How long will my short sale take?
While all short sales are different, there are some general timelines I give folks when asked. Now mind you, I have had short sales approved in 10 days, and I have had short sales that took over a year to have approved, but most traditional short sales ( EXLUDING HAFA ) will usually fall into these general time frames:
SHORT SALE APPROVAL TIMELINE
Before your lender will consider the short sale, the property will need to be marketed and a buyer secured. Pricing and marketing should be aggressive, and I generally recommend price reductions every 2-3 weeks depending on property activity. The timeline to secure a buyer will have the most variation depending on market conditions and price. AFTER the buyer is secured, the average short sale approval time in my experience is about 4-7 weeks. After approval, the sale will still need to close. Below are the average general timelines to expect:
1-3 WEEKS: DOCUMENT COLLECTION
Once a buyer is secured the short sale approval process will begin. Your lender will want you to “qualify” for the short sale. You will receive a list of documentation your lender will require as part of the approval process. It is best to have all this documentation ready up-front to prevent any delays. All the documentation will go to your lender along with the ratified purchase contract, estimated HUD and other Realtor provided documentation (listing agreement, listing history, etc). The documentation will be reviewed by the lender.
1-3 WEEKS: PROPERTY VALUATION
After ALL your paperwork has been received and reviewed, the next event that will take place will be an evaluation of your property by the lender. Your lender will want to get a grip on the value of your home and will order either an appraisal or BPO (Broker’s Price Opinion) from a local real estate agent or appraiser. This valuation will be scheduled, performed and the results will be sent to the lender.
2-4 WEEKS: NEGOTIATIONS AND INVESTOR APPROVAL
Once this value has been received by the lender, the purchase contract will be weighed against it. The lender will accept, reject or counter the contract. Your lender will determine their “acceptable” fees and timelines. These fees will very often need to be negotiated several times in order to get the net proceeds of the sale to an acceptable level. The terms of the approval letter will be dissected and sometimes renegotiated. Once acceptable terms for all parties have been reached, the investor on your loan will also need to sign off on the approval.
4-6 WEEKS: APPROVAL TO CLOSE
Once the approval letter has been issued, your sale will move forward as any other. The buyer will need to wrap up their loan, do any inspections or appraisals (if not already performed) and the lawyers will schedule a closing. There will always be a limited time frame associated with the short sale approval letter so all parties will want to be prepared to move as quickly as possible to close.
EXCEPTIONS TO THE TIMELINES
MULTIPLE LIENHOLDERS: ADDITIONAL 1-4 WEEKS PER LIEN
If there are junior lien holders ( second mortgages, other liens), all liens will have to be negotiated and all lien holders will have to be in agreement with each other in order to get the sale to happen. This requires extra time.
LOST BUYER: ADDITIONAL 2-4 WEEKS
Unfortunately buyers do not always perform as expected. If a buyer is lost through the process, a new buyer will have to be found. This will also require additional time, but is not necessarily an entire new approval as seller documentation will have already been processed and the valuation will have been performed.
INACCURATE BPO OR APPRAISAL: ADDITIONAL 2-12 WEEKS
Once in awhile a BPO/Appraisal does not go as expected and needs to be disputed. This can take as little as 2 weeks, or some lenders will require the old BPO to expire, before considering a new one. Most BPO’s expire in 3 months.
SHORT SALE REJECTION: ADDITIONAL 4-12 WEEKS
Once in awhile a short sale is rejected. Usually the issue is one that is able to be overcome, however this generally requires an entire new short sale approval from the very beginning.