A client of mine put an offer in on a short sale.  After 3 months the bank accepted the offer with the stipulation that the escrow close by July 2nd. The problem was that these were FHA borrowers, and the offer was accepted on June 8th.

To make a long story short, we went the extra mile to close this escrow as soon as possible. Keep in mind, the typical FHA loan takes about 45 days to close. Well, documents were ready today with the borrowers scheduled to sign tomorrow and the loan to close early next week.  A great effort by my staff and me in getting things taken care of so fast, right?

Well, the bank in first position on the seller’s property has yet to sign off on the extension beyond July 2nd.  Although it is unlikely the bank will let this property go to a trustee’s sale this Monday as originally scheduled, as of late this afternoon the bank hadn’t given the green light to let the buyers close escrow.  If the bank for whaever reason denies the extension, we will have wasted a tremendous amount of time and effort–and there is nothing that can be done about it at this point.

The above scenario is an example of what can go wrong with transactions involving short sales. You never quite know where you stand until escrow finally closes. Granted, one can pick up a good deal purchasing a home this way, but if escrow fails to close on the agreed upon date, anything can happen.

……more on Monday