Colorado Springs Vintage Homes Blog

21 reasons short sales fail

Part X of Colorado Springs Short Sales Series

Interested in selling your house as a short-sale?  Email Kathy Torline  KTorline@msn.com or call 719-287-1049

 According to an article in Reuters in April 2008, 1/3 of all short-sale fail.  The study was conducted of more than 3,000 real estate agents by Campbell Communications.

Since I do short sales for clients in Colorado Springs and the surrounding areas, I thought I’d make up my own list of why they fail.   My logic is that if I can avoid or minimize these issues as much as possible, I should be able to lessen the failure rate.   Here’s my list; although I don’t have them ranked in any particular order.  Some of these things I can control and some of them I can’t; regardless it was an interesting exercise to put the list together.

A.  Training and education   (One short sale class is not enough to prepare a realtor to represent a client in short sale.)

(1) Seller’s agents don’t always understand what they are doing

(2) Buyer’s agents don’t always understand what they are doing

B.  A buyer is never found for the property

(3) Price is too high

(4) There is too much inventory on the market for buyers to choose from 

(5) Undesirable location

(6) Property needs major repairs

(7) Not enough time to market the property before the property goes to foreclosure

C.  Offer is too low

(8) Which means the BPO/appraisal came in too high

D.  Problems with the preliminary HUD

(9) Too much money going to junior liens

(10) lender won’t approve the commissions

E.  Problems with the buy/sell agreement

(11) Potential buyer must by arms-length (an unrelated third party)

F.  Problems with short sale package

(12) Incomplete

(13) Missing loan # on each page

(14) “Generic” forms were used vs. lender-specific forms

G.  Unsecured Note / Deficiency / 1099-C / Seller Contribution

(15) Lender may require seller to pay back all of the loss; seller won’t agree

(16) Lender may not agree to settle account

H.  Bankruptcy

(17) Seller files bankruptcy in middle of listing

I.  Miscommunication

(18) Seller and Listing agent don’t communicate

(19) Buyer and Buyer’s agent don’t communicate

(20) Lender(s) does not communicate in a timely manner

(21) Buyer’s Agent and Listing Agent don’t communicate

 If you enjoyed reading this article, why not Subscribe to be notified of the next one? 

• Colorado Springs Homes, 4 things to know about a short sale - Part I of Short Sales Series
• Avoid Foreclosure, Know Your Options - Part II of Short Sales Series
• Colorado Springs Home Foreclosures – 11 benefits of a short sale - Part III of Short Sales Series
• The final step in the Colorado Foreclosure process – Part IV of Short Sale Series 
• How long does it take to do a Colorado Springs Short Sale? - Part V in Short Sale Series
• What are the credit consequences on a short sale? - Part VI of Short Sale Series
• Are there tax ramifications to a Colorado Springs short sale? — Part VII of Short Sale Series
• What you MUST know about short sales on FHA loans - Part VIII of Short Sale Series
• How do you price a Colorado Springs short sale? - Part IX of Short Sale Series

  If you enjoyed reading this article, why not Subscribe to be notified of the next one? 

Kathy (719-287-1049)   KTorline@msn.com

Tags: colorado short sale, Colorado Springs CO homes, colorado springs co realtor, colorado springs colorado real estate, colorado springs realty, colorado springs short sales, short sale package

This entry was posted on Monday, January 19th, 2009 at 7:11 am and is filed under For Sellers, Foreclosures and Short Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1. Jacquie Cliff - Lynnwood Real Estate Agent said at January 19th, 2009 at 5:49 pm

   I really think that #1 and #2 are the root of the rest of the list. I have done several short sales deals, both on the buying and selling side, and will say for a fact that clueless agents are dangerous when it comes to getting a short sale done.

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