July 1st 2011 was the the day we finally closed a 605 day short sale for a client who tried to modify and could not qualify. As a result the sellers decided to proceed with a short sale but for a multitude of reasons we ended up going through through six different buyers and a dozen price reductions.

August 2009 was a turbulent time with most banks as they began shifting their short sale servicing systems from fax based processing to uploading documents into a task based system. Bank of America began shifting to web based short sale submissions because they just could not keep up with lost paperwork, missing documents, and lack of support staff. Soon most banks began making their own shift to prevent the endless duplication of effort.

What I Learned and What You Should Know

Through all of this I decided it was important to share the five most important changes that prevented us from closing in less than six months instead of almost two years.

1. The buyer and their agent must be totally committed to the process by putting earnest money in escrow.

2. Always have a backup offer in case the buyer backs out.

3. Investors need to know that your agent knows the value of your neighborhood. Make sure your agent knows how to prepare a broker price opinion to support the value of the purchase contract.

4. Banks and investors are always changing guidelines and requirements for submission of short sale packets. I have a network of short sale specialists that check in with each other to stay on top of recent changes.

5. Sellers must be willing to be patient with the short sale process. The sellers of the property mentioned in this post experienced a roller coaster of emotions all the way to the very end.

The Moral of The Story

Change will always be part of the short sale process, it really has improved and the success rate continues to climb from 20% to 70%. There are too many details to document in one blog post. In short, the process has improved and it can and will continue to get better.