Home Buying in Eden Prairie>Question Details

Bearface, Home Buyer in Eden Prairie, MN

I want to know what the truth is about placing an offer on a short sale/foreclosure,does it really take months to close?

Asked by Bearface, Eden Prairie, MN Fri Jul 15, 2011

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Yes, typically the short equity sale is a lengthy process. You will want your agent to make sure either they have experience negotiating short sales or are using a negotiator/attorneys services to get it done. From the Buyers perspective, you need to find a home you are willing to wait for and stick it out. On the sellers side, there is alot of information and documents being collected to see that they qualify in their mortgage holders eyes for the short equity sale. It is never a
1 vote Thank Flag Link Fri Jul 15, 2011
Yes. The question is ...how many months? They are typically faster than they used to be, but if you want to be in your home or even want to know if you will be allowed to buy the. Home within a month, look for a home that is priced well but not a short sale if you can find one.

If you have to go with a short sale, realize that it could easily be 3to 4 months before you know if you'll get the home. If you can't do that, forget a short sale.

Harsh, but true.
0 votes Thank Flag Link Wed Apr 18, 2012
Each situation is different and will have different decision makers and timelines.
If there is just one lender it may take less time. It really helps if the listing
agent has done a good job preparing the lender and owner. So there is
no yes or no answer for you. Good luck. '

Annette O'Connor
Coldwell Banker Burnet
A licensed Mn. Realtor
0 votes Thank Flag Link Wed Apr 18, 2012
Bearface, (great name!)
Our team is located in San Diego (working the Southern California). In our experience, we have had a bank respond in 4 weeks or 6months. There are many factors when negotiating each short sale. Every home is different. Ask your realtor to research each property and ask the short sale negotiator/listing agent the right questions that you may have before you make an offer. This will help make your decision making process when moving forward with a property. Good Luck!
0 votes Thank Flag Link Wed Jul 20, 2011
There is no way to perdict the time it will take to successfully purchase/sell a short sale property. Though many lending instuiitons have greatly improved their processing efficiecy. Each transaction is a case by case scenario in terms of completion. If availiable search out short sales that are advertised as "approved". For the most part these homes have been through the evaluation process and the asking price is indicative of what the bank is willing to accept.

Concerning foreclosures, there should be little to no delay. The exception would be if the seller/bank placed an offering period restrictions for owner occupant and or second home/investor purchasers. For example Fannie Mae foreclosures won't except offers from anyone until the 5th day on the market. On the 5th day owner occupants are the only ones able to offer. On the 15th day the seller opens the property to accept second home/investor offers.
0 votes Thank Flag Link Wed Jul 20, 2011
Yes, It can take months. Remember the bank that is making the final decision is not emotionally involved like the buyer. Buyers put an offer in and then they are on pins and needles waiting for a answer. The bank does not care about that. They are looking at the total cost to the bank and they are not in a hurry to lose money.
0 votes Thank Flag Link Wed Jul 20, 2011
Buying a short sale can take months and certainly that has been the most common advice given by most realtors. Buyers should be mindful that buying a short sale is never a sure thing. Many short sales have multiple offers and some times banks will foreclose even though they have a short sale offer. So short sale buyers should not go into any short sale purchase thinking that they will be successful and that there will be a quick turn around. On the positive side some lenders have recently improved their processes and improved their turn around times.
0 votes Thank Flag Link Wed Jul 20, 2011
IN GENERAL, it takes 60-90 days for approval and then about another 30 to close. So you are looking at 90 to 120 days overall (minimum). It all depends on the lender/servicer and who holds the "paper" on the property. EACH LENDER OR SERVICER IS COMPLETELY DIFFERENT. Some lenders/servicers have a person that does the approval and others have to go before a committee that only meets once a month. Some mortgages have been sold on the secondary market and packaged with other mortgages, some may be part of a REIT, others may be held by the orginal lender, etc.

Most lenders and servicers have improved their approval timeframes, but it is possible to run into situations where it can take much longer than 120 days. Short sales can be a good opportunity if you can afford to wait.
0 votes Thank Flag Link Mon Jul 18, 2011
Dear Eden,
If the bank has approved the short sale it should be faster but sometimes homes are put on the market without even being approved as shorts sales. When this happens, the seller needs to present an offer to the bank (from a buyer) and start the procedure from step 1. This might take months or not close at all.
if you need some assistance in short sales dont hessitate to contact me.
Ivonne Arana
Majestic Properties
iarana@majesticproperties.com
0 votes Thank Flag Link Mon Jul 18, 2011
Yes although in the past year or so the banks have gotten better at responding to a short sale offer it still does most times take several months. Short sales can be a great buy for a buyer who is not in any hurry and who also realizes their offer may not be accepted. Also the most important thing to know with a short sale is the buyer is usually responsible for any back taxes, liens, HOA or Condo fees etc. It is very important to have an agent who is experienced in short sales and knows the process very well and can educate their client on short sales and what to expect and what to watch out for. I have a lot of experience with short sales and although very time consuming, hard work and of course the bank pays less commission it is very rewarding at the end to see the bank accepted my clients offer and they obtained a great deal.
Also surprisingly enough the short sale dept and the foreclosure dept do not communicate so sometimes while an owner is going thru a short sale and a buyer has an offer in one day an owner can receive papers and their home is foreclosed on. This is unfortunate and sad.
If you are considering a short sale please be sure you are working with a licensed experienced agent who
explains all the details to you.

