One of my most successful Blog Articles for Active Rain was 5 Stages of Grief in a Short Sale. In that blog I compared the Five Stages of Grief a terminal ill patient goes through when informed of their life threatening illness. In that blog article I said sellers in Short Sales seem to go through these same stages.

I would like to expand on this and now say I think Banks go through these same stages. Let’s review the stages and you will see what I mean. The five stages are:

  • Denial
  • Anger
  • Depression
  • Bargaining
  • Acceptance

Stage1 Denial:  Those who have been doing Short Sales for a while must wonder why banks are taking so long to approve Short Sales. Did you ever think it might be because they are in Denial. Think about it for a minute. The banks have one value for the asset and they get a offer much less. 

Stage 2 Anger: Banks seem to be angry about alot of things and are out to get even with most everybody. Their anger is directed at the President, The Treasury, The Fed, The Press, New Financial Regulation, New Capital Requirements, Credit Card Reform, Number of Loan Defaults, on and on all the way to the homeowner who is being blamed for the problem the banks have created from their own greed… In this instance I do not agree that GREED IS GOOD.. Nor is Anger in this situation. It just seems to perpetuate the problem.

Stage 3 Depression:  This is the stage where most Short Sales sit in limbo. The bank is so depressed about the number of people in default and the diffference between the Banks Asset Values on their books and the real Market Value of these properties they just can’t seem to get out of their deep depression to do what is in their best interest and that is selling the asset to a new buyer. By the way most Short Sales that end up in Foreclosure is  because the Banks cannot get beyond these first 3 steps.

Stage 4 Bargaining: This is the most critical stage of a Short Sale. This is where a Bank has all of the informatiion they need to make a decision inother words a “Complete Short Sale Package”. The bank looks at the Seller Information, the Hardship letter, the HUD-1, the remaining balance on the loan, the buyers offer and proof of funds and determines the NET dollar amount they are willing to accept.

Stage 5 Acceptance: This is when the banks give  the “Final Approval For a Short Sale”.  This is when the banks come to the realization that the Short Sale is in their best interest and can move on to another deal

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