Top 5 Reasons Short Sales Fail

Top 5 Reasons Short Sales Fail

1. Value Discrepancy:  The most common reason Short Sale's fail is because Lenders & their investors are uninformed or incorrectly informed about the Subject Property's value.  More specifically, this problem arises from the BPO Agent or Appraiser hired by the Bank.  Most Lenders will order a full Appraisal, however sometimes only a "Drive-By" will be performed. If the Agent gives a inflated Value to the property, the Short Sale can be stalled for months!  As most Lenders are not authorized to perform more than 1 valuation in a given amount of time, it is absolutely imperative that the valuation be performed properly & accurately the first time
2. Bank Worker:  The Loss Mitigation workers at the Banks are very busy, and sometimes have literally hundreds of other Short Sale files on their desk.  They do not have the time to waste on incomplete files, or insufficient offers. It is the Bank's job to maximize their Investor's payoff, so Workers can be very gruff and unfriendly.  Because of this and poor knowledge base (due to high worker turn-over), it is our responsibility to make their jobs as easy & streamlined as possible. The more work the Banker needs to do, the higher chance of the Short Sale failing.
3. Insufficient Time: The third most common reason Short Sales fail is because there is not enough time to facilitate. Time delay can arise from Financial/Document request, Offer review time, looming Auction date, and others.  Frequently, the looming auction date is the culprit, as the Bank needs sufficient time (~2 weeks) to set the Short Sale file up, and request the Auction postponement. Since postponements are never guaranteed, it is vital to be as responsive as possible to any Bank/Investor requests.
4. Document Delay: This is more or less self-explanatory.  Since Loss Mitigation workers have many other files, they cannot waste time on incomplete packages. Furthermore, since Banks are inundated with Short Sale request, they have very strict servicing guidelines to adhere to.  Lenders & Investors cannot keep Short Sale files open indefinitely, and because of the offer review time-frame, updated financials & documents are needed constantly.  Once a document request is made, most workers will only keep the file open for 3-5 business days, and will close the file immediately if a timely response is not received. 
5. Investor Rules: Even when everything is done by the book; the offer is good, the property isn't going to auction, all Junior Lien-holders have signed off, etc, the Short Sale can still denied! Investors have tons of guidelines and stipulations that must be met in order for them to feel happy about the Short Sale. Despite the best efforts, Investor guidelines are generally non-negotiable. For example, most Investors will have caps on how much $$ a Junior can receive, and sometimes the Junior's Investor is unable to accept such a settlement, consequently forcing a Foreclosure Auction.  It is in these minor points & guidelines where deals can be won or lost, so it is important to know who the Bank is working for!