risk to the buyer. That is because they buyer can walk away from their offer at any time up until the bank accept it.

 

For this reason, it is always a good idea to get as many back-up offers on your property as possible. That way, if the bank approves a short sale dollar amount but the buyer has already canceled the purchase, you can move on to the next best qualified buyer to make an offer. Make sure that your real estate agent is keeping a list of all offers on your property and that the list is organized in such a way that if the first offer falls through, the next offer can be contacted immediately.

 

Once an offer has been accepted by your lender(s) and you have a buyer in place, your sale can still fall through. Both short sales and bank-owned properties are normally sold in "as is" condition. This means that neither the seller nor the bank will make any repairs to the property. This however does not diminish the buyer's right to inspect the property. And if the buyer's inspection goes poorly, there is a reasonable chance that the sale will not go through.

 

There are a wide variety of issues that turn up in inspections: termite damage, bug infestations, foundation and roof problems. These are just scratching the surface. In the event inspection results show that the buyer will have a large repair bill, the buyer is left with three options. They can proceed with the sale anyway, ask for a reduction in price, or cancel their contract. If the buyer asks for a price reduction, it is up to your lender to approve or deny that request.

 

Again, these are just some of the reasons that it is important to have multiple offers to purchase the property.

 

If a property enters escrow and falls out several times, it is likely that the lender will eventually foreclose. Although many lenders will hold off on foreclosure for an extended period of time, they will not allow this cycle to continue indefinitely. Therefore, it is important to do everything you can to make your home marketable. Although it is rare, there are other circumstances in which a home going through a short sale can go into foreclosure.

  

Most lenders will schedule a foreclosure auction at the earliest possible date. Once you have received your first notice of delinquency, you can be assured that the wheels are in motion to schedule that auction. Depending upon where you live, the process of going from being merely delinquent to having your home foreclosed upon can be a matter of weeks or months. Consult an attorney in your area for detailed information.

 

Once the foreclosure auction is scheduled, your lender has the right to postpone or cancel it. This process usually involves multiple people in multiple departments within the lender. Although your lender may have agreed to a postponement, it is not unheard of for mistakes to occur and there are a number of cases in which people have been foreclosed upon even though a short sale amount has been agreed upon and the property is in escrow. This is another reason to complete the process as quickly as possible.

 

In order to mitigate these risks, your real estate agent should be in touch with your lender on a regular basis. If there is an auction date scheduled, your agent needs to be aware of it and working with your lender on a postponement. Some lenders will not postpone auctions until the day before they are scheduled. In these circumstances it is very important that your agent be diligent in their follow-up. Even if you and your agent do everything correctly, a mistake on the part of the lender is impossible to prevent.

 


 

Bobby Lehmkuhl ׀ Bobby@4Malibu.com ׀ 310.365.7696 ׀ Broker Lic. #01457517

Danielle Dutcher ׀ Danielle@4Malibu.com ׀ 805.341.8769 ׀ Broker Lic. #01463653


 

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although information has been gathered from sources believed to be reliable, please note that individual situations can vary, therefore, please consult a professional for specific advice.


 

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Lisa Delzompo (951-704-4559)

"May your home always be too small ... to hold all your friends!"

Is your home getting too small?  Need a FREE Home Valuation?  Preparing to Sell a Home?  Click here to submit a form online, or Call Frank at 951-326-7330 for a free consultation.

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REAL ESTATE:  www.SandToSeaProperties.com.  Covering northern San Diego, Oceanside, Temecula, Murrieta, Riverside County and desert areas of Yucca Valley, Joshua Tree and Twentynine Palms, CA.

LOANS:  PRW Lending, Inc. Call direct 951-704-4559, or email me at lisa(@)sand2sea.us  

 

 

 

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Information is deemed reliable but is not guaranteed. Information is general and may not address your particular situation.  Do not rely solely on this or any information you find on the internet.  You should consult relevant professionals directly about your real estate, financial, etc., situation. 

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