For months I’ve cautioned my buyers that Short Sale properties in the Nashville market can be a real nightmare – taking 4-6 months to close (that is if you EVER get a response from the bank). A recent article in BusinessWeek shows that banks making Short Sales tougher in other parts of the country. Banks are “backing away from short sales, forcing sellers to pay extra at closing or demanding a promissory note for the amount due.”
When their situations were really tough, most banks preferred short sales because they were their best opportunity to get the most money back. But with an improving economy, and because the losses on many of these properties have already been written off the books, banks are increasingly reluctant to negotiate a short sale, especially in a relatively stable market like Nashville. In my experience asset managers are more likely to turn their attention to markets where values are still falling like Florida and the Southwest. The bank employee can easily bury a file when he knows the value of a property is likely to be the same of better in six months. There is no incentive to address a homeowner request for a short sale unless that seller is likely to default or is close to foreclosure.
Today, banks demand 9.5 weeks to respond to a short-sale request, compared to 4.5 weeks a year ago, according to research firm Campbell Communications. Their reluctance is frequently stymieing sales and frustrating real estate practitioners.
Moral of the story – some deals really are too good to be true (well, that and listen to your REALTOR®).