Short Sale Process and Wait Time

With so many short sale homes on the market in many areas if you are looking to buy a home you may very well be opting to buy one of these many short sale homes. In doing so knowing what the process is and what the wait time might be is critical in your decision making.

If you submit an offer on a short sale home and you are the first offer on the home then your wait time is likely to be longer than any others. Let's talk about why. The short sale process starts with the offer and many other documents being submitted to the lender who holds the current loan. This paperwork is made up of all the documents you likely signed as well as the sellers bank statements, W2 statements, current pay stubs, a hardship letter and a HUD. Also included is a debt to income ratio from the seller showing that they cannot make the current house payments and all their other debts and still have enough money to live on.

Now the wait begins. The bank has a process that they go through to possibly approve the short sale. Depending on how many short sales the bank is trying to process as well as how well their process is streamlined all goes into how long the process will take. They first evaluate the paperwork which takes at least a couple of weeks and then they order a BPO (broker price opinion) which is a agents opinion of value - much like an appraisal but not hiring an actual appraiser but paying much less to a licensed realtor to run comps, view the home and give a educated value on the home.

Although lenders have started to streamline this whole process be aware of the fact that just this process generally take several weeks. Once all information has been gathered and a negotiator on the lenders behalf takes a look at the documentation and findings to evaluate if the offer is within an acceptable range. Keep in mind that although it is perceived by many that the bank will take anything to unload the property this is not the case. They will accept an offer that nets them around 88% of the current market value but not a real giveaway price.

I am finding more and more that lenders are coming back with a counter offer on most offers submitted, in part because homes are being listed just to get an offer so the process can get started and it delays the foreclosure process. Many times, the first offer gets frustrated with the wait period and the home goes back on the market, then the second buyer comes in and has to wait a fraction of the time because most of the work and wait time has been done.

Keep in mind - and this is very important - not all short sales will be successful, for various reasons a fair amount of short sales end up in foreclosure although there is a valid offer on the table. For this reason, do not start believing that it is a slam dunk and the home will ultimately be yours. I have experienced an approved short sale with only two days prior to foreclosure which gives no time to close and the lender ends up foreclosing.

The foreclosure department and the short sale department do not communicate well with time frames and many times this ends up hurting both the buyer and the seller.

Nancy Niblett is a highly successful Real Estate Agent specializing in the Chandler area. She credits her success to hard work, integrity and honesty. Clients continue to refer her over and over again. Nancy is one of the most successful award-winning agents and currently with West USA Revelation. She was awarded the Top 50 Individual Agents by Phoenix Business Journal and continues to be on top of all market conditions.

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