We are going to be sure to see a spike in short sales and loan modifications for 2009. Not only because those are two viable options for homeowners seeking relief for delinquent payments on their mortgage or trying to avoid a foreclosure on their credit report. But because it just makes sense. Now we have to get more of the three people in the marriage to work better on making it work; the Realtor, homeowner and lender.
Why Some Short Sales Fail
Not Truly a Short Sale
Some short sales fail because they are not truly short sales. At any given time, I can do a search within our MLS and find dozens of listings with agent remarks of "short sale" with a days on market of 180 days. The process just doesn't last that long. A seller can not decide that they do not want the property any longer, find an agent to list it as a short sale, but not be in default. Ask the listing agent how long the house has been on the market and has a substitution of trustee assignment taken place yet. There are too many properties legally in pre-foreclosure for the lender to take on a homeowner who just simply wants to sell short due to depreciation in the market area.
Missing Paperwork and Poor Communication
Missing paperwork and poor communication can kill any short sale deal. The listing agent should have a full short sale package ready to submit or a pre-liminary package already submitted. Lenders vary on how much information they want and when they want it. Some do not want a great deal of paperwork until an offer is made on the property. Some want it all and will immediately assign a negotiator to the file to work with the agent. Some lenders now have a separate short sale department that works with electronic submission from a dedicated website. The most important step is to make first communication with the lender that the property is on the market as a short sale and follow the steps outlined from that point on.
In my next post I'll talk about pricing and liens.
http://www.charlotterealestateforeclosures.com/004A8A