Good Luck!
0 votes Thank Flag Link Sun Jul 17, 2011
Bearface, It does take an inordinate amount of time to close a short sale. That is because you are dealing with a bank and they have to go through the chain of commands. It will usually take longer because the listing agent is not experienced or they do not have an attorney or third party handling their short sales. You just need to be able to wait. I would urge you to make sure that you have a short sale addendum accompany your offer, because that would give you a specified time period when you can pull the plug if you so desire. Without that addendum, you could be in for the long haul.

Good luck. If you can wait, they usually are a good deal.
0 votes Thank Flag Link Sun Jul 17, 2011
Every transaction is unique. If there are multiple liens on the property by different lenders it could take serveral months, however banks are becoming increasingly eager to complete these short sales, so the process is becoming a little easier to navigate. I dont reccomend you exclude short sale properties from your search, but it is important to get in touch with an experienced and full time Realtor who has completed several short sales
Web Reference: http://www.teammayre.com
0 votes Thank Flag Link Sun Jul 17, 2011
Short sales are not always the best deals. If you put an offer on an approved SS and it also has an approved SS on the 2nd, the process is pretty fast. Most banks after approval are just waiting for an offer. However most SS are as-is and most banks won't pay for any reports (that sellers usually pay for), or repairs so it's not always the best deal. They are usually priced at market value so with a buyer coming in for all that, it's much better to look for standard sales. REO's are the same situation but are usually priced below market value so the banks can get them off their books, so it's a better deal. An REO already has the price they're willing to take. Again, they are usually as-is but with a good price, the difference of a buyer paying for the reports isn't that big of a deal. If major repairs are needed you can always renegotiate for the bank to fix and if they don't, you have the option to walk away but you will be out the money for the inspection.
With that being said, if you want to list your home as a SS, make sure your dealing with a Realtor who knows the negotiation process and knows how to do it. If you're wanting to buy a SS, make sure you also have a good Realtor who looks up comps and goes in at a fair price. Non approved SS can take anywhere from a week to months. When you write your offer make sure to have your Realtor write in the purchase agreement that you will give your deposit upon BANK APPROVAL not sellers approval. That can tie up your money and will be cashed. The bank will open escrow and that money will be sitting in an escrow account tied up so if it takes months for bank approval, that money is taken out of your bank acct. If you write it that you will give the deposit check once you have BANK APPROVAL then you can still look at other properties and your money is not tied up. That way if a standard sale or something else comes along you like better and your offer is accepted, then you have that money to open escrow on the accepted home and can walk away from the one you've been waiting on. However, your Realtor will need to let the other agent know you've been accepted on another one so they can let the bank know. Hope this information is helpful.
0 votes Thank Flag Link Sun Jul 17, 2011
Yes, short sales can take months. Sometimes buying a short sale only adds 4-6 weeks to the process though. Other times it adds much more depending on the speed of the bank.

Foreclosures can also be slower because of response times but they are usually much quicker than short sales.

Good luck in your search!
0 votes Thank Flag Link Sat Jul 16, 2011
Depending on the bank.....

Short answer? Oh, God, YES it can take months!

If you're in a hurry to close, don't write an offer on a short sale.

Buy a regular sale or a foreclosure.

But if you have time to spare, and you have a mountain of patience and perseverance, and you are looking for a good deal, then by all means!
0 votes Thank Flag Link Sat Jul 16, 2011
If you reallywant to buy a home, and take possession in a reasonable or fixed amount of time.............stay away from a short sale.

There are plenty of good bargains out there that aren't short sales.

Good luck!
0 votes Thank Flag Link Sat Jul 16, 2011
Yes, it can take any where from three to six months, sometimes longer for a short sale. If there is more than one lien on the prop\erty. Be prepared to wait., and make sure your realtor has the experience to negotiate a short sale, that can really help the process.
0 votes Thank Flag Link Fri Jul 15, 2011
I did not read all the comments but Yes it can takes months if not longer depending on the number of liens on the property. If you put an offer in be sure to have patience during the process. In my opinion you would have better luck if you were to look at homes that are already in foreclosure.
Web Reference: http://www.merrittnoel.com
0 votes Thank Flag Link Fri Jul 15, 2011
Dear Bearface,
Yes it can take up to 6 months to close on some of these distressed properties. That is the truth.
0 votes Thank Flag Link Fri Jul 15, 2011
My first short sale nearly three years ago took 10 months from contract to closing. Now the time frame has been in the 4 to 6 month range. This year we had written approval on one 30 days after the contract was submitted. It is crucial for the seller to have all documents in place with the bank to get started. Plus it is very important for the bank to have permission upfront so they can talk to your Realtor or attorney
0 votes Thank Flag Link Fri Jul 15, 2011
The truth: Yes. It really takes months to close. Typically, between 3 and 6 months. However, I've heard of cases that have taken over 12 months.
0 votes Thank Flag Link Fri Jul 15, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Every Short sale is different, depending on the lender and amount involved. If there are multiple lenders then there is going to be a fight for the money and you can bet its going to take much longer to close this type deal. I have had agents in my office spend 9,10,12 months trying to work a short sale out only for the deal to fall apart out of pure frustration.
0 votes Thank Flag Link Fri Jul 15, 2011
Bearface,
The timing varies from lender to lender. That said you do indeed need to be patient. Remember...you are dealing with an emotionless entity that has NO motivation to go anywhere .They are acting on the whim of their bean counters, auditors, accountants, stock holders and management policies. It's just the way it is.
If this kind of situation isn't for you then ask your Broker to only show you "traditional" sales and find something that works for you.
In my market bank sales are about 50% of the market so you still have a lot to look at.
0 votes Thank Flag Link Fri Jul 15, 2011
Hi Bearface,

