While I’ve talked before about how many banks have improved approval times on short sales, things are far from perfect. Our team has sold many Denver short sales over the past few months, and on more than one occasion a buyer has walked away from the deal before the bank has approved a sale.
Reasons for buyers backing out of a short sale transaction are numerous, but they almost always involve “time” as a major component. Unfortunately, Denver short sales still don’t allow anything in the way of certainty. Even the most responsive banks are taking 60-90 days to make a decision on short sale contracts. However, the 60-90 days is just an estimate and home buyers are facing serious decisions and need a place to live.
Many times these buyers are running up against the end of a lease. If a short sale isn’t approved in time, these buyers will move on to a normal resale home, or even a bank owned home, where the closing date can be more certain.
Our most successful buyers have been investors who have time to wait for the sometimes lengthy Denver short sales and for whom time isn’t a major factor.
There is a great article on DSNews.com explaining this problem in detail:
Processing delays have taken their toll on first-time homebuyer interest in short sales, according to the latest HousingPulse Tracking Survey released by Campbell Surveys and Inside Mortgage Finance Monday
First-time homebuyers were a part of 39.7 percent of the short sale transactions completed in August, the HousingPulse survey found. That tally marks a three-month slide in the share of short sales that went to first-time buyers, and is the lowest percentage for this buyer segment ever recorded by the survey.
The first-time homebuyer share of short sales hit a peak of 54.1 percent of all short sale transactions in November 2009, just before the originally-scheduled expiration of the federal homebuyer tax credit, according to Campbell Surveys.
Short sale transactions have garnered a reputation for being problematic for buyers and sellers alike, with typical approval times of several months after a homebuyer first submits an offer.