Dear Real Estate Adviser,
We’re in the process of short-selling our home. At our closing, the buyer didn’t show. This apparently happens frequently.
Why do so many so-called short sales take so darn long and fall apart so often? By the way, when we called the showing service that our Realtor is using, we got a phone message for our lender, which is a major bank. What’s up with that?
— D. Dresser
Let’s address the fallout factors first. There are about as many reasons for a short sale to fall apart as there are documents and involved parties.
“With every short sale, there are dozens of required documents requiring as many signatures, dates, witnesses, initials and sometimes notaries,” says Garrett Heaney, a spokesman for Realty Infusion in Seminole, Fla., a real estate technology firm that sells short-sale processing software.
There is also a long list of parties involved in each deal, including buyers, sellers, brokers, lenders, agents, attorneys, negotiators, loss mitigators and bankers, he says.
Moreover, the large amount of “numbers” in the process — including numbers related to appraisals, broker price opinions, offers and negotiated terms — create even more snafus as they’re bandied back and forth between the parties involved.
“Now, try to visualize getting all of these documents collected, organized and submitted through the required channels within any time frame and you’ll have a good idea why less than 20 percent of traditional short sales are successful,” Heaney says.
In your case, it’s possible the buyer may have just moved on to another property. Because of those lengthy closing time frames, potential buyers who make an offer on a short sale probably will continue to look at other properties, even if their offer gets accepted by the initial seller in the meantime.
Many short-sale real estate agents wait to submit their clients’ additional offer only after the bank had accepted an earlier offer. That can trigger the reset button and lengthen time frames further.
Additionally, many major banks went through significant personnel changes and departmental restructurings over the past two years — imagine what that can do to the short-sale process. Smaller community banks, by the way, are typically much faster at processing short sales than the majors.
It’s fishy that your Realtor’s showing service and the bank seemingly are acting as one. While some short-sale specialists may appear to be surrogates for banks that use them most often, real estate agents and the service firms they enlist are expected to act independently and without conflict of interest. That’s part of their fiduciary duty to you. The law typically requires them to inform you if they’re getting referral fees from banks, mortgage brokers, etc., much less setting up shop with them.
I hope you’ve since received a good explanation from your Realtor for that puzzling phone cross-up. Otherwise, a complaint to your state Realtor board may be in order.
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