By Kevin Chiu
Home buyers are making multiple offers to purchase homes that are short sales in rising numbers as they grow impatient with the drawn out short sale process with banks, and mortgage servicing companies.
The long waits and other obstacles have taken the excitement out of the home buying experience for first time home buyers, according to the Campbell Inside Mortgage Finance tracking survey. Short sale purchases, in which banks cooperate with homeowners to sell at a price lower than what is owed on the mortgage, fell to 39.7% of short sale transactions during August, the third consecutive month of declines.
A combination of factors are dragging the short sale process into the ground for many would be home purchasers, including lenders reporting lost paperwork and asking buyers and sellers to re-send it, often as many as six or seven times. Slow appraisals, dealing with multiple investors on a single home and poor communication contribute to the often painful process.
A study by the California Association of Realtors found that 74% of respondents to a survey on short sales said that lenders took more than 60 days to respond to an offer to purchase a home, and that half the number surveyed for the study said that it took lenders or mortgage servicing companies at least five days to respond to any sort of question.
However, Realtors who specialized and have been certified as short sale experts are having more success in closing transactions for buyers. Homes that sell as short sales close for an average of 27% less than other properties listed on the market not including bank owned REOs, according to the National Association of Realtors. Short sales made up 17.1% of homes purchased during the month of August, according to the Campbell report.
Selling a home as a short sale reduces bank losses by an average of 20%, according to Santa Clara, California Remax real estate agent Guiseppe Matese. “You are doing your part to stop the decline in the housing market,” Matese wrote in an article submitted for online publishers. “Your neighbor who opts to let their bank foreclose is hurting the housing market. This is because bank owned properties usually sell for less than a short sale.
“We have seen this first hand. A short sale sells for $400,000 and then a similar bank owned home sells for $300,000. This is because banks don’t maintain the homes they sell and buyers know they can get a bargain.”