Hi,

I just asked this question of a mortgage banker here in Florida. His answer was simply that the banking institutions are so overwhelmed by short sale requests and there aren't enough employees to work them. That begs the question: why not hire or transfer staff into those positions? Answer: the banks are not going to hire more people so that they can speed up the process of losing money. Ultimately the lenders slow to react times are driving the end user (non investor) out of the market. When a person needs a primary home to move to, threy often cannot wait the 90 days or longer to solidify the sale and then another 30-60 days to close excrow. So the banks are left with the bottom feeders and they will pay far less than the end user will. Frustrating...right? Its so bad that when I price a listing sharply, my first line in remarks is "THIS IS NOT A SHORT SALE" . If only the banks would cut their losses quickly ...the homes wouldn't sit vacant, depreciating daily from lack of maintenance and REAL buyers could participate and get this homes and communities back on track.

Good answers below ---- from a mortgage brokers standpoint - banks do not want to own houses but they are in the business of lending money. Most of the REO's ( short sales and forclosures ) involve banks that own mortgage companies. They want the business and when they don't get it, they turn it over to there asset management departments to handle the transactions. Typically, bank owned title companies are involved as well. From my experience, the level of support at both the asset manangment department and the title companies that are either owned or have some type of CBA, is horrendous!

Great deals are to be had when purchasing these properties. Be patient and understand up front this is a frustrating process and you should come out fine.

Are you asking from the time you make the offer, from the time the seller accepts, or the bank approves? Once the bank approves, a closing can move quickly. Once the bank approves, delays may still occur, depending upon the property and it's condition. There can be clouds on a title, for one example.

The time period that it takes to get bank approval once a seller signs can be days, weeks, or never. There isn’t a rhyme or reason or a way to predict.

Your buyer agent should ask the sellers agent if the bank is aware, or has approved a short sale for the property.

If ONLY it was 6-8 weeks. We were discussing at my office that it is taking closer to 90 days. Plain and simple - the system is broken. Lenders are overwhelmed with requests. Understand that while you may only see a small number of Short Sales or Forclosures in your area; there are MANY MANY more in other parts of the country. Large banks are dealing with these all over; not just in Maryland or DC.

While I do not have any hard statistics; from best I can tell by talking with other agents is that about 1 in 10 actually close as short sales. The rest end up going into foreclosure and being sold then.

Tina,
I wrote a blog piece about the Anatomy of a short sale. I think the sheer complexity, number of moving pieces and the proper participation by all parties is why it takes so long. I've been waiting 10 months on one that I expect to close in January. My longest one took 18 months. 95% of the waiting, if everyone does their job right is waiting for the lender to look at it. Things are improving but don't believe any promises that aren't in writing, and only half believe those.

I'm not sure that this actually answers any questions, but I am recently in contract with the sellers... I can always back out if I find something better...But the home I found is FANTASTIC in every way!! It's recently been refurbished (6 yrs ago)... I have seen so many other places and as a future home owner, I hope that I'd be ale to recognize a good deal from a bad one!!.... I got this pace on the low-ball price and I'm sure that the banks are gonna want to Charge me more!! Boooo... So how long do your think I'll have to wait for their true decision? 12/23/11
http://www.facebook.com/heatherjean.smith?ref=tn_tnmn

BoA gave us a closing date today! April 25. The negotiator that we are dealing with works for countrywide. I thought that they were the same but apparently they still get two different paychecks. He said that we can maybe get an earlier closing date if we want.
We were at the 8 week point today!
The negotiator said that though we have a closing date to not hold our breath because there are no rules in a short sale.
He said that even though BoA gave a short sale we still have no contract with the seller and BoA STILL has not provided us with written approval!
Is this usual? How do we get an earlier closing???

Thank you for all the comments. The short sale process is very frustrating. We are not represented by a 3rd party negotiator. We are represented by the listing agent. Our agent (not the listing agent) is not very informative....and to make matters worse, she is positive one day, and negative the next. Our agent has forbid us from speaking to the listing agent...claiming it is unethical.

Our offer was submitted mid December. Everything moved very fast until the past month. I have no idea what the hold up could be. Sometimes I wonder if it is being held up by the agents commission negotiation! Who knows!?

