Short sales, in which homes are sold for less than is owed on them, have become such obstacle courses for buyers and sellers in California that fewer than three in five homes offered for sale result in a sale, the California Association of Realtors reported Monday.

The association said nearly 70 percent of its members responding to a survey said that closing their most recent short-sale transaction was "difficult" or "extremely difficult." Ten percent described it as easy.

The association said its members reported problems with lenders that included unresponsiveness, onerous procedures and long processing delays.

Falling real estate prices have left many California homeowners with homes worth less than they owe on them. Homeowners unable to make the payments can ask lenders to agree to a short sale and accept less than is owed. If they don't agree, the home can end in a foreclosure sale.

Among the problems reported in the survey were lack of a standardized approval process; the dragging out of the approvals; and tardiness in returning any communication. Only 14 percent of agents surveyed said they received a response from a lender within one business day.

Two-thirds said they were "not satisfied" or "not at all satisfied" with the timeliness of lenders' responses to their inquiries and three-quarters were unhappy with the amount of time it took to learn whether a deal was approved or denied.

"The short-sale system is clearly flawed and must be standardized and streamlined," said CAR President Beth L. Peerce.

"The process is anything but short. The process is convoluted," said Colleen Badagliacco, a San Jose real estate agent and chair of the association's short-sale task force. Badagliacco, with Altera Real Estate in San Jose, said the association is pushing for "some consistency in the process, so the procedures will be similar no matter who you're dealing with -- Wells Fargo, Bank of America, or whomever."

Badagliacco said she's seen short sales that were near approval suddenly become foreclosures through the complexities of the process.

"Sometimes, I don't think the right hand knows what the left hand is doing," Badagliacco said.

Robert Heath with Bayview Residential in Campbell, said he worked on one short sale for a condo in Sunnyvale in which Bank of America approved the loan after two months of negotiations, but abruptly gave the buyer only seven days to close after an investor declined to go along with the deal. That was not enough time to complete the deal, he said, and the condo will end in foreclosure.

"They should have denied it if they were going to foreclose anyway," Heath said.

A Bank of America spokesman said the bank asked the investor for a postponement, but the investor refused. With the property set for auction on March 11, the deal had to close in seven days, said Richard Simon, a bank spokesman.

Simon said BofA "is currently completing a greater percentage of short sales in a higher volume setting than we were 18 months ago" due to increased staffing and new technology. That has resulted in a "more efficient process," more short sales and fewer complaints, he said.

Contact Pete Carey at 408-920-5419.

Shortsighted

70 percent
Real estate agents in a survey who said closing a recent short sale was "difficult" or "extremely difficult"
14 percent
Agents who said they received a reply from a lender within one business day when asking about a short-sale property