Your question was duplicated on our site, and you can review the additional answers you received via the link below.

Best Wishes,

Emily Erekuff
Community Moderator
0 votes Thank Flag Link Fri Jul 15, 2011
In the St. George, Ut market the average time a short sale takes to negotiate and close is four months. Many take longer. Many times the original listing price on a home is a number the listing agent has entered but only after an offer will the bank come back and figure out what they really want from the house, then the process begins.
0 votes Thank Flag Link Fri Jul 15, 2011
Yes I am in the process of buying a SS property myself Its been 5 months But Im hanging in there because its going to be worth it. Yes, it can be very frustrating at times but if you put an offer in on one, I wish you the best of luck and be patient. You can get a great deal if you are patient.
0 votes Thank Flag Link Fri Jul 15, 2011
Yes these sales do take time but may be worth it in the end. If the home has gone through the whole foreclosure process the transaction may not take long as the title should be cleared and all liens satisfied.. Short sales take longer. In short sales we are handling now (buyer side) we are dealing with multiple mortgage holders (mortgages were bundled and sold off), mortgage insurers, and the local bank servicing the deal. Each one has to approve every part of the deal. I helped clients make several short sale offers in April of this year. We are closing two this month, two next month, and still working on another.
0 votes Thank Flag Link Fri Jul 15, 2011
0 votes Thank Flag Link Fri Jul 15, 2011
Yes, short sales often take months to receive an answer from the lender and continuous communication. If the mortgage is held by a local bank the process can proceed more quickly. Many of the homes in short sale positions are in good condition and the patient buyer can benefit by getting a good price on a home. Many realtors have taken additional coursework and have designations as SFRs or CDPEs. And experience is the best teacher. They know the questions to ask to get a sense of where the short sale is in the process and how long it might take to be able to close. Not all short sales enter the foreclosure process. Usually, you can get a reasonably quick response on a foreclosed home. Some lenders are now aggressively pricing foreclosed homes and waiting a week to compile as many offers as possible giving preference to those who will occupy vs. investors.
0 votes Thank Flag Link Fri Jul 15, 2011
Bearface, you asked a great question! While there is a big difference between a short sale (short equity sale) and a foreclosure. Under foreclosures those at least from my experience are running two to three months. On the other hand a Short sale depending a certain factors may run longer than 3 months. There are no easy answers here, due to continually changing business process at the banks and government backed Freddie and Fannie and generally communication is a common breakdown.

Some of the factors to consider the length are; is the negotiator (Listing Agent or Attorney) experienced; how many loans/liens are on the property; whether the loan is owned by a lender or just serviced by a lender. If it is serviced then you can automatically extend by 30-60 days. Sometimes even having all the answers don't get you closed as quickly as you would like.

Working with your buyers agents to obtain as much information as possible from the listing agent will help you to better understand the length of time it takes to close the deal.

Chris Rocheford,
Keller Williams Realty Integrity
0 votes Thank Flag Link Fri Jul 15, 2011
The length of time depends on several variables: 1) the bank, 2) that bank's case load, 3) whether or not the short-sale has already been approved, 4) the team handling the negotiations, and 5) your offer (plus the perceived strength thereof).

If you can afford to wait for a while, then a short-sale purchase might be a good option for you. If otherwise, then a short-sale purchase might not be for you.
0 votes Thank Flag Link Fri Jul 15, 2011
It will take 3 months minimum but can be drastically reduced if it is a pre-approved short sale or a HAFA. If there is no MI either that is a god-send,

So yes I agree with everyone else. Hopefully you have a good buyers agent that can tell you if this will be a waste of time or not, and hopefully also has experience listing short sales.

Thanks!
0 votes Thank Flag Link Fri Jul 15, 2011
YES
short sales take a long time.
Some banks work faster than others.
Especially if the owner has two mortgages on the property.
Make sure to find out who's handling the short sale...??
Very important, preferably a lawyer..
0 votes Thank Flag Link Fri Jul 15, 2011
It depends on the bank, I have seen them go from 6 weeks to 2 years. Some never close as short sales.
0 votes Thank Flag Link Fri Jul 15, 2011
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