Bank of America just sent out an e-mail blast to agents across the country announcing that agents can now substitute a new buyer without having to initiate a new short sale. This is in the event the original buyer walked away from the deal. For home buyers and sellers reading this who may not be involved every day in dealing with short sales, this really is a game changer for the real estate market. Short sales are a cancer to the real estate market because of how long, difficult and complicated they are to complete. Looking back on this decision by Bank of America at some future date, I believe we will note that this fundamentally impacted the real estate market in a positive way.
Bank of America has been leading the way in streamlining short sales after a very rough start. As a leader in the business, it would seem other big banks will follow. We’ll have to watch to see if Wells Fargo, JP Morgan Chase, Citi, and US Bank fallow Bank of America in this effort.
The biggest challenge with short sales is to keep buyers interested in the property long enough to see the entire transaction through to the end. Short sales typically take 60-90 days to get approved after the buyer and seller have signed their contract and all the corresponding paperwork has been sent up to the bank. It then takes another 30 days or so to close. Most buyers don’t want to stick around for 120 days with the uncertainty that they don’t know if the bank will even agree to the short sale or if the terms of the agreement will be acceptable to the seller.
There are still several things the banks could do to streamline the process and make short sales more efficient so we can clear the market, but this is a very big step in the right direction.