1. Run-on (and on, and on) escrows

When you’re buying a home (or selling one, for that matter), time is absolutely of the essence.  Buyers reasonably expect that the big time suck in real estate is in the house hunting process itself.  It seems like once you find a home you want to buy and the seller agrees to your price and terms, things should move pretty quickly, right?  Not so much, when it comes to some distressed property sales. We’ve heard of the occasional, swiftly-moving escrow on an REO (real estate owned - by the bank), but for the most part, these transactions take anywhere from a few days to a few weeks longer than “regular” sales, because of the extra signatures, supervisor-level approvals and even investor involvement required to seal thedeal. Banks don’t have the same sense of urgency individual home sellers do, and it’s not uncommon for the people who need to sign on the dotted line to be on vacation or scattered across the country, adding days or weeks worth of time to the escrow.  Short sales are also an entirely different animal when it comes to escrow timelines. While a standard sale from an individual seller to an individual buyer might take 45 days from contract to closing, short sale can take anywhere from 45 days to 6 or 8 months after the seller has accepted thecontract to get the deal closed.

2.  Bank won't take a lowball offer

Banks owe their shareholders and investors a duty to get as much as they can for these properties.  Just because you see it’s on the market and listed as a short sale or a foreclosure doesn’t mean they’re going to give it to you for a fraction of its worth. The bank’s goal is to get a purchase price as close as possible to the home’s fair market value, as determined by the recent sales prices of similar, nearby homes, with some adjustments made for the property’s condition. Fact is, many banks would rather see the listing agent reduce the price by a moderate amount, and wait to see what offers come in, than to accept an offer 30 percent below the asking price just because there are no other offers on the table.

3.  Last minute postponements/cancellations

These transactions have an uncanny way of being delayed at the last minute - or never going through at all, through no fault of the prospective buyer. You signed docs yesterday, put your dog in the crate this morning and just hopped in the moving truck, only to get a text from your broker that the deal didn’t close because the escrow company which was selected by the bank flubbed the checkboxes on a single sheet of paper (it happens). Or, you’ve been in contract (with the seller) on a short sale for four months, and the bank refuses the sale entirely because the seller refuses to kick even $1 of their own cash into the deal, despite having a flush savings account.

4.  The bank's black box

Make an offer on a normal home and you’re likely to know what the outcome will be within a few hours or a few days, at the outside. If things take longer because the seller is out of town or some such, the listing agent tells you that, and you at least know what’s going on.  Make an offer on a bank-owned property or a short sale? It could be days, but could also, easily, be weeks or months before you know what’s going on. No amount of calling, pleading, prodding or nudging is likely to get you much information on how your offer or the seller’s short sale application is being handled or what (if any) progress is being made. That “black box” into which your offer disappears at the bank level can be very frustrating.

5.  Double Standards

In a “regular” equity sale with no bank involvement, both buyer and seller are obligated to meet various timelines. Seller has to provide disclosures by X date, open the property to inspections - with utilities on - by Y, and close and move out by Z. REO and short sale buyers, on the other hand, are often dismayed to find that even though the bank might take weeks or months to sign or handle its deliverables, the bank will insist that the buyer show up, sign or send a check quick-like.