Home Buying in Boggy Creek>Question Details

Seadov, Home Buyer in Boggy Creek, Orlando,...

Can someone advise on how long should a buyer wait for approval response from a bank for a short sale offer before withdrawing the offer?

Asked by Seadov, Boggy Creek, Orlando, FL Fri Sep 25, 2009

We made an offer on a short sale home for more than two months ago, the offer was accepted by the home owner two weeks later and since then we've been waiting for the bank approval but no response coming from the bank yet. We are considering withdrawing our offer by the end of the month, by which time it would have been 10 weeks since we originally made the offer. How long does it is take, on average, for banks to approve a short sale deal?

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Mike Luzzo’s answer
Seadov,

You asked:
How long does it is take, on average, for banks to approve a short sale deal?
I recently ran my numbers for a buyer who asked the same question. Currently I have 20 short sale files in mitigation.
Here are the numbers:
33 sold
Shortest 28 days
Longest 592 days
Average 165 days
If you have proper agent representation your agent should be managing YOUR expectations. In other words Seadov, how long do YOU want to stay in contract until YOU are ready to look and purchase somewhere else?
You can only manage what you can manage and control only what you can control.
Good Luck.

Mike Luzzo
1 vote Thank Flag Link Sat Sep 26, 2009
Seadov,

I’ve personally had Short Sales completed in a month to one currently listed now running into its 9th (investor owned with a second, bank just had a BPO performed for the value so something is happening finally) but average time is 3 to 6.

Now there are circumstances that factor into the equation of the Short Sale process:

1) Is there a true hardship, the majority of the time there is but then you do have a small percentage are just running from the negative equality of home value vs current loan or loans?
2) Which brings me to the next factor which is a biggie, the dreaded 'Second', you know one of those 100% loans (80/20 loan), and is this second loan with a different Bank or investment group?
3) Does the Seller currently live in the property or have they moved out, if they have and changed their mailing address the home is no longer considered their primary residence, some Banks will now place them in the investor category unless a job transfer, medical or military transfer to name a very few reasons for not being in the property comes into play. Now having said that some Real Estate Agents ask the Seller to move out to facilitate cleaning the house and making it easier to show, the Seller keeps his mailing address at the home, because the home is vacant doesn’t change the time factor much just gets quicker offers.
4) Was the value of the home when listed at a market value the Bank will entertain offers at or is it a tad low attracting multiple Buyers and are these being forwarded to the Bank? Once the Seller signs an offer Agents are supposed to pend the home in the MLS with the option of accepting backups. Now this is another biggie, if a Short Sale Addendum to Purchase and Sale Contract is included per your Agent or the Sellers Agent try to negotiate out number 5 dealing with ‘Multiple Offers’.
5) How is offer to buy the property structured?
6) Has the Seller stopped making payments totally? Is there good reason for it? Most Banks will not entertain a Short Sale unless the Seller is past due.
7) Is the listing Agent working the Short Sale directly with a Bank or using an outside negotiation firm?

Now these are just a few off the top there are more factors that can throw blocks along the way adding time or denial of the offer to the process and I can go on.

Personally I don’t use words like ‘Specialist’ or ‘Expert’ in explaining my knowledge and hands on experience helping both buyers and sellers of Short Sales although I have attended over 21 classes and seminars on the subject by some of the best in the industry.

As stated on my website:

'As short sale knowledgeable Realtors® we can guide you through the process quickly, discretely, and effortlessly as you instruct us to. We don’t make any pie in the sky offers we'll leave that to the T.V. infomercials, print ads, internet sites and signs at the corner stoplights that scream promises and innuendos that for a fee they can make it go away'.

Good Luck and I hope this helps,

Broker Dave
Visit my profile located here on Trulia, it’s easy, just mouse over my picture and click.
Web Reference: http://orlandohomestore.com
1 vote Thank Flag Link Sat Sep 26, 2009
Hi Seadov,

I added a new database to my website that helps to answer this question.

