What is a Short Sale?
When a house has been foreclosed upon due to a bankruptcy, etc., the lender
is willing to sell at a discounted price to release the mortgage. This
is a short sell. Here are some key points to keep in mind before making
an offer on a foreclosed home. While it may seem like a bargain on the
surface, a short sale can test your patience to the nth degree.
Patience is a virtue
There is no question about it: short sales are an arduous process and can take a
very long time. Waiting out the approval process can be daunting, even discouraging.
However, if you are trying to take advantage of an opportunity such as
a short sale, perhaps saving you thousands of dollars, your patience will pay off.
Neither threatens of cancellation, the property's location, condition,
its location, nor any other urgency mean anything to the lender. Your
best chances are to be patient and wait if you truly want the home.
How long should you wait?
It all depends on whether the listing agent has done their homework as
well as the lender. Many listing agents prefer to source out their short
sale negotiations to a third party, thereby delaying the process further.
The wait time may can anywhere from 24 hours and up to 30 days, depending
on how busy they are with submissions.
But, you are not entirely at their mercy - here are a few things you and
your agent can look into that may hasten the process.
Some factors that may cause additional delays:
- Additional levels of approval may be required
FHA short sales through HUD are typically
- Something was omitted from the short sale package, such as mortgage insurance
- If it has been <120 days, ask your agent to contact the listing agent
or third-party negotiator - call the lender to see if they have received
the package. This may take you over an hour to get an answer
- Lengthy short sale approval periods can also be due to short-staffing or
that tracking issues at the lender's office, requiring the listing
agent to submit the short-sale package multiple times
- If the appraisal came back higher than your offer, the listing agent is
building may be trying to get approval for a new appraiser.
How the Short Sale process works - from submission to approval
- Lender acknowledges receipt of an offer -10 to 30 days
- The lender calls for an appraisal - 14-60 days after receipt
- The file is reviewed - 2-10 business days after the appraisal
- A negotiator is assigned - 2 to 10 business days
- The file is approved or rejected - 30 to 120 days
The first buyer may have withdrawn their offer; the whole process starts
over with the 2nd offer
Do your Due Diligence
You will need a Buyer's Agent - ask them to look into similar sales. While the lender may be willing
to negotiate to some degree, the offer needs to be both reasonable and
close to market value in order to be considered/accepted. Have your agent
look into other listings by the short sale agent as well as their experience
- lack of either or both will hinder a closing.
Should you hire a short sale attorney? When it comes to
short sales, a good short sale lawyer cannot only negotiate the sale but they
you legal advice about the transaction - this is something your real estate
agent cannot do. The attorneys at
the Law Offices of James C. Shields can assist you to handle the process expeditiously
Ask how many other offers have been submitted. The listing agent does not have to disclose the offers, but they can tell
you how many other offers have been submitted ahead of yours if any.
It is not uncommon to offer more than asking price if there are several offers on the table; it just depends on how committed
you are to purchasing that property
Is the listing agent's short sale package complete? If the required paperwork is incomplete, the short sale package will not
be processed - rest assured that the
attorneys at James C Shields will have all this information
How many mortgages secure the property? Your agent can provide this information
Unfortunately, you can't always avoid problems on a short sale. Whether
you are buying or selling a short sale home,
call the Law Offices of James C. Shields for expert handling of the purchase or sale, alleviating undue stress.
There is no substitution for an experienced tough-as-nails, attorney -
one who knows exactly what to say and do to get the lenders to cooperate.