Mortgage Fraud and News

Reasons That Short Sales Often Don’t Close

If you look at the real estate industry, many people are being threatened by foreclosure. In fact, right now, the number of foreclosed homes is still on the rise. And bet all people would want to avoid this process, because it is going to hold them back financially for the next 5 years. 

As a result, people are looking ways to avoid this dreaded process. One that has caught the interest of the public is short sale. Yes, this transaction is not just for finance and investment, it is also one of the best options to escape foreclosure. 

Short sale does not help you escape hurting your credit. Just like foreclosure, it can also hold you financially but the effects are less frustrating. However, the biggest drawback people face for short sale is closing it. Most of the times, short sale transactions never close. 

One of the many reasons why short sale never closes is attributed to the lenders. Lenders have to approve your application before you can proceed with the selling process. The only problem is you are at their mercy when you apply for it. In fact, they can really give you a hard time, even though it is done unintentionally. 

So what is the real problem with the lenders? Rejection. They can easily reject your application and lose your chances of closing. Short sale involved numerous requirements for approval. And if you fail to meet those requirements, you’d definitely have delays in approval. The longer it takes to get the approval, the more your buyers would grow impatient and eventually lose their interest to buy.

If you want to know more about the specific causes for rejection, here are some of them: 

1. The contents of the short sale package is either incomplete or missing.

2. Your reason for undergoing short sale is not convincing or not even equivalent to the lender’s definition of what hardship is. You even lack evidence to prove such hardship.

3. Failing to monitor the status of the application, wherein you lose the opportunity to correct any problems related to the application.

4. The price of short sale isn’t appealing to the lenders. It may be too low or does not meet the standard set by their third-party investors. 

Of course, there are also non-lender related reasons why short sale would not close. It may be attributed to how you sell your property. Your advertising must not be that effective because you are not getting any buyers at all. Or perhaps, your house pretty much look like a liability rather than an asset that no buyers would even attempt to look at the place. 

Therefore, if you really want to close your short sale transaction, learn more about the process first. If there are things that are hard to understand, well you can always seek the help of experienced agents or even talk to the bank. This way, you will not be missing out on the important stuff that could affect your application.

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