Why do short sales take so long?
By now most people know that the name “short sale” has absolutely nothing to do with the amount of time it takes to complete those types of transactions. The “short” in short sale is there because it describes how the bank is willing to accept less than what is owed on the mortgage (a short payoff) in order to release the lien and allow the home to be sold.
Right now across the country, the average amount of time it takes to get a residential real estate transaction closed once an offer is accepted is 60 days. Yet the typical short sale takes a minimum of 90 days and often more than 120 to get from accepted offer to the closing table.
The single biggest factor contributing to this situation is that the system is completely overwhelmed. Within 3-4 years many lenders have gone from having just one to three percent of their loans delinquent to as many as 25-30 percent or more in a distressed situation. The banks simply did not have enough staff and resources available to handle the deluge. Even now, most banks are still scrambling to get staff and systems in place to handle the crush of modification and short sale requests.
Another problem is that many real estate professionals have no real training in handling short sale transactions. They do the best they can, but working a short sale with a bank is totally different than handling a normal real estate transaction. It requires a completely different skill set. As a result, some well-intentioned individuals in real estate are contributing to delays in the process by not getting the bank what they need, on the bank’s timeline, and formatted according to the bank’s requirements.
The mortgage industry has made strides over the past year and things are slowly getting better. It just isn’t happening as quickly as we would like.
