Housing News

What to do when a short sale doesn’t close on schedule

Whether a veteran or a newbie, there is no guarantee that a short sale transaction will close on time, so here is what to do when that insurmountable obstacle presents itself.

Published

7 years ago

September 17, 2013

Melissa Zavala

All Parties Must Perform

When I was a real estate novice, I had trouble understanding how what I perceived to be a simple transaction had so many hiccups and hurdles. What I later realized was that it takes many different parties to effectively put together and close a real estate transaction: listing agent, selling agent, buyer, seller, buyer’s lender, buyer’s agent, seller’s agent, settlement agents, an attorney and a title company. And, if one of those parties is less effective or efficient than the rest, that may impact when and if the transaction closes.

With short sales, there are even more parties involved in getting the sale to close on schedule. In addition to lenders, appraisers, inspectors, buyers, sellers, two agents, and a settlement company, there are also short sale lenders that can easily bring down the house.

When a short sale lender has approved a short sale, the short sale lender sends a formal approval letter. Most short sale approval letters state the date upon which the short sale must close. Because there are so many parties involved in effectuating a closing, it is not uncommon to be approaching that closing date on the approval letter only to learn that the transaction may not close on time. Common impediments to an on time closing include loan documents that have not yet been signed, or a buyer (or seller) not performing on another portion of the contract.

What To Do If You Cannot Close by the Date on the Approval Letter

If you cannot close by the date on the short sale approval letter, this might mean trouble. In many cases, the short sale lender will grant you an extension. A written extension must received; your title company or settlement agent will not permit you to close until you have received that extension.

Here are three things you need to be aware of when requesting an extension on your short sale approval letter:

Short sale lenders don’t like to do the same thing twice. Learn the realistic closing date before contacting the short sale lender for the extension. Don’t just say that you need a week, and then later learn that you need two. Prior to requesting the extension, contact all parties to learn the realistic date and ask the lender for an extension until that date.
Check dates on all approval letters. If you have more than one short sale lender, make sure that your second short sale approval letter will not expire before the new closing date. If so, don’t forget to contact the other lien holder for a revised approval letter as well.
Make sure buyer loan documents or the mortgage rate lock will not expire. If your buyer has already signed loan documents or has locked his interest rate, the buyer needs to be aware of the risks involved. Short sale lenders are unpredictable. And, it may take several days (or sometimes weeks) to obtain the necessary extension on the short sale approval.

Error on Your Part

Have you ever heard the phrase, “An error on your part does not constitute an emergency on my part”? When you request your extension, keep in mind that this may be the response you receive (or some version of it) from the short sale lender. Although you may be receiving lots of pressure, don’t do anything that may put your deal at risk. At this point in the transaction, you are at the mercy of the lender. Be pleasant, persistent, professional, and patient; that should help to assure that you receive your short sale approval.

0 Shares

Related Topics:housing Real Estate Profession short sale

Up Next

City nears seizure of underwater mortgages, invoking eminent domain

Don't Miss

Couple fined for refusing to rent to African Americans

Melissa Zavala

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

2 Comments

Austin

Austin tops the list of best places to buy a home

When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?

Published

5 years ago

May 29, 2015

Lani Rosales, COO + News Director

Looking at the bigger picture

(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).

That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).

They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.

“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”

Click here to continue reading the list of the 12 best places to buy a home…

Housing News

Average age of houses on the rise, so is it now better or worse to buy new?

With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.

Published

6 years ago

March 2, 2015

Dawn Brotherton, Staff Writer

The average home age is higher than ever

(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.

With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.

Prices of new homes on the rise

Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.

Click here to continue reading this story…

Housing News

Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?

The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.

Published

6 years ago

February 25, 2015

Lani Rosales, COO + News Director

Why Realtors are vulnerable to these rapid changes

(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.

Note: We’ll let you decide which company plays which role in the image above.

So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.

1. Zillow poaches top talent, Move/NAR sues

It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.

Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.