Short Sale Process Continues to Frustrate
September 28th, 2011 categories: Foreclosures, Las Vegas Real Estate, Mortgage Relief, Short Sales, US Economy
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Despite years of promises from the banks and various half-baked government programs that often did as much harm as good, the short sale process remains mired in lengthy processing delays that continue to play their part in hindering the overall housing recovery. A new survey from Inside Mortgage Finance has just confirmed what those of us in the profession already know; buyers are sick and tired of short sales and their average completion times of 16 to 17 weeks. Of course this 4+ month average completion time masks a larger truth, namely that many short sale transactions never make it to completion at all. The reasons are both numerous and complex which include (but are not limited to) difficulty with inconsistent appraisals, the logistics of getting multiple interested parties on the same page, garden variety bureaucratic issues involving mountains of paperwork and most especially the lack of experienced staff in the mortgage servicing industry relative to the size of the task. First time buyers have been especially discouraged by these frustrations and the survey also documents a significant multi-month decrease in the number of successful short sale transactions attributable to this segment of the buyer universe. In the Las Vegas real estate market specifically, short sale transactions generally account for 20% of total completed sales in any given month. This is an absurdly low figure given the severity of residential distress across Southern Nevada and the fact that a much higher 50% of residential properties for sale are short sales. This means that 3 out of every 5 of properties marketed as short sales never have the chance of successfully closing with buyers taking over as the new owners. There is prolific belief in the Las Vegas real estate community that most new government programs to boost the real estate market, let alone the economy, will have any positive impact for consumers. The government and the banks are missing an important opportunity to move the ball forward in terms of stabilizing housing prices through greater short sale facilitation. We are living in a historic time that I fear I will be retelling to my grandchildren just as my grandfather recounted the Great Depression to me…
