5 Reasons Your Short Sales Will NEVER Close

Some today experts are saying that only 1 out of 10 short sales reach successful conclusion. Yet others say that 1 out of every 4 close escrow. Regardless a 10% to 25% success ratio is pathetic no matter what your business is!

5) Undisclosed Consequences

There are legal and tax consequences to every short sale. And this last ‘reason’ can be combined with several of the others above. But, I have seen short sales fail because a Seller is unaware of the repercussions a short sale may have. For example, a Seller may be  issued a 1099 to the IRS  for the deficient amount after a short sale is completed potentially creating a unexpected tax liability. Other times, a lender may accepted a short payoff but not release the Seller and after close sue the seller in court for the deficiency. The Seller’s credit may also be negatively impacted if amends are not made to the satisfaction of their lender.

Not all of this can be done or should be done by a competent Real Estate agent. In fact, all of my Sellers are expected to seek advice and counsel from tax and legal professionals. Nonetheless, if a Seller is not properly informed of all that may happen, it can be quite a shock to them when they learn that they have to bring $10,000 to closing, or that they may be sued right after close of escrow.

If you are a buyer, short sales can be a great way to buy or the only way to sell your home if you owe more than your home is presently worth and you must sell. But like anything, there are ups, downs, whatever your choice make sure to surround yourself with experts with whom you are comfortable with and who will work diligently to represents YOUR interests not theirs, regardless if you are buying or selling.

Drew Ludlow is a Licensed Real Estate Broker in Charge/Owner of Cornerstone Property Group with more than 10 years of experience assisting buyers and sellers in Apex North Carolina

  • )

Comments

  1. […] They do work out, at least some of them. Nationally, I’ve heard that the success rate of short sales is between 10% and 30%. That’s a big spread, but any way that you cut it, many short sales are doomed from the start. There are many, many reasons why short sales never get approved – with one of the top reasons being inexperienced real estate agents. […]

  2. There is a right way and a wrong way to handle a short sale as a real estate broker. The right way leads to success but requires a significant amount of work which involves among many other things, educating the home sellers, staying in constant contact with the right people at the bank…and never giving up. Only the true professionals will embrace the “do what it takes” attitude to stay focused on helping the home seller and ensure this type of transaction closes. I certainly agree that personal experience is the best teacher!

    Marc Iafrate, MBA
    Capital City Real Estate Group – Keller Williams Realty
    (919) 886-7355