There are many different opinions on how to do a short sale.
Some people say they take an average of 90-180 days....some took 8 months and some have close in 50 days. I have been lucky to have closed my most recent one about 4 months ago in 47 days! WOW!
It really all depends on the lender....how many mortgages the borrower has....are they two different banks or are they the same bank and the buyer is approved by the same lender...how upside down they are and of course the worst part is having to call them once a week just to see if they lost the 50 pages of paperwork you sent them. But it really all depends on the situation so anything is possible in a short sale.
You might even get a person who just got back from a relaxing vacation and decided to make it easier on the borrower because they were in a good mood. Who really knows. I would love to interview someone in the loss mitigation department just to get a day in the life of story...that would be interesting to hear what they have to say.
No matter how you slice it there will always be different views regarding the process...the success rate and how long the dilemma will last before the banks give you some answers.
I bet if you asked most Realtors® that are still in the business today if they've ever completed or even attempted a short sale...most will tell you they've experienced it one way or another. Some will tell you that their clients weren't patient enough to wait it out and end up moving on to something else and even might switch agents in hopes of finding an easier deal to do. Then there are the ones who have successfully closed on some without too many issues.
Most of the issues come up early on during the process. Even though the listing agent is required to disclose the short sale process in the remarks section in the MLS.
MOST REALTORS® DO NOT READ! And that is why most deals fail.
When I list a property as a short sale I usually speak to the agent just to make sure we are on the same page. Most of them like to brag how they know it all yet their clients back out too early because they don't disclose the basic process to them so they never make it past the first 30 days and most of these deals die within the first 30 days. I have been very lucky to have been able to successfully close them with and without an attorney.
I remember back in 2002 when I had this client who listed their property with me....not knowing they were going to be up side down when they sold. I didn't even know what a short sale was. I would always have closings where the clients were receiving money and now I was faced with my first one where they were going to have to bring it. This situation was long ago so I didn't even know what in the word a short sale was back then and I bet you if you ask the same agents now .....most wouldn't have known what one was either. I had no idea of the process. Short sales weren't as popular back then as they were in the 1980's.
Well today they are just part of the wonderful world of the Real Estate Transaction.
Now back to the general process. I'm not going to go far into detail on how to fill out the paperwork so I'd rather skip that part since there have been many other articles written on it. This post is more tailored to the anguish of waiting for the unknown.
Normally you can kiss the first 30 days away. That is the time the banks require to hire the negotiator. Luckily I just got a negotiator on one that was submitted about 25 day so I just saved the clients 5 extra days of anguish. Since there was a call put into the bank they were kind enough to inform us that there was a negotiator assigned and we even got a name!
The next step will be when the negotiator contacts us. We can only find out the status by calling someone in loss mitigation but one the negotiator contacts us they will then do their initial BPO (Brokers Price Opinion) on the subject property. Once we establish who the point people are then I will gather all of my comps and wait to meet the appraiser at the property. Yes..you heard that right...I WILL MEET THEM AT THE PROPERTY! I will then volunteer all the data I pulled to help support the purchase price as well as being able to justify that I have tried to get the lender back as much of the value as I can for the property.
I will then go over the condition of the property as well as explain the current market conditions of the neighborhood. In this particular neighborhood there is a very high ration of short sales and or foreclosures so I have to be able to give them as much knowledge of the neighborhood to justify the value. I'll also explain how i came to the price. How many times it has been reduced due to no activity and I'll tell them the price was only reduced to stimulate activity.
If the BPO does not come in your favor there is a 50/50 chance that your deal will die!!
The BPO is in so now the lender will:
Ok so now you have your approval! You're almost at the end of the road but there are a couple of my tasks you need to complete.
The approval letter will give you all the conditions:
The net amount to them
The commission that will be paid.
Closing date not to exceed X date
Seller to receive $0
Whether on not they are allowing you to pay the 2nd mortgage
If they want the seller to sign a Promissory note.
If they will issue a deficiency judgment.
How it will be reported on the sellers credit report.
Anything you can do to help the cause. Don't be lazy and sit back and just hope that it will all work out. You might as well go for it full force since you spend all this time trying to make these difficult deals successful.