Still a Long Process.
You’ve probably heard the saying “There’s nothing short about a short sale.” Aside from money, patience seems to be the only thing that runs in short order in a short sale. Unfortunately, this statement rings true, even as we head into 2012. Despite all of the relief funding and manpower that has been pumped into the banking system to cope with the crush of short sales that accompanied the recession, the fact remains that short sales are still taking an inordinate amount of time to close — a fact that is hampering the housing recovery all around the region, including San Carlos.
This is somewhat remarkable to see in 2012, since short sales have been pervasive in the real estate market for at least 3 years. And while nobody really anticipated the magnitude and duration of the recession, the banks have had ample time and experience to figure out a more efficient way to process the seemingly endless flow of short sale requests that are crossing their desks.
It’s a San Carlos Issue Too.
It would be very easy to erroneously dismiss this whole topic when considering the San Carlos real estate. After all, to the casual observer it must seem like house prices have continued to rise almost unabated over the last decade in the hot San Carlos market. But in recent years since the outset of the recession, short sales have accounted for about 7-10% of all homes sold in San Carlos. While this is not an insignificant number, it’s a considerably lower rate than surrounding communities.
This percentage is not dropping as the economy starts to pick up steam. On the contrary, the make-up of short sales in the San Carlos real estate market has actually increased in the past few months. Consider the following:
- Of the 28 homes that are currently “pending sale” in San Carlos, a whopping 46% of them are short sales.
- Most of these short sales have been at the pending sale status for at least 2-3 months. The longest has been pending for 6 months.
- Of the homes 28 homes currently for sale in San Carlos, 21% are short sales. This is well above the normal average.
The bottom line is that short sales are still taking a long time to close. And that may spell trouble as the number of short sales in San Carlos inches upward.
What’s the Cause?
Why are short sales taking still taking so long to close? That seems to be the $64,000 question. The challenge that the banks face is still quite daunting. Every transaction is unique as far as how many lenders are involved, who the lenders actually are, and the circumstances surrounding the hardship which is necessitating the short sale. So there’s no “cookie-cutter” method for streamlining the process, other than good old brute force. But the short sale departments at most banks suffer from an extremely high turnover rate, so the person who had your file last week may likely not be here this week. And that means everything may start over from square one. The process is still amazingly inefficient.
Finally, Realtors share in the blame for the inefficiency of the process. Short sales are extremely complicated transactions, and the rules and guidelines that govern short sales seem to change almost every week. Very few Realtors on the Peninsula are truly specialists in dealing with short sales, simply because they don’t do them often enough. Mistakes that are inadvertently made in the preparation of the short sale package equate to delays and restarts down the road.
The Moral? Patience is Mandatory.
The bottom line is that if you’re looking to buy a short-sale property in San Carlos, you need to be extremely flexible and patient with the process, because most likely the contract is going to take months to close (if it even closes at all.) I am representing two different buyers on short sale transactions — one has been pending for 3 months, the other for almost 7!!! Now that’s patience…
If the housing market is going to truly put the ugly past behind it, the way that short sales are handled has to improve… and quickly.
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