I’ve worked with buyers who have made offers on short sales and even though I tell them this is going to take a minimum of 60 days, they still get very antsy after 30 days. I don’t blame them but I’m including some reasons and a timeline for short sales approval. Hopefully this will help both buyers and sellers understand the process a bit better.
Big Picture Reasons Why Short Sales take so long:
Lenders can’t keep up with the record amounts of short sales and foreclosures. I recently listened to a national economist who said that one of the major lenders had 8 people in their short sale department and now have 3,000! If you’re a business owner, you know that explosive growth will wreak havoc in your company.
Lenders don’t want to put even more money into something where they’re already losing money We know that the lenders will make more money with a short sale than a foreclosure. I’ve asked that question directly to one of the large lenders and they said “We’re not going to add more personnel in an area where we’re losing money. We’re here to make money.” There you have it – it’s always the bottom line.
And here are the details …… and it’s always in the details.
- The listing agent doesn’t have a full short sale package into the lender(s). OK, let’s face it that realtors (like many people) hate paperwork. But short sales are absolutely driven by paperwork and one missing document will cause the whole thing can go south.
- The listing agent doesn’t stay in contact with the lender(s). We contact each lender at least once every week for an update PLUS we then update the buyer’s agent. The important point here is communication with all parties.
- There are multiple layers to the approval process. Many buyers, sellers and agents don’t realize that the lender negotiator is only the first communication level. After the lender’s negotiators approve the package, it usually has to go on to another level of decision makes and/or the investor and then possibly on to the mortgage insurer. Each one of these levels has their own criteria and each one takes at least 3-5 business days to approve and move on. If the lender rejects or counter offers the buyer’s offer, even more time can be added.
Here’s one of the lender’s letters that explains the process:
This is a brief overview of the short sale process and the estimated time frames for each step.We expect the process to take 45-90 days to complete. However, these are only approximations and delays outside of our control may occur.
· The Purchase Contract documentation has been received. If additional information is required, we will contact you and/or your agent.
· Our appraisal vendor will contact you and/or your agent within approximately 5 business days from the date that we receive all required documentation from you to set an appointment for an interior appraisal of the property. A point of contact is necessary to obtain access to the property.
· Upon completion of the appraisal, which takes approximately ten (10) business days, we will update your file and prepare it for review. In some cases, approval may be required by the investor, which may take more time.
· The offer will be accepted or declined after the review process is complete.
· If the offer is declined, we will send notification to you and your agent within 5 business
With all of these reasons should you still consider a short sale? Yes if you’re prepared to wait and you know the listing agent knows what he/she is doing. You’re going to get a home that’s probably in better condition than a bank owned home and you can’t beat today’s interest rates.
Are you thinking about selling your home via a short sale OR are you a buyer considering purchasing a short sale? Get educated first and then sell or buy. Know your options and know your rights.
Thanks for reading this.
Joe Stradcutter
High Pointe Realty
612.516-3456
jstradcutter@gmail.com
No comments yet.