As of this posting, there are 326 properties under contract in the Charleston tri-county area that are listed as "possible short sales". Many of these will never close as a short sale for one of the following reasons:
1. The home will go into foreclosure before the short sale is approved by the lender.
2. The seller will not be approved to dispose of the property in a short sale for lack of a sufficient financial hardship.
3. The buyer will not be willing to wait for a response from the seller's lender (the 3rd party).
We've been involved in quite a few short sales since 2007 and, what you need to be aware of as a Buyer is that usually the price you are seeing as the "list" price has been set by the agent and/or the Seller and if may be so far off from what the bank will actually accept on the property that it's a pipe dream to think you could ever get the property for that price.
I read a statistic recently which stated that approximately 14% of Short Sale contracts nationwide ever close. This is an extremely low number. If you're a buyer looking for a great bargain on a property, you best bet is to purchase a foreclosure or REO property which will have a much higher chance of closing.
The good news about Short Sales is that, I'm hearing from colleagues, as well as on my own deals, that lenders are starting to give quicker responses to Buyer's offers on Short Sales. I had one in January, though, that the lender had not responded in 45 days (that was my Buyer's deadline given to the Seller) to his offer. So, it really does depend on the lender. In this case, the lender was Citi-Mortgage.
Another factor that plays into the response times for Short Sales is the Seller's financial situation. Did you know that most lenders won't even consider approving a Short Sale unless the Seller is behind on their mortgage payments?
When I've listed Short Sales, I've assisted my Sellers in preparing their "Short Sale Package" for their lender. It consists of a checklist of items such as bank statements, a financial worksheet, a market analysis or CMA of the area where the property is located, a preliminary HUD (Settlement Statement) and a hardship letter explaining the reason why the home needs to be sold at this time and why the Seller is not able to make the current payments.
Hopefully the real estate market as well as the economy in the Charleston area will continue to improve and we'll see less and less Short Sales in the marketplace. For more information, please feel free to contact us at 843-343-7640.
Melanie & Jed
Century 21 Properties Plus, Inc.