why short sale take so long to close?

  • November 09 2013 - New City
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Answers (10)

As the banks have had more experience with short sales, many have streamlined the process. You should have an attorney who is experienced in short sales, and will help guide you through the process. Good luck with your transaction!
  • May 20 2014
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Hi,

There is nothing short about a short sale! Once you submit an offer the process starts. The banks are very slow and have yet to get on board and organized with the process. The offer moves through many different departments and many different peoples hands and that in itself takes a lot of time. Then, the investors decide if the #'s will work to get them the net they require. The key with a short sale is to be patient.
  • November 12 2013
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It usually have to do with the bank and their approval process.
  • November 12 2013
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Evidently "Good Neighbor Policy" means "Don't link to a site that has better and more relevant information than Zillow"  I guess I am a bad neighbor.
  • November 12 2013
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How long have you been waiting for your short sale to close?
Did your agent or the listing agent let you know when the short sale package was ready to be presented to the bank?
Once the contract has been accepted by the owner of the property, the short sale package is then put together, this can sometimes take its time depending on how organized and co-operative the seller is as it requires a LOT of seller personal info.
Once the short sale package has been submitted to the bank, its in their hands and needs to be approved by the short sale department.  I think I have been fairly lucky with short sales in the past as I have always had a reply from the bank within 2-3 months of inputting the package.  Once approved it would then take at least another 30 - 60 days to close (In General),
Hope this is of some help.
  • November 11 2013
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If there is a second lien on the property, it is often the second lien holder that holds up acceptance, as the second lien holder often gets "nothing" in a short sale.

Then there is that whole process of trying to determine what the lender would get if they did a foreclosure instead, and how long that would take, and how much that would cost the lender.

And as everyone knows, there is no exact "science" for estimating "present market value".  Many times, Realtor CMA's and Broker BPO's are "off" by more than 25%.  Machine AVM's are not any better, regardless if bank-owned in-house, pay for service from one of the major AVM providers, or one of the numerous "free" ones.  If a buyer overpaid for a house due to "bubble market conditions", there is no simple method to determine what is presently a "fair" price.

Besides, if it is a "fair" price, but the seller is making their contractual payments, why take a "loss" when one is being paid the full loan amount?

A short sale is not going to occur unless the lender thinks they will lose more by "having" to do a "foreclosure" to collect on the debt.  And if one is behind on the payments?  Might as well collect as much as possible from the borrower, then let it go to foreclosure.  Typically it is different departments in the lending institution working on both processes simultaneously.


Foreclosures are "the law" and a great thing for the lenders.  "Short sales" are only a "option" at the discretion of the lenders.  Any Realtor that promises you a short sale is lying to you.
  • November 11 2013
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Banks are the cause of the delay on short sales.  When purchasing a home that is a short sale, the lender has to approve the sale price, which means that the offer goes and sits on someones desk until the bank review board meets, which could be weekly, biweekly, or even monthly.  When it is reviewed, then the party that holds the note for the mortgage is reviewed to see if in fact their needs have changed to allow the short sale to go through.  In my opinion, you will find a home with an approved short sale while the home is listed to move much faster than a property that isn't preapproved for a short sale.  As long as you have months to wait, then it isn't too bad!
  • November 11 2013
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I wrote an article on the subject of short sales.  Just click here to read it:
hotlink deleted by Zillow moderator. Please see our Good Neighbor Policy for posting guidelines
  • November 10 2013
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Would be nice if anyone could answer that question.  I've heard of short sales taking two years.  The bank puts the seller through the meat grinder during this process.  They look for some way to deny the seller the short sale by disqualifying them financially.  If the bank thinks the seller has the ability to pay they will not approve the sale.
  • November 10 2013
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Most often than not, banks' approval is the cause of delay. Even if the buyer has made an offer and it has been accepted by the seller, the seller's bank must approve the sale. Banks are losing money in short sale that is why they're not too happy about it.
  • November 10 2013
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