It depends who you ask. Brokers who handle a lot of short sales each have their own anecdotal experiences and short sale war stories. Masterpiece Realty Associates has successfully closed dozens of short sales and I can report that generally speaking the system has improved considerably from what it was in past years. A combination of learning curves within both the lending and brokerage communities has been helpful plus many lenders have streamlined their procedures but problems persist including the following:
- Many lenders still take way too long to process short sales.
- This creates ironic situations where after a 45-60 day delay by the lender they say the seller’s documentation such as bank statements are outdated and have to be updated
- The most serious impact of delays is that buyers run out of patience and cancel on the eve of lender approvals or even after approvals
- Lenders vary as to the procedure for substituting a new buyer in these situations. Some require that the process virtually be started over whereas others allow the substitution of a new buyer with relative ease.
- Junior lenders can be uncooperative and often ask for more money than the 1st Lien Holder is willing to allocate to them thus creating an economic gap which sometimes results in the buyer having to come up with more money if they want to move forward with the transaction.
The Equator system which is used for gathering information and processing short sales is used by Bank of America, WellsFargo Bank and a few other lenders. Equator has continued to improve but there are still occasional glitches.
The message here is that short sales require patience and persistence and above all competent parties handling both sides of the transaction.