I am going to assume you are talking about "short sales" in which case they are many times anything but short. As for paying cash, unfortunately that will really not speed things up very much when it comes to the negotiating of the short sale. The bank will be reviewing the SELLERS financial situation as well as the "fair market value" of the home to ensure they are not losing a significant amount of money based on today's values (not the loan value). There are also other factors that will help to determine the speed at which a short sale is processed (i.e. FHA loan, Fannie Mae Loan, Bankruptcy, if seller is in default or not, how many loans or involved, homeowner's associations fees in arrears, PMI company involved, experience of listing agent, attorneys involved, which lender is processing the short sale).
As you can see there are a lot of factors and as a buyer you are most times in the dark while the short sale is processing. For that reason when buying a short sale it is IMPERATIVE that you have a Buyer's Agent and an Attorney working with you who are extremely knowledgeable on short sales as well as with the ways to protect you while the short sale is being negotiated. I am a CDPE (Certified Distressed Property Expert) and together with my team I have successfully closed over 37 short sales over the past few years alone. Not only can I advise you during a short sale, but I can also advise you ahead of time on which short sales you may want to avoid. Feel free to call me or e-mail me if you would like to speak further.
"THE OCEAN'S SIX GROUP"
ReMax Real Estate LTD.
NJAR Circle of Excellence Award Winner '06-'08
The short refers to the fact that the seller owes more money than they can sell the house for, therefore the payoff to the bank on closing will be "short" funds.
Briefly the process goes as follows:
1) the seller (or their agent) sends the bank a signed contract of sale and tons of paperwork, including a letter from the seller requesting approval of a short sale and the reason why the seller is requesting one (called a hardship letter)
2) bank reviews the contract and paperwork. They sends someone out to do what's called a BPO (broker price opinion) to determine the actual fair market value of the house. WIthout a good agent on the sellers side prodding the bank, this can take months. The bank eventually reviews the BPO and then will either accept, reject or counter-offer the offer price. Again, without constant contact with the bank this can take time too.
3) Once the sales price/contract is approved, typically the bank gives the buyers 45 days from approval to close the house.
Cash deals can close faster because there is no need to obtain a mortgage, but the bank will not accept a sale contingency (i.e.: you need to sell your house to use the proceded to buy a short sale house)
Bear in mind that a short sale is usually an as is sale, so it's on the buyer to pay for an inspection, but don't expect the bank or the seller to do any major repairs.
A conventional sale can occur in perhaps 7 business days (the quickest I've heard of is 4 days).
Hope that helps.