According to HousingPulse Tracking Survey, fewer homebuyers are pursuing short sales as a means of saving money on a new home. This trend has been primarily attributed to the problematic, lengthy nature of the short-term sale process.
Most notably, HousingPulse found that first-time homebuyers accounted for merely 40 percent of all short sale transactions, a significant fall of nearly 15 percent since the trend’s peak in November, 2009. This group largely explained their lack of interest in short sales as being due to the convoluted purchasing process. Noted problems included lost paperwork, slow appraisals, and drawn-out mortgage modification negotiations due to significant understaffing of mortgage servicers. Such buyers also mentioned difficulty coordinating with multiple investors as being a factor.
Length of Short Sale Blamed for Buyer Disinterest
The length of time taken to finalize a short sale has been found to be a clear factor that causes buyers to look elsewhere for homes, despite the average 27 percent discount that can be found with short sale homes. In fact, at present the short sale process takes an average of 16.6 weeks, with the majority of that time spent waiting for approval from the lender.
While many would-be buyers blame their lack of interest on difficult lenders, banks blame the problem on buyers. Lenders frequently complain that the process would move more smoothly if paperwork was in order from the start; poorly-submitted paperwork is often blamed for delaying the process.
The process has been further complicated by buyers often placing multiple offers at once, since more than one offer rarely makes it through the approval process in time. However, this tactic can slow the process even further and rarely gets desired results.