Another common problem is the slow pace at which lenders approve short sales, which occur when a seller is allowed to accept a sale price that's less than the loan balance, leaving the bank with a loss. These deals can be painfully slow if the seller has multiple mortgages.
A lot of borrowers have second mortgages and sometimes third mortgages and one of the major problems with closing is that you can't get the first and the second on the same page. The first will approve (the short sale) and the second won't, and then the second will approve it and the first approval will expire.
Many short sales linger beyond the point of salvation, but in other cases, patience and persistence are rewarded. Hastings recalls one short sale in which the seller had two loans held by the same lender, but the approvals were still out of sync. Time passed, the paperwork came together and eventually the deal closed.
|Often, home sales are victims of the "low appraisal" trap|
To overcome a low appraisal, the seller must persuade the appraiser to reconsider or negotiate a price that's acceptable to the buyer. This is rarely possible, and if the property is a foreclosure that's owned by an out-of-state bank, these negotiations can be even more difficult.
The solution is going back and forth, trying to justify the price. Or the seller is going to have to lower the price. If it's a bank, that's a big deal. They're going to drive a hard bargain. Moreover, if the bank is located in a different city such as Dallas or Minnesota, they have no idea what's happening in California.
Repair credit disputes
Buyers naturally want to purchase a house that's in good condition, while sellers usually don’t want to spend a lot of money to fix up a house they've put on the market. In some cases, the list of repairs is so long that buyers become nervous about the condition of the house, and that puts the sale in jeopardy, says David Moody, a broker at Sunrise Realty in Athens, Ga.
One strategy to remedy this situation is for buyers and sellers to get estimates of repair costs and "start nibbling away" at what might seem like an insurmountable list of defects. Don't let it overwhelm you. Get prices. I'm always amazed at the number of times (a repair) is not nearly as much as either party thought it was going to be.
REO title delays
Buyers who want to purchase a bank-owned property, also known as real-estate owned or REO, sometimes run into glitches in the chain of title or ownership, Moody says. This gap occurs when a home is put on the market and readied to be sold before all the last details of the foreclosure have been finalized.
The solution, again, is patience — and a lot of it.