Regulate Bank's Behavior in Short Sales

Once again, I have a client who wants to buy a short sale property. I spoke to the listing agent about it. There was accepted offer on it before, and the bank got back to them quickly on it - only one month!

That's right, responding to a purchase offer in one month is considered fast.

Why is this? I don't think banks are that inefficient that they couldn't deal with this in a reasonable amount of time.

The more time you leave a short sale hanging the worse it is for the owner, for the neighborhood and for property values.

Most buyers can't wait that long or deal with the uncertainty.  Anyone who is moving to a new area or has a lease needs to have a set date range where they can expect to take possession of a house.  This means that short sale properties are mostly bought by investors.  If the banks were forced to get their act together and had a time limit to reply, owner occupants could purchase short sales easier.  Since they usually pay higher prices than investors it would actually benefit the banks.

Short sales are frequently vacant, and empty houses deteriorate much faster. They get broken into and have copper pipes and appliances stolen. No one is there to notice the small leak that turns into the big leak that brings down the bedroom ceiling. The house gets damp, moldy and musty. It's a downwards spiral.

Once the house goes into foreclosure it really hurts property values. Plus now we have another former home owner with a foreclosure on their record. One who is probably pissed off at the bank and may damage the house on the way out.

It seems reasonable - more than reasonable - to give banks a time limit to reply to a short sale contract. One month is more than enough time. I think banks should be regulated on this.

You might also want to read: What is a Short Sale