Contigo Realty

Controlled Chaos? The Current State of Short Sales in Phoenix

published on 2010-01-01

Though short sales in the Phoenix area are on the decline, they still account for about 15-20% of sales in the valley. Not everyone wants to go through the delays and uncertainties of a short sale, but by passing over short sales, you'll have less inventory from which to choose. But before you decide to offer on a short sale, be prepared for these common situations:

The home could be listed for one price, but the bank asks for more later. In most cases, the bank does not participate in setting the list price, so the price you see on the listing has not yet been approved by the bank. The listing agent usually helps the owner price the home based on the comparables, then submits an accepted offer to the lender for approval. The lender then performs a separate appraisal and then may ask for a price HIGHER THAN YOUR CONTRACT PRICE. Unfortunately, this “counter offer” often happens a month or two AFTER your offer was accepted and submitted to the bank.

The whole approval process seems chaotic. There has been some action by lenders to improve their short sale procedures, and more short sales are getting approved now than several years ago. But even though we've seen improvements, the process may still have both the buyer and seller feeling like they are living in the wild west. As much as the agents involved in the transactions try to intervene to smooth the process, banks will lose paperwork, delay an approval, ask for multiple documents, reply with an outrageous counter offer, or just plain STALL. The most likely explanation is that this controlled chaos is somehow in the lender's best interest. Unless they have a financial incentive to improve the short sale process, this chaos may continue.

The answer might be NO. There are many situations that can cause a short sale to be rejected but it does happen. Sometimes the lender doesn't say no explicitly, but just allows the home to go to foreclosure (Trustee Sale). Though the seller can request that the Trustee Sale date be extended, that request may not be honored, even if the short sale is being negotiated.

Buyers and Buyer Agents have not access to the owner's lender for privacy reasons. However, we work with the listing agent to make sure we're doing all we can to get an approval through. Short sales work best when all parties understand and accept some of these short sale situations that seem to plague the process and everyone understands the biggest requirement: PATIENCE.

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Though not guaranteed, information and statistics in this article have been acquired from sources believed to be reliable.

The Fair Housing Act prohibits discrimination in housing based on color, race, religion, national origin, sex, familial status, or disability.

Information Deemed Reliable But Not Guaranteed. The information being provided is for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. This information, including square footage, while not guaranteed, has been acquired from sources believed to be reliable.

Last Updated: 2020-07-10 06:38:17