Profile picture for JPyszChicago

Why are short sales taking so long?

It`s really aggravating that a short sale approval process takes so long. Supposedly the banks are to answer within 30 days, are they doing this? I hardly see that happen. It would make every bodies live so much easier, the market would have start living again. Most of what is on MLS are short sales! What is your experience with lenders? Question is to listing agents mostly....Thanks.
  • October 20 2012 - Chicago
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Answers (17)

Profile picture for Matt Laricy
Ya well the government says they should be quick, but the government promises a lot of things. It depends on the bank, how quick the seller is at getting the material to you, etc. Each one is relative to the situation. I have closed some in 60 days and some in 6 months.
  • October 20 2012
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Profile picture for Cindy Quinton
I am a relatively new agent, and my only experience with short sales has been from the buy side. No, the banks are not answering in 30 days. And, here at least, the banks will only accept traditional market value. So, it doesn't seem as if the buyer gets much return for the additional time and distress that comes with buying a short sale. 

I am also seeing a lot of short sale practices that seem suspect.There are brokerage/agents renting out empty houses, Ones that refuse to take additional offers to the bank because they already have an investor who buys ALL of their short sales, and then turns around and resales at a profit to the interested parties (usually the day it closes the first time). It just feels like an area wrought with shadiness, if not outright fraud, and very little to offer buyers unless they simply love the home.
  • October 20 2012
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I have sold many short sales, and in the last year--especially--they are going a lot faster. In the past waiting 6-18 months was common...now I find the process taking about 3-4 months if you are aggressively on top of everything. Major pain, but we do it for our client's best interests :)
  • October 20 2012
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Profile picture for AlbertMarin
In California - The reason they take different periods of time to close depends on the investor making the decision on approving the short sale.  Most banks are just servicing the loans and very rarely own the loan themselves.  Therefore, the bank has to present a BPO (Brokers Price Opinion) with the full package (not an incomplete package that some agents piece together) over to the investor(s) to make a decision.  Sometimes there is not one investor on the same loan, there could be multiple investors that have to approve the short sale.  The best a listing agent can do to move the process along is to make sure their package is complete, include a BPO theirselves, and have a solid buyer that will close as soon as possible after the short sale is approved.  Right now a standard sale closes usually a little more that 30 days so expect an easy flowing short sale to close in about 40 days and the rest 40+Days.
  • October 20 2012
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Profile picture for ShaylaTwit
They should be called "long sales."  Nothing 'short' about them.  Unfortunately.  It truly boggles my mind.  You would think that, considering they have a contract, banks would want to jump on them instead of losing money as the properties go into foreclosure.

Good luck with your purchase!  Shayla Twit, Sarasota FL Realtor
  • October 20 2012
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First of all many people do not know exactly what a short sale is. I will answer that first, then I will give you a few tips on how to improve your time line.

What Is a Short Sale?

A Short Sale occurs when the value of the home being sold is less than the amount owed on the outstanding loan(s) and your lender agrees to accept a lower price on your current home than the current mortgage balance. The lender may have certain requirements to meet and you may be required to have a qualified buyer ready to purchase the home and be willing to deal with extended deadlines and additional demands made by your lender..

For example, in 2005 you paid $350,000 for your home and took out a loan for $320,000, but today the home is worth only $275,000. If you must sell the home today the home is only worth what the market is willing to pay. The amount to pay off the loan is still approximately $320,000 minus $275,000 which puts you $45,000 under the payoff amount, not counting any small amount of equity gained during the five years.

Of course, you could wait for the market to improve before you sell your home. Some experts have been estimating the recovery to take 10-20 years to possibly get back to the values of 2005. However, if you must sell your home you do have some options. You could pay the difference to the lender in cash, or you could let the home go into foreclosure. Another option is to pursue a Short Sale.

Ok, now you are pursuing a short sale. I recently helped a friend out with his short sale department at his Title Company . What I learned was that banks are over whelmed with the volume they have on the books. In order to keep the process going smoothly, it is very important that the real estate agent, Title Company, and the home owner keep the entire documents and forms currant. Even when not asked, always send in any new monthly bank statements or earning statements. This includes investments! If any forms are not up-to-date then the process will be slowed down or come to a stop.  Another thing, do not leave anything out, fill in all the blanks on all the forms.  Provide all that you can and all that the lender is requesting.  Their request for information will not go away, it will only prolong the entire process if they do not receive it.  If you need help with the forms ask for help.

