Largo Di--you are correct to be wary of the short-sale lender's situation concerning title. You need to know everything about the situation on the seller's side before obligating yourself in this short sale, because the bank will always keep the control.
There have been situations that buyers have gotten into where they have purchased a home as a short sale, and received foreclosure documents AFTER the contract was closed, so yes, do be cautious and know exactly what you're getting into.
I do believe, however, that your title insurance policy should protect you against these title-clearing conditions, and I have not yet had a short sale delayed by the lender for any reason. I have had several attempted foreclosure purchases fall through for just these reasons. Your own mortgage rate should not be locked until you have fully ratified contract, and it's generally good for at least 60 days, which more than covers most delays.

When the lender approves a short sale, they should give the correct amount of time required to close the contract--if they do not close at that time, my best advice is to move on, unless they can give some very specific reasons for the delay!

Froma lender stand point, we can have everything ready on our end but the seller might want additional time to review the HUD or terms and make additional requests. We have closed over 100 Short Sales thsi year alone and I have not had a problem with anything unreasonable. We have had to extend the rate but i will talk to the seller's realtor and ask them to pay for teh extension fee if the delay is on their end.

We are very familiar with how these transactions proceed and I would lkie to help. Please call or email me
727-331-8400 or akashella@TLTLoans.com

Largo,

Yes, the seller's lender is calling all of the shots, and even though the homeowner's financial doucments may have been submitted initially, these days lenders are looking for updated bank statements, etc. from the seller right before close. They want to ensure that a hardship still exists before putting a final approval on a sale. So make sure that your agent is working with the listing agent to ensure this happens in a timely manner.

Also, be ready to close quickly once you get the approval date. If you're able to actually get an approval on a short sale, this is not the time to worry about a few tenths of a percentage on an interest rate. Keep in mind you're making a long-term investment now at probably the most opportune time in history. Good luck!

Kind Regards,

Julia

Julia & Matt Fishel
Suncoast Partners
Keller Williams Realty
Clearwater, FL

(727)366-0324

Largo:

When it comes to short sales, nothing is a certainty. That is why you are able to get such a good deal. Expect delays, expect your rate lock to expire. Expect the worst and hope for the best. 80% of short sales end in foreclosure-not a successful closing. I would say a minimum timeframe for approval is 60 days, maybe longer.

I personally bid on a short sale investment property. I offered $79,900 which was the advertised short sale price. The lender did not accept any of the 4 offers on the table, foreclosed on the property and sold it three months later for $53,000. In many cases there is no incentive for the lender to approve a short sale. I have also been involved in a transaction where my buyers bid on a short sale home and were waiting for the approval of the lender (for two months) to get a no answer that ended in foreclosure for the seller.

Best advice-Continue looking for other homes until a closing date is actually scheduled with your title company.

Largo,
From what I have seen, when the banks finally do give a date, they usually stick with it. Typically if there are delays its on the buyers end.

Good luck!

Some lenders will extend within reason and some might not... Some might charge the buyer a fee for closing late called a "per dium fee"... You want to try to avoid closing late if possible because it adds stress for everyone.
While you are waiting for the approval make sure to have your loan officer working on your loan and file so that it is ready to go once the short sale is approved. Make sure your loan officer has all the financial documents they need and keep updated copies of your paystubs/bank statements ready. Also let your loan officer know that you are purchasing a short sale and you will likely have to close in 3o days or less once you get the approval. Ask the loan officer how long it will likely take him/her to do the loan and what else you can do to help speed things along. Once you have the approval make sure the lender orders the appraisal right away.... Good luck!

Generally once you recieve your demand letter from the bank they are done. They will not request to extend the closing date, as long as your lender is ready to go you will close on time. Make sure your financial ducks are in a row so your ready to go as soon as you have bank approval.