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shortsell- can you offer shortsell with time limit to the bank?

  • January 09 2014 - Lynnwood
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Answers (6)

We generally recommend short sale contingency increments of 120-180 days and expect it could take longer, so be ready to renew for another term if dealing with a slow bank.  They will not respond to any deadlines and march to the beat of their own drum.

My honest advice, make sure the home is a diamond in the ruff, like a rare short sale in Arlington or a trending community in Silver Spring, before you spend too much time and miss out on other regular and bank owned homes priced to sell in the same communities.

If the market is flooded with short sales, in dense cities like Detroit or California, then they may be worth a look.  But in a strong suburban metro market like ours in Fairfax County, VA, just outside of Washington DC, 90% of buyers choose regular and bank sales because short sales don't offer much advantage considering all factors of the contract process.

VA, MD, & DC only

Special invitation:  Buyers make money at settlement up to 2% CASH back - visit Glasshousere.com to learn more.

  • January 09 2014
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Essentially, you can, and should, set a deadline on an offer made on a short sale.  However, in reality, the bank will completely disregard any buyer/seller based deadlines and work at their own pace.

From a buyer perspective, how you structure a short sale offer depends largely on your own circumstances, the property and the nature of the short sale for the seller.  Generally, you'll want to build in opportunities to exit the contract prior to lienholder approval, and even after lienholder approval. This provides a great deal of flexibility, and allows you to pursue the short sale while still enabling you to take advantage of other opportunities as they arise.

Of course, these exit opportunities create undesirable instability for a seller, and we've seen a trend in the past 18 months where many short sale sellers represented by experience professionals are requiring buyers to be more committed to the process.  They require inspections and other contingencies to be done prior to lienholder approval to ensure buyers are committed and help expedite closing once approval is obtained.  While there are risks for buyers with this arrangement, many times they are offset with rewards of a faster process since these transactions are often more organized and the pros have solid contacts with many large lenders.

In the end, short sales are a very complex transaction, and can be extraordinarily frustrating from all sides even when managed well.  The best course of action for both buyer and seller is to work with an experience professional who will take time to learn your goals, provide you options for how to move forward, execute a proven plan and communicate effectively with you along the way.

Going it alone, or with an inexperienced or non-communicative broker can be a real nightmare.
  • January 09 2014
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Hi there,
The short answer is yes.

However, the lien holder will pay absolutely no attention to any time limit you set, and whether you are a buyer or seller will determine the implications of whether or not that is a good strategy (usually not if you are truly committed to the home/process)…but an agent experienced with short sales should be able to walk you through all scenarios to help you determine the best course of action. 

Best of luck!
Ryan Halset
Seattle Area Realtor
  • January 09 2014
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Profile picture for LemkeSoldMyHome
An offer should always have a deadline on it to protect the buyer.  With that being said protecting the buyer is all it really does, because the bank works on their own schedules unfortunately.  With the larger banks buyers should be prepared for 3+ months to get a deal closed.  I would tell you more realistically is 6-12 months.  My last short sale took 11 months to close.  The bank may ask for an addendum to be signed by buyer to extend time frame before they look into it.  I would do 30 days at a time so if buyer would find another home they could walk and get earnest money back.  Good luck!
  • January 09 2014
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In Western Washington the standard short sale addendum does have a time limit.  Buyers will want to make that period shorter (e.g. 60 days) and sellers will want to make it longer (e.g. 120 days).  Then there is also the issue of whether you can back out during that period.  Buyers will want to make it yes, and sellers no.

As to your question though, this is not really a time limit "to the bank."  The bank will likely totally ignore the time limit and just get to it when they get to it.  That's just one of the frustrating parts about short sales.

  • January 09 2014
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Profile picture for JessicaAggson
You can write it in the contract but unfortunately you are at the mercy of the bank. It's whenever they get to that file and have time to work on it. That's why buyers get so frustrated sometimes because the banks can take anywhere from 30 to 120 days to respond to your offer. But if you wait it out you will probably end up with a fantastic price for the home. Good luck to you. I hope this helps.
  • January 09 2014
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