Why do Short Sales take so long?

I get asked this question very often, and the reason is simple... The lender who is ultimately taking the financial hit is waiting for that big fish to come along. Here is a brief explanation of how a Short Sale works...

(FYI - A Short Sale is when the seller/owner owes more than the home can bring at fair market value)

1) The home owner (seller) is unable to continue making the monthly mortgage payment.
2) Seller hires a Professional Real Estate Consultant to list the home as a possible "Short Sale".
3) Listing Agent (LA) will price the home very low (sometimes too low) in order to draw some buzz to the home and start collecting offers.
4) If the LA is in communication with the seller, the seller will review the offers and pass along the ones that they accept to the lender.
5) LA will continue to send the other multiple offers to the lender for their review and final approval.
6) The lender usually will draw out the process up until the time of the trustee sale (foreclosure). If they have a solid offer, then the lender may accept and save the home owner from foreclosure.
7) Lender are not accepting low offers on Short Sales for the simple reason... They are looking to minimize their loss and are not going to give away the property. As they would say... You can't get a deal on a steal... There are other buyers in this market and the lenders know that.

Well, I hope that gave you a little insight as to why a Short Sale could take 1, 3, or even 6 months to complete.

Now keep in mind, there are also lenders that are very fast to react if they are getting close to the trustee sale. This is a date that you'll want to find out if you are interested in a Short Sale or else you could be in for a long, boring ride.

FHA Down Payment Assistance Program

The new Federal housing bill is expected to be signed into law very quickly in order to grant the Feds authority and the means to take over Fannie and Freddie. The President has already rescinded his earlier threat to veto and has now promised to sign it.

In the new bill, there is a provision to eliminate the FHA Seller Assisted Down Payment Programs (ADP) through Nehemiah and AmeriDream. The bill gives a stop date for the programs of October 1, 2008, however, lenders will be permitted to discontinue the ADP at their discretion anytime before October 1, 2008.

As a side note, NAR seems to be addressing more so the gifted down payments (which will continue- gifted from a family member) and bond money, which there is none of at the moment.

What this means for you:
If you or anyone you know have been considering making a purchase, and would like to take advantage of the FHA Seller Assisted Down Payment Programs, now would be the time to seriously start looking. Please give me a call or email if you would like to discuss this in further detail and see how this could work out to your benefit.