Home Buying in Valley Stream>Question Details

Miss Tirry, Renter in Valley Stream, NY


Asked by Miss Tirry, Valley Stream, NY Mon Dec 13, 2010

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Hi Miss Tirry,

A short sale is a process of selling a home that is underwater. The owner owes more on the home than it is currently worth and needs to sell it. They can't do a traditional sale as a result so they apply for a short sale with their lender. If accepted by the lender, the loan will not be paid off in full -- it will be short. In order to qualify, the seller must prove "hardship" to the lender/servicer.

There are at least a couple decision makers on a short sale. The first decision maker is the seller, they decide to accept or reject your offer. If accepted, they then send your offer to their lender and apply for the short sale. The lender then decides whether your offer reflects the current market value for the home and whether they will allow the seller to sell short. It is likely the offer must also be approved by an underlying investor (unless the servicer has delegated authority) and/or a mortgage insurer. If there are multiple mortgage loans on the property, they get to decide as well.

Because there is no defined time period for this process (in most cases, and even where there is it is not always adhered to strictly), you can be in contract on a short sale for a long time. It is essential that your contract be drafted well to reflect exactly how long you intend to wait for short sale approval. Lately, my one lender short sales have been receiving approvals fairly quickly (5 - 7 weeks), two lender short sales are a bit longer (7-9 weeks).

Hope this helps!

Tni LeBlanc
Broker/Short Sale Agent
CA DRE #01871795
1 vote Thank Flag Link Fri Apr 26, 2013
Most of us agents have answered your primary question already, so no need to repeat what they said, however I just wanted to add one word, "patience". If you are patient, and willing to wait a bit, then it can work. If not, it's best to get a regular sale. To be honest, there isn't much of a price difference when you compare a short sale to a regular sale. So sometimes, it's good to consider a regular sale. Have a great day and good luck!
1 vote Thank Flag Link Fri Apr 26, 2013
I've been helping First Time Buyers for 22 years as a mortgage professional and I will tell you what I have always told my clients here in New York: If you are a First Time Buyer, steer clear of foreclosures and short sales.

Foreclosures are someone else's headache. The home probably has not been well-maintained and you're a First Time Buyer adjusting to paying a mortgage. Do you really want to walk in the door to someone else's deferred maintenance that YOU will have to pay for? Also, if you're thinking there are deals to be had in terms of lower prices, mostly those "deals" go to professional investors who can pay cash, negotiate hard with a Lender, and close fast.

For Short Sales, my attitude of late is that First Time Buyers should steer clear. Short Sales tend to be a better deal for the homeowner than for the Buyer. You'll wait MONTHS for the homeowner's Lender to approve the short sale; maybe as long as Six or Seven Months. Meanwhile, you're stuck in a contract to buy that home. I closed a short sale recently with a Buyer who, after seven months said this at the closing table, "I don't even want this house anymore."

And he didn't even get the "deal" on price he thought he was getting! The house appraised for only slightly more than he paid for it at the short sale price. He walked into this deal thinking he was buying a home for $100,000 less than it's value. In the end that wasn't the case.

There are plenty of motivated Sellers with their homes listed on your local MLS. Go find a good Local Mortgage Banker, get prequalified, then find a great, experienced Realtor, and buy the home you want at the price you're willing to pay. It's a Buyer's Market, after all!

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services

*If you thought my answer was helpful, please give me a "Thumbs Up" or "Best Answer." Thanks!
1 vote Thank Flag Link Tue Apr 16, 2013
A short sale occurs when an owner has proven hardship to the lender, and sells the property for less than owed; the owner can accept whatever offer he/she wishes, however the lender decides to accept, reject or at times counter offer; short sales are by no means fast sales, unless already pre-approved by the lender, therefore much patience is needed, as there are no set standards of time as to how long it will take.
1 vote Thank Flag Link Mon Dec 13, 2010
To be quite brief, a short sale is a process where the owner's lender(s) agrees to the sale of the home for less that what is owed on the home. The final decision comes from the owner's lender(s) and the process could take anywhere from 2-12 months depending on a variety of issues.
Web Reference: http://www.321property.com
1 vote Thank Flag Link Mon Dec 13, 2010
Buying a Short Sale

Buying a short sale is not like buying a property in a traditional way. A short sale may have some risk but it also can be very rewarding. When you are searching for a short sale you will want to make sure you are prepared. Here are some things you will need to consider.

First of all, you need to make sure that you have enough time. It takes anywhere from 30 days to 6 months or even more to get an answer on a short sale. It really depends on many factors. It requires a proof of funds letter if paying cash or a pre-approval letter from a lender if obtaining a mortgage. The seller must approve the purchase offer before it gets submitted to the bank. The bank may come back with a counteroffer or reject your offer completely. In some instances you may not even hear back from the bank at all.

Short sales take a long time because the bank has to review it and they are back logged with many short sales and don't have enough coverage to complete them in a timely manner. The bank typically is willing to work with the seller and buyer on short sales to help avoid foreclosure. The bank can ask the buyer to pay some of the liens or HOA fees. Some lenders will only pay up to a certain dollar amount and ask the buyer to pay the remainder or there is no deal.

One of the benefits of buying a short sale is that the bank is typically willing to accept less money for the property because of the time and risk involved. So you generally are getting the home at below market value.

