Got Foreclosure! - Blog

How’s that for a provocative title? But unfortunately it’s true!

And there is a lot of frustration out there among agents that have a bunch of “short sale” listings that aren’t selling.

It’s no surprise, because a “short sale flag” on an MLS listings is the “kiss of death” most of the time. There are three reasons for that.

1. Short Sales take too long to get approved by the seller’s lenders. It takes an average 60 days or more to get an answer from the short selling lender once a complete short sale package is submitted. That is too long for a “normal” retail buyer because her own loan approval may change in terms and rates during that time period. Buyers who are ready to buy are ready to buy NOW, not in 60+ days.
2. Short Sale Listings are either not great deals, or priced so low that it’s unlikely that the short selling lender will approve an offer at that price.
3. Even low priced short sale listings are priced higher (typically at least 10%) than comparable REO listings (bank owned properties). That gives a three-point tie breaker to REO listings over short sales.

The rational explanation is that banks and lenders are more otivated to take a big loss once they actually own the property. Too bad for most home owners…

Is there a remedy? Only if a buyer who has time to wait and negotiate steps forward to make a bona fide offer. That buyer is most likely an investor so the offer will be low. The short selling lender has to be realistic about comparable values and anticipated revenue from a future REO listing vs. accepting the presented offer.

You can learn about doing short sales here, or contact us if you have to sell an overleveraged property.