6 Month Short Sale

[Michael Yeung]

Wanted to share my short sale experience. I am a buyer that just closed on a place in Brooklyn, NY. We made an offer on an apartment coop we liked. It wasn’t until our lawyer’s review of the contract rider that we learned that the deal was a short sale. We thought this was odd at first since our offer was at market rate and not discounted. Internet research about short sales quickly made us very nervous. However, the seller’s agent assured that the approval process would be swift. Prior to executing the contract we were told that the amount the seller would be under was around 5%, and with the bank being the only lien holder, it seemed unlikely the short sale would get disapproved. We put together our board application, had our coop board interview and got approval (which in itself is a rollercoaster ride as those of you who have gone through it would know).

Then came the dark period; weekly check-ins with our attorney and the seller’s agent that provided little to now real information. “Just submitted some last minute documents, should have an answer from the bank this week…” "Any day now, just spoke with the Bank" etc. etc. Three and half month later, we were told the bank disapproved the sale. We were devastated. The seller’s agent scrambled to make a deal, asking us to come up a little, which we cautiously obliged and resubmitted the short sale application for a lower payoff amount. Back to the same routine. We were told we’d have an answer in a week but it took another 30 days for the bank to say no again. So as to not let those 5 months be completely wasted, we came to the difficult decision of covering the debt owed (seller’s broker lowered their commission from 6% to 2% to help). We wonder if we would have agreed to the increased amount 6 months ago to avoid all this wasted time.

We finally closed after nearly 6 months. Even though it worked out in the end, it was an incredibly frustrating process of being in the dark. We still don’t fully understand why the bank disapproved the sale twice! Both attorneys and the broker all agree that they've never experienced a deal like this before. I am simply hoping that this posting would help enlighten us and of course help others in a similar process.