If you are a buyer waiting for the process to be completed, you are at the mercy of the listing agent and everyone else that is involved with the process to do all the above. The first thing I would ask the real estate agent, is how far along is the process?  Have a set time line for all parties to have the process completed and ready for closing.  But, don't be in too big of a hurry.  Buyers can get some pretty good deals this way!  Waiting can pay off with big savings in the long run.



  • October 21 2012
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Thanks for letting us know. So, in short, it takes a long time due to factors that includes checking documents of the property, right? As well as gathering other supported information that needs to be updated so the bank can close the process smoothly.
  • October 22 2012
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An Approved Short Sale may give you a response within 30 days. But the short sales have to go through the system (which happens to be extremely slow). To speed up the process you may want to make sure the seller has a short sale agent on board too.

  • October 24 2012
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Profile picture for LonnyMiller
I have 80+ listings for short sale and the average time from offer to close is 4 months. That's long, but not that long. Some take less and some take more, but 4 months is a good barometer. 

Lonny Miller

Realtor @ Charles Rutenberg Realty
[Contact information removed by Zillow moderator]

  • October 26 2012
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I have personally been involved with one short sale that took over 12 months to complete... it can be very time consuming but very rewarding in my opinion...
  • March 27 2013
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Profile picture for Kaye Norenberg
They are getting faster but require a great deal of time on the phone.  Just as important as the Realtor is a Title Company that is experienced in short sales.
  • March 27 2013
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Profile picture for DaisyEdwards
Not all short sales take a long time. You never know what to expect. I think that preplanning on the listing agents part makes a HUGE difference. When I take a short sale listing I have the seller gather ALL of their items (financials, hardship letter, etc) before the property even goes on the market. All of it is sent to the lender. I keep the whole file in a packet ready to send again...and again ...and again if necessary. I call to verify that the lender has received the authorization form to speak with me.  If the sellers is ready, then this saves ALOT of time when an offer is received. In many cases you can request a BPO to be completed on the property.

Short sales are an easy process in my opinion...its just being organized that is the issue. If your file is organized, then resending 'missing' docs is not very time consuming.

This being said, my last short sale took about 3 days after we received an offer. And we were able to close within 2 weeks. Our only delay was waiting for a resale certificate.
  • March 27 2013
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Profile picture for user9639155
A guy in our neighborhood did not like the neighborhood. Inherited some cash when a family member passed, and contracted a new home to be built across town. Made up some BS story to the bank and literally walked away from the property (with the help of a realtor advising him to short sale). This is what is wrong with America....
:(
  • March 28 2013
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The process starts with the timeliness of the Realtor and how much cooperation they are getting from the Seller(s)/Borrower(s) ... then ... has the Realtor hired a third party negotiator to represent on behalf of the Seller(s)/Borrower(s)? ... then ... either the Realtor or the third party negotiator must interface with the Short Sale Negotiator of the Bank ... then ... the Short Sale Negotiator of the Bank must interface with the Bank's Investor who bought the loan ... then it might be necessary to deal with the Private Mortgage Company insurer.

There are many steps and each investor has different requirements of the Bank to service their account. There may be a need to have one or more Opinions of Value conducted which could delay the process.(These could be actual appraisals or BPO's - Broker Pricing Opinion Letters).

A good deal of time can pass before all of this is worked out and there always seems to be an excuse or exemption from the 30 day rule (whether it's true or not - a copy of this, that or the other is missing and has delayed the start of the clock ... hrumph).

Best of Luck to you!
  • March 28 2013
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Because of rising prices, I am seeing more of them fall apart after months of waiting. The lenders get another BPO and decide the price should be higher. Remember that they are the ones doing everyone a favor by reducing what is owed them. I doubt any of us would do that except for family  ;-)
  • March 29 2013
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Lot's a variables at play here.  It may be the bank but it may also be whomever is negotiating the file!
  • April 01 2013
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I see it a lot with who on the selling side is handling the file. If there is an experienced attorney or 3rd party negotiator on the file they tend to move quicker. Unfortunately we are at the mercy of the banks and they can take a  while since they have so many short sales files to get through.
  • April 04 2013
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