It can take 2-6 months from the time you write an offer until the time the bank responds to hopefully agree. Once that happens the bank ALWAYS demand the closing to occur instantaneously........which is extremely irritating, but seems to be universal. So they almost always say close in 30 days...period!! Of course in this market it is extremely difficult to get a loan commitment and close in that time frame so your attorney will often have to ask for an extension of the closing for a few days or so and while it does not have to be accepted, I have never seen, or heard of, a bank saying no. While these banks are A-holes, they are not that big of one, so it should work out, but a bit of drama seems common.
Properties sell for what properties are worth. With short sales it is easy to get distracted by the list price, but with short sales, the list price is irrelevant in most cases.
If you are looking for an agent, check out the testimonial section on my site.
Americorp Real Estate
Brokers Associate, e-PRO
Every deal is different. Every bank is different. Each lender looks at the facts of the situation and not necessarily the list price. Some listing agents set an unrealistically low listing price to encourage a solid financial offer to present to the bank so they can get a response price from the bank. Then down the road they can market the property at that price if the original buyer doesn't want it at that price calling it a "Preapproved short sale".
There are a lot of agents out there working short sales that don't know what they are doing.
Depending on the situation a deal could close in 30 days but more likely its going to take 90 days or more and if you need to move by a certain date less than 120 days out you are definitely at risk of sleeping on a friend's couch for some time for many deals.
If you have any questions feel free to reach out to me at the any of the communication means below. Best of luck!
Eric Marcus ABR, CPA, CNE, CRS
Your Real Friend in Chicago Real Estate
Eric Marcus Real Estate Group
Best of luck.
Short sale listings that are promoted as preapproved at asking price can be great buys! More banks are doing the BPO distressed appraisals before a contract comes in and telling the listing agent at what price point they will accept the loss on sale and price it right there. This means not very negotiable off of listing price, so come in at or close to asking price on those listings if you like the inside of the home. Plus banks encourage multiple offers when the home is a great deal from the start and priced at distressed BPO level. Have your agent do a buyer CMA and maybe it's OK to go in at asking price if sold comps easily support the asking price.
Even if you make a low offer that is accepted by the seller, there is no reason to think that the bank with 3rd party approval will approve that contract that that lower price once the BPO comes in. As mentioned before, they often counter higher than the signed contract, telling the buyer to pay more if they want the house after waiting two months for a response. That doesn't go over big with the buyer, buyer walks and the home is reactivated back to square one.
Regarding timeline, realistically from start to finish, if all the stars are aligned ... the process takes about 3-6 months on average. When claims are made that a closing can occur within 30 days on a short sale, that only is likely if the property is already short sale APPROVED and the buyer is paying cash.
Bottom line on negotiating short sales? The final sold price is determined by what the BANK wants to NET on the deal. You can submit a low ball offer to see what that number may be, but if it is too low, the bank will reject the offer and not even bother to make a counter offer. However, if your offer is within range, you are likely to get an approval or a counter offer.
So find an agent that you feel comfortable with their knowledge of short sales. Ask a lot of questions.
All the Best,
As far as closing, it could take up to 5-6 months, typically. The key to faster (and that means a few months) is the buyer's offer has to be perfect and sweet for the bank, the seller has to be extremely cooperative, right on top of the paperwork and jump when the bank says. Even if they New legislation allows for a shorter time period, but the bank has to voluntarily agree to do it - and waive their rights to the deliquency forever. Seems like not a lot of banks are willing to do that, so we will see how many take the small incentive reward to do HAFA and require them to make a fast decision.
I recently just attended a seminar by BOA on short sales - and it seems more of the same. Nothing happens fast. But with a short sale, get an experienced broker who knows what they are doing. These short sales rules and tricks are changing all the time.
There are many pitfalls and hurdles that take committment and perserverance by all parties invloved. Experienced RealtorsÂ® and attorneys are more vital in these transactions than your typical resale. Also, consider that each bank's response time and each case is different, which adds or subtracts time to the processing of the short sale.
The Realtors in your area should know of a good short sale attorney that all of you can meet with.
I wouldn't be involved with another Short Sale without my short sale attorney. All of my short sale deals have
been going through and in just a few months. They remove a lot of the red tape.
Good luck! Jodi
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
1. Only one way to find out - write an offer and see what happens. Your agent will give you a ballpark idea of what the bank will be looking for; but it's your call.
2. When you've "had it up to here" with the waiting, add another 45 days.
Without a doubt, this depends on the merit of each individual situation. The acceptable bank's selling price will likely be closely tied to the most recent appraisal or BPO information. This is often related to the debt associated with the property....first/second mortgage, liens, legal fees etc.
If your transaction is one that has not been approved by the lender you can most likely depend on the bank "bumping" up the sellers agreed contract price.
So to answer your question, a buyers offer is negotiable because the lender may accept the buyers offer as is, counter this offer, or accept an offer that is less in certain circumstances. What determines a lenders approval of the offer is several things:
1. How close is the offer to the amount borrowed or owed on the mortgage?
2. How close is the offer to the current market value (BPO) value or Appraised Value?
3. Is the offer Cash of Financed?
Time to close a Short Sale has been discussed before. If it is a HAFA, FHA, Short Sale normal time to market a home is 120 days. If it is a traditional Short sale the process could take 6-12 months
Short Sales are a major presence in our current market as you probably have seen. Unfortunately, there is no full proof answer to this question you have.
How negotiable the price of a short sale is depends mainly on how the home is priced. If an owner has a mortgage of 300k left on a home and the price is 275k on the MLS, then it is priced pretty accurately. There is probably more room in THAT price than if the home was price @ 199k.
The problem is that agents price them all over the board. If they underprice them too much, then they run the risk that the bank will reject the contract. The end all goal is to simply get an ANSWER from the bank, so most Short Sales are priced where they will get immediate offers. The sooner the contract gets submitted to the bank, the sooner everyone finds out what the bank will accept...
Which moves into your 2nd questions. How long!?!
Again...it depends. If there is one mortgage on the home, the general rule is that you should hear an answer in 3-5 months. if there are 2 mortgages from the same bank, then more like 4-6 months. If there are 2 or more mortgages from different banks then good luck! Time is defintely against you in a short sale.
Tell ya what...if you have any other questions, feel free to contact me via email and I will gladly help out. Assisting buyers in the purchase of their homes is my main job these days...especially with all the great 'deals' out there.