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Three reasons a short sale may not close on time

Short sales is increasingly common in the real estate practice, and there are common reasons why the deal may not be sealed when you expect it to be.

time is money

short sales timing

Never Count Your Chickens…

You’ve heard the phrase, “Don’t count your chickens before they hatch.” It may be hard to believe but that ditty was a moral to one of Aesop’s fables and has been around since something like 570 B.C. The modern-day short sale has not been around quite so long. Yet, the phrase still applies. There are many agents, buyers, and sellers that count on the timely closing and are disappointed when it just doesn’t happen.

Here are three reasons that some short sales don’t close on time (and tips for what you can do to avoid counting those chickens):

  1. Buyer’s lender has not drawn the loan documents in a timely manner. It’s always a good idea to aim for the loan documents to be prepared several days prior to closing. Since there are so many people involved in the process and so many steps prior to closing, a delay in the drawing of the loan documents can really put a damper on the short sale. Also, be careful. If the loan documents take too long, some short sale lenders will charge a per diem for a tardy closing or, even worse, they may ask you to begin the short sale process all over again.
  2. Short sale lender does not approve the final HUD-1 (settlement statement) quickly and efficiently. Most short sale lenders require a cursory review of the final settlement statement prior to closing. This cursory review may take a few days; it’s not always hours. And, during this review, changes may be requested on the HUD-1. Certain lenders require fees or exact wording on specific lines on the settlement statement, and those changes may be requested prior to approving the final settlement statement and the closing. Note that Bank of America requests the final HUD-1 five days prior to closing; this request is likely due to common delays in the HUD approval process.
  3. Seller does not have an exit strategy. It’s always a good idea for short sale listing agents to be sure that the seller is beginning to consider his (or her) exit strategy at the time the short sale listing is taken. Will the sellers move in with mom? Will they be renting a property? Are they relocating to another area? When short sale approval is received, those approval letters have a ‘close by’ date, which is usually no more than 45 days from the date it was received. And, there are many sellers that need more than 6 weeks to devise and implement their exit strategy. If the seller doesn’t get out, the buyer may not be willing to close.

While these are the three main reasons that most short sales do not close in a timely manner, there is one thing that all three have in common—communication. Good, solid communication among and between all of the parties involved in the short sale transaction may help you to be in a position to count your chickens after they have hatched!

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Written By

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.



  1. stevejolly

    August 30, 2012 at 12:28 am

    I agree…Communication is the key to success with short sales.  I have been the listing agent for several short sales and all required a tremendous amount of follow up and discussion with the bank to close successfully. I do not think many listing agents are prepared for all of the hoops to jump through. I prefer not to list short sales, but will always help a friend.  Or a friend of a friend.  Take care!

  2. Zivak Realty Group

    November 29, 2022 at 12:55 am

    This is an excellent post with great information. Thanks for sharing it.

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