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Why Don't ALL Short Sales Close?

Posted by Michael Kara on Tuesday, May 10th, 2011 at 3:03pm.

It's a safe bet to blame the lender when a short sale falls through or doesn't close during an expected timeframe.  The lenders are often slow, troublesome to work with and require the same documents sent multiple times, along with persistent follow-up (this is why having a team of 5 people dedicated to your short sale is a worthwhile idea, btw).  But there are times when a short sale doesn't close and it had nothing to do with the lender at all.  To expand your familiarity with short sale closings (and short sales in general) I wanted to blog this week about things that hinder short sales OTHER than the lender, and what we do as a team to prevent them.

1.  Sellers.  Sellers can sometimes be a reason that the sale doesn't go through, believe it or not!  Sometimes, they think that they will be better off trying for a loan modification, declaring bankruptcy, or going into foreclosure.  Obviously, we can't tell you what to do, but we can make sure that you're able to make an educated decision.  Short sales AREN'T for everyone; but neither are loan mods, bankruptcy or foreclosures!  Instead of sorting out the ups and downs of each option on your own, read some of the articles that we maintain on our short sale page.  Better yet, just call or email us to chat.  It can't hurt, it can only help.

2.  Buyers Backing Out.  It is common for buyers to walk away during the short sale process because, while waiting for the short sale to be approved, they found another property that caught their eye or because their Realtor didn't properly explain the short sale process to them and they didn't understand that it would be time consuming.  To combat this issue, we set expectations ahead of time and explain the process to the buyers or the buyer's agent to ensure that they understand the time frames involved.  Additionally, we communicate weekly with them; buyers who hear status updates on the deal frequently are more likely to stick around because they know that we're working hard to get an approval letter and they can see the progress that we're making with the lenders.  Finally, we almost always collect escrow up front, which acts as a "down payment" of sorts, and just ensures that the buyer is serious about THIS property and not putting offers in on every short sale they can find to see which one closes first.

3.  Buyers Don't Qualify.  Another reason that the short sale might be halted is if the buyers of choice simply cannot purchase the property via cash nor financing.  We work hard to make sure that buyers for our short sale properties are well qualified, and if they are being financed, we often ask that they get prequalified through one of our trusted lenders, just to confirm that buyer's purchasing power.  At times, the buyer qualified to purchase the property in the beginning, but during the time that the short sale was being negotiated, the buyer lost qualification measures due to issues with credit or a change in the lender's guidelines.  This is difficult to curb but having a 2nd lender qualify the buyer will help us foresee problems that may arise in the future with the buyer’s ability to purchase a home.

We do all that we can to make sure that every short sale gets to the closing table, which is why we put our team's knowledge and experience to the test constantly to push ourselves to a higher level.  If you have questions about a short sale here in Central Florida, feel free to give us a call and we'll be glad to talk it over with you.

- Michael Kara
Kara Homes & Associates, LLC
407-447-2829
www.KaraHomesOrlando.com

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