Honestly, I need a glimmer of hope. This ride is not fun!

Hi Tina: Short sales used to take forever.

However, as per new federal guidelines on short sales, the process should start to improve this year.

April 5th is when the new guidelines take effect, and the banks involved have to be participating in the program, along with the home owner having a "legitimate hardship".

Hope this helps,

Johnny Yankoviak
Weichert Realtors
Gainesville, VA

Rachel,
I would definitely tell your agent to tell the listing agent that you are considering "walking away." I bet you will get things moving much faster if the seller knows this. I'm not sure but I think that if they keep calling things will start moving along.
Do you have an attorney??

If the seller hasn't signed on the terms the bank is proposing that could stall things as they counter back and forth. The goal of a short sale from the seller's point of view is to save their credit from a foreclosure, and, in most cases to have the defeciency waved without the bank pursuing them later for it.

If the seller has signed the offer, it is strange that you don't have the written within a month. Sheesh, nothing surprises me anymore. Is there a 3rd party negotiator involved or is the listing agent the negotiator?

You are right...Wells has a reputation for being an easy bank to work with. I am not sure if the seller has physically signed the offer. We are truly on the final step! All addendums have been signed along the way, and Wells asked us for an updated pre approval and proof of funds a month ago. According to my agent...all we need is the written contract. I don't know what the hold up is. The agent and the seller are calling Wells daily...only to be told that they are "working on it!"

Rachel,

Wells is one of the easier banks to work with. Are you sure the verbal communication wasn't just a confirmation that the bank had recieved the offer?

Has the seller already signed the offer too? A lot of times, the seller is advised "not to sign" until after they have gotten a chance to review the banks terms when a offer has been accepted by the bank.

I am fully aware that short sales can take months. The sale has already gone through the entire approval process. Verbal approval was given over a month ago. We are just waiting for the written contract.

I was wondering how long a bank...specifically Wells...takes to provide the written contract.

Tina,

I haven't read the below comments. Generally speaking though 6-8 weeks is quick for a short sale. I hear and see transactions that can take 6-8 months from start to finish. The wait is due to the banks length of time to review the offer and accept or not accept it. They go through the seller's packet of information, verify the hardship (reason for doing a short sale). Send out someone to do a BPO (Broker's Price Opinion) to verify if the offer is reasonable. Then make a decision. Based on the bank they all have their own time frame. Each on is different, some better, some worse.

We have been waiting for a written contract for more than a month since Wells Fargo approved our offer. The seller and the realtor are calling Wells daily. Wells says they are "working on it"

How long does it typically take Wells to provide the written contract once all of the parties involved are in agreement?

We are ready to walk!

Anyone had experience on Chase after their verbal approval, how long will it take to get it in writing??

First time homebuyer,
Tell me about it! Ten days feels like forever when you're waiting!!! Like I said earlier we did get that accidental call from the bank to my mortgage broker so that helped break up the time. I can't wait for a closing date!!!

Vicbabs, March 3rd you got the verbal approval. It has been 10 days now, the same as my situation, I still haven't receved the written agreement after 10 days of verbal approval from Chase/Wamu.......my god...10 days feels like 10 years.

"""Garfield....Let me know if you get a response! I have the exact same question!
We received a verbal approval. Now the seller is waiting for an approval letter.
I was told that once the seller gets this letter then we go into contract.
Do you know what bank you are working with? We are dealing with Bank of America."""


Vicbabs, I am having the same situation too, but the bank which is Chase gave a verbal
approval 10 days agoand still haven't receieved the written approval.. when is BoA gave
you the verbal approval?

Tina: The short sale process takes such a long time due the the overwhelming number of Short Sales that banks have to process. Banks were never intended to be owners of Real Estate. They were set up to be lenders. Our current Real Estate Market is very unstable and there are no quick fixes.

Some short sales can take 6 months...be patient.

Good luck, Vicbabs. Hope all works out for you.
I also have an offer (proof of funds, preapproval, everything) with BofA for 3 weeks now, but haven't heard anything yet. Hope we'll hear soon.

