Yesterday the LA Times had a front page article explaining why banks today are pushing short sales – and getting them done.

Realtors, buyers and sellers in the past dreaded doing short sales – banks took forever to approve the offers (the buyers would lose patience and move on to another property) and it seemed like the lenders were always asking for more paperwork (which had already been sent in and “misplaced”).

But those days are pretty much gone. Lenders have staffed up to handle the load, offers are being reviewed in 10 days or so and in California, the new Homeowner Bill of Rights makes it easier for homeowners to do a short sale after they’ve considered all their options.

Contrary to what some might think, lenders don’t want to foreclose on a home. A vacant house is subject to vandalism, decreases neighborhood values and will probably be sold for less as a bank owned property vice had it been sold as a short sale.

Unfortunately, many homes still go through foreclosure in Ventura County, often because the homeowner waits too long before trying to do a short sale.  Once a Notice of Trustee Sale has been filed on the property, the auction will be set for 3-4 weeks out, and often that doesn’t leave enough time to market the home, get a good offer, submit that offer to the lender and then still have enough time for the lender to review that offer.  Time simply runs out.

Leslie and I counsel homeowners at the pre-foreclosure stage (when the Notice of Default has been filed) to use the first 6 weeks or so of the 3 month time frame (the Default stage) to try and get their loan mod, but if unsuccessful, then seriously consider starting the short sale process.  Homeowners need to do short sales for a variety of reasons – job transfer, divorce, death of a spouse, job loss or reduced income, medical issues, etc.

The key is to always – like a chess player – be thinking a move or two ahead and be ready to make a decision before time runs out.