Up until about six weeks ago, the average time between a contract and a closing on a short sale was about 60 days. Since the beginning of August it's gone up to over 80 days. Let's say it takes 3 or 4 weeks between approval and closing. That means the average deal is getting approved in about 6 weeks (up from 4 weeks).

The FARBAR short sale addendum containts a number a specific points for your protection. Assuming you used one, what did you fill in for the deadline for approval? If you leave it blank it's 45 days.

Good luck,
Mark LeMenager
Weichert, Realtors -Hallmark Properties
1 vote Thank Flag Link Fri Sep 25, 2009
Seadov

It is 6+months. It COULD vary by bank but I would be very cautious of any agent that over promises. Short sales seem to be getting more complicated instead of easier. I am working on one. The offer was placed in February and we have an approval for closing Oct 9 AND the bank rep we are talking with says she was handling over 200 files and they just gave her 200 more to work on.

As far as anyone advising you to place multiple offers on numerous bank short sales, keep this in mind....if you had $5000 in a checking account and you wrote a check for $5000 to rent, $5000 for a car, $5000 to your cousin, $5000 to a bill AND they all cashed their checks at the same time. Did you overdraw your account? Same concept for multiple offers on short sales. You are signing a contract to buy a home. Yes it is contingent on bank approval but IF the banks all approved you, you had better be prepared to purchase the home. Best advise is one at time, make sure you have a 45 day cancel so you can move on if you want and be ready to wait and wait. They are complicated to close too.

I hope this helps. If I can assist you in anyway please use the contact information to locate me.

Regards,
Gay Middleton
Realtor*Moving you in the Right Direction
gaymiddleton@orlandohomeresales.com
Web Reference: http://www.gaymiddleton.com
0 votes Thank Flag Link Fri Sep 25, 2009
Bad news, Seadov. Many short sales take 6-8 months. Some take over a year. If you were expecting that the bank would act in 6-8 weeks (considering that it took the homeowner two weeks to accept the offer), then you may have been given a faulty picture of short sales. Sure, sometimes banks respond in a few weeks. However, that's far from the norm. Unless a buyer is willing to wait for at least 3-4 months (and even then perhaps not get an answer), the buyer shouldn't be attempting to purchase a short sale.

If the property you made an offer on is your dream home...if you know there's nothing else out there that would make you happy...then stick with the short sale. However, if there are other properties out there--especially ones that aren't short sales (even foreclosures tend to move quicker)--then withdraw your offer and look for another property.

On top of that, if you're qualified for the first-time homebuyer tax credit, you really ought to consider finding a house you can close on by the end of November. There's no assurance the tax credit will be extended, or that it will continue in its present form.

Hope that helps.
0 votes Thank Flag Link Fri Sep 25, 2009
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Hello Seadov,

I can understand your frustration at this time when it comes to Short Sales. The banks are so backed up with files that some of these are taking as long as 6+ months to complete. If you are working with a seasoned professional who knows the process with the banks, then you are probably in good hands and it is being delayed for specific reasons that can be explained to you. Every deal is a different deal when it comes to Real Estate and it is so true when it comes to the Short Sale process. Everyone selling Short Sale properties wants to say they are an expert in this field and that is far from the truth because of the Banks specific guidelines. BOA is one of the tough ones right now because they took over the Countrywide problems.
If you should every need any good advise on these tough sales, please keep me in mind. I have been doing
Shorts for over 10 years now and they never come easy.
Take care and good luck to you,

John Forrester-Realtor
Keller Williams Realty
407-741-3258
0 votes Thank Flag Link Fri Sep 25, 2009
I feel your paid most buyers that have good agent put multiple offers on bank owned homes. They arewriting the contracts with the clause, " Deposit due opon exceptance from the seller". That way you can make several offers while the bank decides what they want to do.

Hope that helps.
0 votes Thank Flag Link Fri Sep 25, 2009
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