The reason that this short sale drug out for such a long time is because the short sale lender thought that the house was worth more than its actual value. Imagine that you were a bank losing hundreds of thousands of dollars on a loan. You hire an appraiser and he says the house is worth 380k. Would you accept a short sale offer for 275k? No!
We had the home on the market for six months and 275k was the highest price any buyer was willing to pay. Here is why there was such a big discrepancy between what a buyer was willing to pay and what an appraiser thought the house was worth. The house was located in the country about 12 miles outside of town. Most people will pay more for a house that is located closer to town. Three miles east of this house was an upscale area of luxury homes.
Most of these homes were located in well-maintained gated communities. The person who appraised this home used those homes as comparable sales for the appraisal. But it gets worse. This home had no garage and was located down about a mile of dirt road and surrounded by lower priced homes. The comparable sales the appraiser used were an apples to oranges comparison. That was why the home was not selling for what the bank thought it was worth. We submitted two different short sale packages over the course of nine months.
Both times the bank told us they wouldn't approve the short sale because they thought the home was selling for less than it was worth. We finally lucked out on the third short sale offer. This time the home appraised at an accurate value, and the bank approved the short sale. However, the home had declined in value over the past year. It sold for 235k. Yep, that's correct. The bank lost over 40k because they used inaccurate appraisal data to make a decision on the short sale. The motto of this story is that most short sale problems can be solved with time and persistence.