A brief overview ~
The Short Sale process is long and tedious, all parties involved really need to be patient. Once a Short Sale offer is submitted on a home, it will take 3 to 4 months to find out if the bank will accept the offer! The listing agent can only "prep" the short sale file while waiting for the offer. There are certain steps to the process that the holding bank will not do until they have an offer in hand..
Once an offer has been rec'd on the home, the bank will request that additional information be sent with the offer - to include:
additional financial information from the seller - monthly budget report, copy of paystubs, copy of tax returns, etc. This info is usually already compiled and ready to go with the offer.
a new market analysis if it has been more than two months since the last one was sent in.
an estimate of closing cost (HUD 1) to include everything the bank must pay at closing - taxes, buyers' closing cost, real estate commissions, HOA dues, etc. This cannot be done prior to getting the offer.
a fully signed purchase & sale contract, to include the Buyer's pre-approval letter from their lender, and a copy of the earnest money check.
a copy of the listing, listing history, and showing report.
Once the bank has received all of the requested documents along with the offer, it is then reviewed by several departments and once it is determined that the short sale might be feasible, an appraisal or BPO is ordered. (BPO= broker's price opinion). Getting the appraisal or BPO ordered is a huge step but this process alone can take 4 to 6 weeks!
Once the appraised value is in the "system" the offer and the appraised value are compared to see if the value is in a negotiable range. If yes, then it goes to an actual negotiator.
The negotiator has to review everything that already has been reviewed and if the negotiator determines that the offer is valid it goes to the next step of being negotiated with the actual owner/investor of the loan. This is really the biggest step towards getting an answer. The length of time for this process is determined by how many files the negotiator is working on! Weeks....
Once a bank approval letter has been issued, the "seller" must then approve the bank's approval - before it can go to the buyer. There is no time for delay in this process. Once the bank approves the offer, they usually request that the loan be closed within 30 days.
The banks:
The length of time it takes to get a bank approval on a short sale offer varies from one listing to the next - and from one bank to the next. Much depends on how delinquent the loan is:
Sellers are not behind on their payments and are still living in the home.
Sellers are behind only a few payments.
Sellers have received a Notice of Delinquency (missed at least 3 payments).
Sellers have received a Notice of Trustee Sale (missed at least 4 usually 5 payments).
If you can imagine that all of the above scenarios are actually stacks of short sale request - the banks work from the "Notice of Trustee Sale" stack first. They receive thousands of short sale request every week, hundreds every day.
Sometimes, if a seller has already tried to do a loan modification but failed, the bank will escalate the short sale.
Another major factor in the short sale process is the bank itself - some banks have a bad reputation for taking a very, very long time. The good news is that two of those slow banks are not around any more.. Washington Mutual and Countrywide!
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Sandy Michaels - Realtor Cell (360) 601-3490 Email sandymichaels@msn.com Realty Pro, Inc 12000 SE Mill Plain Blvd Vancouver, WA. 98684 Office (360)882-7000 ~ Fax (360)254-3330 |
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