It’s almost certain in Silicon Valley.
Because of the overwhelming number of short sale offers, it can take months before the bank can review yours. If there is a second lender, it could be another few months before you get a response.
Meanwhile, if the seller misses enough loan payments, the foreclosure process starts almost automatically, with a definite time-line. It’s common that foreclosure will happen before the bank can respond to a short sale offer.
We’ve noticed that home values in some local areas have slipped lower than they were in 1997. Chances are good that if you bought a home in the last 10 years, you owe more than your home is worth.
Before you try a short sale, ask your lender if they will consider a Deed In Lieu Of Foreclosure. Just call customer service. This is one of the least understood, yet best alternatives to foreclosure, and well worth the time to check it out. You might not qualify, but if you do, it may save you from foreclosure.
Why are they so difficult? Why do they take so long?
We get asked a lot of questions about short sales. Short sales are usually challenging and frustrating for everybody, and have little chance of success. Popular opinion is that banks seem to favor foreclosure instead of short sale. It sure seems that way.
But that’s not it. Foreclosure is far more costly to the lender than a short sale. Banks want to approve short sales, but have been overwhelmed with offers, and simply don’t have enough qualified staff to process them. It might be 90 days or more before an offer actually gets reviewed. If there is a second loan or lien, then it’s practically impossible to get a short sale approved.
Banks aren’t being stubborn, or even stupid, as we’ve heard suggested. They just can’t handle the volume. This is the consistent feedback we get from within the default servicing industry.
If you are a buyer, ask your agent if the listing you’re interested in is a short sale. You’re going to have more success and a lot less stress trying to buy something else, like a foreclosure. Chances are that if you wait long enough, that short sale listing will become a foreclosure anyway, and it’ll probably be a bit cheaper. We’ll blog about that later.
If you are a homeowner considering a short sale, a great alternative is a Deed In Lieu Of Foreclosure. We’ll blog about that later, too. In the meantime, you might want to google that term and ask your lender if they’ll consider it. The circumstances have to be right, but it might save you both a lot of grief.