If you have the time to wait, a short sale is a good way to go. One thing to be sure to ask when purchasing a short sale is, "who is handling it?" Is the Realtor an experienced short sale expert? Or is the listing agent using a Short Sale company that strictly focuses on short sales? By having someone with knowledge and expertise in short sales, it will make the process go much smoother and faster.

Tammy Hayes, Realtor, RE/MAX PALM Realty, Port Charlotte, FL tammyhayesre@gmail.com
0 votes Thank Flag Link Thu Jul 4, 2013
Good afternoon Miss Tirry,

If you still have questions about shortsale, you could reach me directly at 646-944-5685.
0 votes Thank Flag Link Thu Jul 4, 2013
If the Seller has the right Attorney working the Offer to the Bank, you should have an answer in 6-8 weeks.
I know this b/c that's how long it takes when I negotiate them. NOT Months, Weeks.
I closed a Short Sale in Hicksville last Month that had 2 banks we needed short sale approval from.
We had approval in 7 weeks on both loans.
We actually were waiting on the Buyers Mortgage to come in.
It all depends on the Sellers Agent. It helps when they are an Attorney.
Call me if you need some help or have questions.
0 votes Thank Flag Link Mon Apr 29, 2013
As others have already stated, it can take weeks and even months and on occasion maybe never. However, my experience has been 7-8 weeks from time of offer. I specialize in short sales and I can tell you that I have not had the same experience as others before me.

The key is to be well educated on what you are doing and what the banks want. From a buyer's perspective, you need to have an agent that is well-versed in short sales both on the selling side as well as the buying side.

The final decision is up to the entity that holds the mortgage, but seller has to approve it first.

If you put an offer on a short sale, you would be wise to use the SSO addendum. This form will allow you to dictate how long you are willing to wait on the bank and also the terms of the contingencies such as earnest money, appraisal and inspection. As a buyer agent, I suggest to run all dates from the time of Bank Acceptance and I've never had a problem getting that accepted.

Hope that helps.
0 votes Thank Flag Link Tue Apr 16, 2013
The New York Times did a nice article about short sales last summer. I include a link to that article on my blog about short sales. Here's the shortened link:


BTW, this is an example where information from brokers outside of the New York City metro area/Long Island can be very useful to you.

The reason is, the banks are the controlling force in short sales, and the banks' back office operations that handle short sales can be anywhere. You'll still have New York-unique closing costs and business practices, but the short sale process is roughly the same nationwide.

The other thing to point out is, this could be a very tough experience for someone who has "fallen in love" with a particular property. If you decide to pursue a short sale, a certain sense of detachment will serve you well!

Karla Harby
Rutenberg Realty
Web Reference: http://bit.ly/aIuxg7
0 votes Thank Flag Link Fri Jan 14, 2011
Your buyers agent should be providing you answers to all your questions.

Short sale final approval is via the lender

It takes approx. 30 -45 days receive any approval IF they lender likes the offer.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes Thank Flag Link Fri Jan 14, 2011
A short sale is best decribed as a Sale of a Home in which the Borrowers (Seller) Lenders agrees to accept less than the borrower owes on his original note. The original Lender on that note has the final say of whether they agree to the terms of the Sale.

How Long can it take? A Long time!

Actually, again it depends upon the Lender you are working with. Some have "Fast Track", Pre approved Short Sales, which can close in as fast as 30 days from acceptance and then there are more complicated transactions that have lasted 9 to 12 months!

A short sale is best for someone who either has plenty of time or no emotional attachment to the property. (IE . An Investor)
0 votes Thank Flag Link Fri Jan 14, 2011
You can be in contract for as long as agreed within Buyer and Sellers. Using the NAR Short Sale Addendum with contract together. A Short Sale with most lenders today get approved within 90 days. It's very important to hire an agent who understands the Short Sale process and have a good track record. If you are looking to buy a Short sale it's important to find out who is the lenders involved and how may loans are involved and know if the seller have Private Mortgage Insurance.
0 votes Thank Flag Link Mon Dec 13, 2010
A short sale is a listing where at full price the sale will not produce enough to pay off the current buyers mortgage and so the lender or bank must agree to the offered price before it can be sold to the buyers. The bank is going to loose money but the theory is that the bank would rather loose some money on a short sale now rather than go to the trouble of foreclosure and then selling it themselves later.

The process goes like this, buyer makes an offer or offers and when the seller (current owner) gets an offer they approve of the sellers agent sends it to the bank for their approval. At this point there is no contract and other offers can still roll in and go to the bank for their approval. The banks are often in no hurry to loose money so they can sit and wait for weeks or months to approve or deny any or all offers. There is no guarantee that if you offer full price that the banks will agree to it. This is why it can be so frustrating to a buyer because the bank can just delay answering at all - yes or no.

Sometimes the bank just goes ahead and proceeds with a foreclosure which stops the short sale altogether.
0 votes Thank Flag Link Mon Dec 13, 2010
The Banks have the final say in any short sale situation...How long can it go? Well, you actually need a buyer to start the process, so if you dont have one, thats hard to say. If you do have a buyer, then the offer you submit can take anywhere from weeks to months to get approved. There is no set time.
0 votes Thank Flag Link Mon Dec 13, 2010
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