People are always surprised when I state that I have an almost perfect success rate in obtaining short sale approval letters. Short sale approval letters are not so difficult to come by. Yes, they often take forever to obtain, but often it is not the short sale approval letter that gets in the way of the closing of the transaction.
Sometimes short sale sellers get in the way of the closing of the short sale. For example, a short sale seller could decide at the eleventh hour that s/he would rather attempt a loan modification or let the property go to foreclosure. The short sale seller could also explore bankruptcy.
Other times new liens appear on the title report after the approval has been obtained. For example, I recently had a short sale ready to close and when the title company ran the title again, two new abstracts of judgment from credit card companies appeared. Since the banks generally will not pay for abstracts of judgment, this is going to be one tough short sale to close.
Tenants occupying short sales can also hamper a short sale closing. If a tenant refuses to vacate before closing and the new buyer insists on purchasing the home vacant, then this could be a real hurdle to pass.
Buyers can also impact the ability to close a short sale. For example, a buyer’s loan may not be able to fund and close before the date on the short sale approval letter. Or, it is entirely possibly that something about the buyer’s finances or interest in the property may have changed during the short sale processing and negotiating period—making the buyer not qualified or not interested in proceeding with the purchase. Buyers can also request additional credits for repair items that come up on the property inspection. And, banks generally state that the property is sold as-is with no repairs. So, these issues can definitely impact the closing.
We hem and we haw about the length of time it takes to obtain a short sale approval. We complain about the banks’ processing and customer service until we are blue in the face. Yet, at the end of the day, the bank is only one factor in the ability to close a short sale. Short sales are a tricky and time consuming. All parties (not just the banks) make them often tough to close.
Photo: flickr creative commons by Howard Lake