As a buyer, a short sale can be a fantastic deal. You may be able to buy the home for less than it is worth because the bank is just happy to get paid the outstanding balance of the loan. Before you jump out there and look for short sales on the market, you should learn what the process entails and how long you should expect it to take.
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The Average Short Sale Wait
Because each bank is different, there’s no cut and dry answer as to how long a short sale can take for the buyer. If we had to give a general ballpark, we’d say between 3 and 4 months. This doesn’t mean that some sales don’t go through faster, because they can. It can also mean that some sales will go through even slower.
The key is to have patience. You, your agent, or even the seller has no control over how long it takes. It’s all in the bank’s hands. Sometimes there is also an investor involved, so it goes even deeper than the bank. With so many parties involved in the transaction, it’s no wonder it can take so long.
The Short Sale Process
The short sale process begins with you making an offer. In most cases, your offer must be more than the outstanding balance on the mortgage. The banks still want to make a profit. Ask your real estate agent for a
list of comparable sales in the area so you have a good idea of the home’s market value. From there you can determine how much you want to offer.
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Make sure that before you make that offer that you have a preapproval letter from your bank. This is a part of the complete package the listing agent must send to the bank offering the short sale. The listing agent must also send the executed purchase contract and the seller’s complete package. If the listing agent does not send a complete package, it could make the short sale process even longer as most banks ignore incomplete packages.
Following is how the process often goes:
- It takes up to one month for the bank to confirm receipt of the short sale offer.
- The bank then takes one to two months to review the offer and secure a
Broker Price Opinion to help in their decision making. The bank usually hires a negotiator to help with this step.
- After all the negotiations are complete, the bank may take another month or two to make a decision.
- The sale cannot go through until the bank sends the Short Sale Approval Letter.
While the process can take months and buyers can get flustered and even walk away from the sale, there are ways to speed it up. It all comes down to the expertise of the listing agent. Before you put in an offer on a short sale, find out how much experience the listing agent has with this type of sale. If it’s their first go-around, it may not be the best choice unless you have many months to wait. Using an experienced agent, you will get better service as they know the importance of staying in communication with the bank. The agent should know how to understand the negotiations and when to take the case to a higher power when it is sitting status quo.
In reality, you can close on a short sale in a few months, but you have to have competent people working on the file to make that happen. Do your research and ask as many questions as you can to find out the experience of everyone involved in the process to make it go as smoothly as possible for you.
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