Tina
You will be lucky is it is only 6 - 8 weeks. I would say average is 4 months, can go much longer, can go shorter but generally not by much.

As to why... we all wonder that. I do know they were not prepared to deal with this situation but they have had enough time to get it in order.

Good Luck!!!

Sara,
We first put in our offer with a full price agreement and also showed that we are qualified for a mortgage.

This price agreement was faxed over on January 22.
Just TEN days later we were notified that the bank was going to order a BPO.
This probably has taken the longest. About 3 weeks later we were notified that the BPO was going to be conducted that day.(February 20th)
About 10 days after the BPO was conducted on March 3rd we got word on the verbal approval.
-Now just waiting for the seller to receive a written letter.

So far we have been very fortunate. I am keeping positive and praying nothing turns for the worst.

The bank neg. accidentally called my mortgage broker on Friday. While she was on the phone she had asked what was going on with the process. He stated that we're moving along and should be in contract NEXT WEEK!

I hope this holds true!

Vicbabs,
How long did it take from the time you put the offer to the time you got the verbal approval? Thanks.

It could be longer than that if things go wrong. Consider the question asked below.

Q. Put in a full price offer on short sale last May.Just heard bank said offer was too low. Can they do this after 10 mos. of stalling? Any options?
http://www.trulia.com/voices/Home_Buying/Q_Put_in_a_full_pri…

Some banks are just very understaffed for short sales.

Garfield....Let me know if you get a response! I have the exact same question! We received a verbal approval. Now the seller is waiting for an approval letter. I was told that once the seller gets this letter then we go into contract. Do you know what bank you are working with? We are dealing with Bank of America.

I have a question, I put an offer in for a property which is a short sale. My offer was accepted after 1 week. The bank signed back on Feb 5. How long is it going to take to close?
Also wanted to add that the property had 2 morgages, which 1st one is done and the 2nd one is at the final stage. Thanks!

I've worked with two buyers on short sales within the past year. Both took about six months to close, but both closed. The time it takes for a short sale transaction to close is dependent on many factors. In one case, the seller declared bankruptcy during the process and we had to wait until the court released the property for sale. In the other case, there were several lenders and it took them a while to agree, plus one of the lenders was a national company with thousands of short sales on their books.

If you are interested in making an offer on a short sale, make the decision early as to how long you will wait. If it's the house of your dreams and you're getting a good deal, hang in there. If it's an investment and you have other opportunities, move on. Either way, work with a Realtor who has experience in short sales and the patience to work through the process with you.

A lot depends on the mortgage company or bank you are dealing with - the absolute worst has to be Bank of America, which we just closed one this week that took 7 months!!! I have another case with them that they have let 4 buyers walk because it took so long - and we have #5 in the hopper now - the negotiator just told me its going to be another 3 weeks for the investor to make a decision. I believe they have to contact the mortgage insurance company to see how much they are going to pay IF they accept the offer - that is where the big hold up is today - the MIP companies are paying out huge sums and may be approaching the end of their funds - and they used to be so profitable!
Now many of the B of A short sales are going llthrough another company, one that I have been doing business with for a long time, and I am sure they will do a much better job! Our company handles many of the B of A REO properties, and we heard that the bank just laid off 600 employees - we are not sure in what department, but we think its probably in the short sale division, since they have hired this independent company to do their short sales.
Banks are in business to lend money, they are not Realtors, but have been forced to be in our business to market all their foreclosures - its a shame they did not do more modifications - but they bombed on that too! I worked with 109 families in the area, applying for loan modifications, and less than 10% ever got approved!\, and with making their three new payment amounts, they are still not sure if they are going to be approved for the modifications or not - and no one with the bank can answer except, "we are studying the case". It s real mess - if the Feds wanted to fire up the economy, doing something here would be a great start!

Hope my explanation helps!

Bill Wootan - Team One Leader
Century 21 H T Brown Realty

Do banks prioritize by home price (as they should, since they have more exposure on higher priced properties or at least those with high loan amounts than with lower priced properties/loan amounts) - in other words, do things move any faster on an $800K property vs a $200K one?

Any change in trends since this thread was asked and answered a year and a half ago?

Thanks.