Why San Mateo Short Sales Fail

Selling Your San Mateo Home When You Owe More than it’s Worth

As unemployment worsens and the recession runs its ugly course, short sales have become a fact of life for many San Mateo home owners who have hit one of life’s pot holes. If you’re upside down on your San Mateo mortgage loan – owe the bank more money than your home is worth – getting rid of the house you once loved is the key to getting back your peace of mind and rebuilding your damaged credit. You’ve heard that finding a buyer who will pay fair market value for your devalued home, and at the same time, getting the bank to agree to accept less money than it is owed is the solution.

Most San Mateo Short Sales Fail

But, is it as simple as that? Of course, the answer is NO. Most San Mateo short sales fail, that is, the bank does not agree to accept a short pay-off as payment in full which satisfies the homeowner’s debt. Ultimately, when the homeowner fails to cure the outstanding delinquency, these San Mateo homes are foreclosed upon and become bank owned homes for sale, or REOs. These REO homes are listed and sold on the traditional resale market usually through the MLS.

Which Begs the Question…

All of which begs a question that I’ve been asked many times: Why do San Mateo short sales derail?

Why Do San Mateo Short Sales Derail?

Here are some of the reasons from different perspectives:

Seller

The number one reason why San Mateo home sellers are turned down by their bank (lender) is they cannot document a genuine hardship. Job loss, income drop, divorce, serious illness or death are considered worthy hardships. Showing hardship is the one issue common to all approved San Mateo short sales.

Other reasons, such as, your San Mateo home is worth less than what you paid for it or you just don’t want it anymore are not hardships. Or, if the seller is not willing to sign a promissory note required by the bank to make up for the difference between what they owe and how much they can get for your home in today’s market.. Or, the seller does not allow access to their home. You have to show it to sell it.

Junior Lien Holder

The San Mateo short sale cannot close escrow if the junior lien holder declines to accept less than owed. Sometimes, junior lien holders prefer to take their chances by foreclosing on the property. A junior lien holder may require the seller to sign a promissory note as well. If the seller refuses, the sale is canceled.

Mortgage Insurer

Private mortgage insurers have a position of risk and often require the seller to sign a promissory note to cover their lost. Most sellers simply want to walk away and rid themselves of any further obligations. Unless the seller agrees to sign the note, the San Mateo short sale will not close escrow.

Buyer

The property may not appraise for the agreed upon purchase price, or the buyer’s loan application may be rejected which would result in a failed transaction. Buyers must be pre-approved and have easy access to their financing. Or, during the lengthy processing period the buyer gets cold feet, or finds another more acceptable San Mateo home and cancels the purchase.

Property

If there are clouds on the title, the rights of ownership cannot be conveyed because title insurance is denied.

List Price

If the list price is too high, buyers won’t buy. If the list price is too low, the bank will reject the price. Remember, short sales are sales approved by the bank for Fair Market Value for less than debt owed.

Processing Delays

A San Mateo short sale is a process driven transaction. If paperwork is missing or unsigned, delay is inevitable. A complete, well documented short sale proposal package is critical to the success of a San Mateo short sale request.

Have a San Mateo Home You Can No Longer Afford and Need to Get it Sold?

Sign up for our webinar on Thursday November 19th at 6pm to learn How to Sell a San Mateo County Home You Can’t Afford. For more information visit our How to Sell a San Mateo Home You Can’t Afford page. To sign up, use the “Sign Up” button below.

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Looking to Buy a San Mateo Short Sale?

Check out our San Mateo Buyer Representation page to learn a little bit about how we work and how our Buyer Representation Program is All About You! Then call us at (650) 655-2500 or email us at info@RayChelRealtyGroup.com to schedule a no obligation consultation. We’ll help you come up with a game plan to get your San Mateo short sale purchase approved.

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Raymond Stoklosa, Chela Stoklosa and Rebecca Williamson are Realtors with The RayChel Realty Group specializing in Santa Clara and San Mateo Real Estate.