Many homeowners look to short sales as a favorable last resort. After all, it has less impact on a credit report when compared to a foreclosure. That’s why it can be frustrating when a short sale falls through. There are many reasons why this might happen. They can be issues with you, the buyer, or the lender.
If a homeowner finds themselves unable to pay their mortgage, there are two major options. The first is to do nothing. That will move towards the path of foreclosure. The bank seizes the home and there will be a severe impact on the homeowner’s credit. For this reason, many people in this position prefer to opt for a short sale. With the right steps, one can take out a loan on a home in a couple of years.
However, this process can be complicated and long. There are also three parties involved: buyer, seller, and lender. The complexity of a short sale means there are many ways in which it can collapse . This remains true in Charlotte, NC.
Fortunately, this post will answer all your questions. It will let you know why short sales may fall through in Charlotte, NC.
What Factors Can Cause a Short Sale to Fail?
A short sale involves a lot more work than a foreclosure. It can cost the lender money, so they will always make sure it is the best option for them. The number of parties and documentation involved in a short sale makes it more complex. This provides a variety of ways for it to fall through. These include the following:
- Deadlines are not met. Paying a mortgage on a house means you will need to meet certain payment deadlines every month. It is missing one of these deadlines that leads to a short sale position. But even when you get to a short sale, you must still move along fast with the process. There are various deadlines, particularly for the submission of some documents and papers. If any of these gets missed, then it is one route by which a sale can fail. The fact that there is a lender, buyer, and seller, makes this even more important. You may have done the best on your side, but the buyer needs to do their best too. If they fail to keep to time, they could jeopardize the process.
- Documentation is incomplete. There is a whole lot of documentation involved in a short sale. Especially on the seller’s side. They must write a hardship letter. This letter discusses the reasons why they can no longer afford their mortgage. The lender will want to ensure that circumstances leave the seller with no other option. Documents proving assets will be required. This is to make sure there is nothing that could be sold to pay for the mortgage. Remember, the lender will always prefer that you pay for the mortgage above anything else. There are many other documents required. These include tax forms, pay stubs, and the like.
- All lenders are not in agreement. It is possible to have more than one lender on a home. The first lender is, in most cases, a bank. In some cases, the loan may not be enough to pay for the home in full. This is where a second lender comes in to settle the balance. There can even be three lenders. Any party that has a lien on your home in Charlotte, NC, must agree to a short sale. In cases where they don’t, it can cause a short sale to fall through.
- A buyer’s offer isn’t good enough. Once again, the three main parties involved have to pass numbers between each other. All parties need to be satisfied with the value. This can be even harder to achieve with more than one lender. As a result, if the buyer’s offer is not good enough, the lenders may not accept it. In some cases, a new offer may come in after the first. If this offer is better, the bank will want to take it instead. After all, a higher price means less money lost. This can drag back the process.
- A buyer is no longer interested. A buyer may have decided on purchasing your home for a certain price. The lender and the seller may be happy with it too. However, the long process means a buyer may keep looking before the sale is closed. If they find another home more to their taste, they may simply pull out from your sale. They have no obligation up to a certain point. When they walk away, it can completely collapse the short sale. A buyer may also experience a change in their finances. This can make them unable to pay for the home.
- The seller no longer qualifies. A lender will do everything they can to avoid a short sale. If the seller suddenly finds employment, they may cancel the short sale process. Being left an inheritance or any other valuable asset can have a similar effect. They will no longer qualify as they are no longer in financial hardship.
How to Improve the Chances of a Successful Short Sale?
It may seem like there are a lot of ways a short sale can fail. It’s true, there are. However, with some precautions, you can increase your chances of success.
- Enlist a good short sale agent. A short sale agent can act as an intermediary between all parties. They can work to ensure everyone is on the same page and working towards success. A good agent is one step that can make everything else much easier. Particularly one with experience in Charlotte, NC.
- Complete documentation on time. Ensure that your hardship letter is written well and submitted by the deadline. This remains true for all other documents. As a seller, you should be timely in your portions. This allows your agent to focus on the buyer and lender.
- Follow up on the buyer. Try to establish a good talking relationship with prospective buyers. This way, you can know ahead of possible hitches. This includes other house options and changes that can bring down the sale.
There are a variety of factors that can lead to a failed short sale. These can be lender, seller, or buyer factors. Getting a good agent in Charlotte, NC can smooth out potential hitches.
You deserve an agent that does their best on every short sale. An agent who knows exactly what they are doing and has experience. In that case, Nancy Braun is the one for you. She and Showcase Realty will ensure that all obstacles are minimized on the path to a short sale. Call Nancy Braun at 704-997-3794 to get started.