Setting Short Sale Expectations

The Sacramento Bee recently published an article discussing – among other things – how Realtors prep both sellers and potential buyers for short sales.

Many people don’t realize this, but setting proper expectations regarding what to expect throughout the short sale process, can save or kill a deal just as much as the actual offer itself.

The network of Realtors that we work with are an amazing group agents, who very bluntly and realistically advise on the length of the process, as well as the various responses we could receive from the lender.

When people ask what our success rate is at Short Sale Legal Services, I usually advise them it’s 85% - when the buyer hangs in. When we work with new agents who have not set the proper (or any) expectations, those are the deals we tend lose - more than lender rejections, more than first/second lien bickering.

As stated in the article, it’s not uncommon for us to come across loss mitigation agents who are sitting with 250-300 files on their desk at any given time as well. While my sympathy for them is somewhat limited, it is the reality of the situation.

Once a loss mit rep finally audits a file and decides whether or not it meets investor guidelines – since many of the lenders we deal with only service the loan – they often have to get in line with every other servicer and wait on investor approval.

Generally speaking, a home with one lien and a “larger” lender servicing the loan will mean an average of about 60 days from submission to approval. Add more liens/lenders and that time frame increases. Add a lender or servicer who’s never done a short sale and the time frame could double or triple. Of course, we’ve seen short sales approved in less than two weeks, but that’s rare.

In addition to setting the proper expectations, it also helps to involve someone (attorney or Realtor) who’s very familiar with the current short sale process. Anyone who advises they’ve been doing short sales for “30 years” is being somewhat misleading, since the process in which short sales are approved or rejected is very different now, due not only to the sheer volume, but also for the multitude of different reasons that are now causing people to do short sales. You’re best bet is dealing with someone whose experience is largely based in the past several years, not decades.

So while you’d be hard-pressed to find many people who can refer to their short sale process as a “dream,” you can take steps to accomplish a successful outcome without it turning into a nightmare…