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Trulia, Other/Just Looking in San Francisco, CA

What's the typical process when buying a short sale?

Asked by Trulia, San Francisco, CA Mon Mar 5, 2012

How long does it take? What are some pitfalls?

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First you want to find out who the lenders are and how many lenders there are. Is there a Pmi co. Is sellers paperwork in order. Who will be negotiating the short sale. This is very important. If the listing agent cant answer these questions don't waste your time. I have been doing short sales since 2007 and so far I still think Bank of America is the best as far as the process goes. Worst are TCF bank, Green Tree and there are few more. Short sale is a PRE FORECLOSURE and sometimes sellers are not very cooperative and this can delay the process. Financials have to be updated during the process. Process can take 30 days if short sale was already approved or anywhere from 45 days to up 6 months or even longer.

Oh and don't forget you must be very, very patient and must understand the process before entering in a short sale contract. Of course there are no guarantees you never know if you will close a short sale. There are so many things that can happen. Seller changes his mind and wants to try loan modification again. Bank wont give full release and seller wont except partial release. There are not too many agents that know the process and it is very refreshing dealing with agents that are certified in short sales.
2 votes Thank Flag Link Mon Mar 5, 2012
There is no typical process. It can take several months or several weeks or even a year. There are numerous pitfalls that you have to have a short sale company to do the short sale. Time consuming for all, pull up a chair have lunch, dinner, take in a movie, watch a ball game etc. Seller has to continue to keep update records of tax returns, bank statements, paystubs, etc. Having a short sale company makes a big difference, if you want to consider a short sale. You still have to go thru the process of putting earnest money, having a home inspection and the 10 lawyer review period. The closing date should be at least several months away. If your getting a loan remember the Seller has no money for repairs of the property. Good luck!!!
2 votes Thank Flag Link Mon Mar 5, 2012
Here is the process in a step by step,

1) Seller accepts and signs offer from Buyer( Seller is still rightful owner of property)
2) Listing agent and/or attorney submit short sale package to primary lien-holder. This package includes several Seller financial documents, hardship letter, contract, listing history from listing agent.
3) Lien-holder orders BPO (Broker Price Opinion), which is an independent real estate agent to provide value analysis
4) Based on the BPO, the lien-holder will respond to offer price. They will likely either accept or counteroffer with terms.
5) Once terms are agreed upon, the lien-holder will officially accept the terms including an approval deadline date, which tends to be 30-45 Days from lien-holder acceptance.

There are several steps that the Seller an their representatives tackle along the way between steps 2-5. Also, there are differnet ways to approach earnest monies, inspections, appraisals, etc... from a Buyers perspective in order to limit exposure to out of pocket expenses.

Hope this helps!
2 votes Thank Flag Link Mon Mar 5, 2012
Without a doubt, a buyer needs to be prepared with one of the biggest difficulties we encounter as humans, next to deciding what to eat for dinner and what to wear tomorrow, respectively, and that is:


More then ever, we, at least in America, live in a culture where answers are a click away. Guidelines dictate how an event will run. People coordinate. Others follow. Organization is the mantra of our society.

Short Sales violate all of that. They are as confounding as the question of our existence is to atheists, and the question of Coca-cola's recipe is to theists.

Imagine never knowing. Never. Where are we in the process?

Agent doesn't know.

Three months later. Can you call the bank?

Agent says attorney says that Bank doesn't respond.

My friend's short sale was done in 3 months. It's been five months. What's happening.

Agent has no answers.

They did an appraisal two months ago, how come we haven't heard anything?

Agent unable to give answers.

But, but, the owner hasn't paid the mortgage in almost two years, and we are offering almost market value, why won't they approve our short sale?

1 vote Thank Flag Link Thu Mar 8, 2012
I would like to add a quick comment - Sometimes a short sale price has been pre-agreed to by the lender.

Your agent should be able to help you with this information.

If the price is pre-approved - then the process will go much more quickly. I find the process is not nearly as lengthy as it used to be.

Another area to inquire about is - more than one lein - second and third lenders to be satisfied will definately make the process more lengthy -
Don't be discouraged......................you will get a great deal!
1 vote Thank Flag Link Mon Mar 5, 2012
In ideal world:
Negotiate Price with Seller
Negotiate Price with the Seller's Bank

This could take many months before the seller's bank even responds.
1 vote Thank Flag Link Mon Mar 5, 2012
Process can take anywhere from 30 days to 6 months depending on who is negotiating the short sale. That is my first question when I have a buyer who is purchasing a short sale property. I have been negotiating short sales for 8 years and can usually tell right away if the person negotiating is going to get the job done. Anything can happen along the way. Bank can counter your offer or deny the short sale in some cases. Patience is key, so make sure you are committed to the transaction and get updates every so often as to how things are progressing, Good Luck!
1 vote Thank Flag Link Mon Mar 5, 2012
Don't set your hopes too high during a short sale purchase. Another issue is that some short sales are not legitimate sales that will ever go through. It isn't uncommon for an Owner to enter into a short sale arrangement just to stall and buy time with no intention of actually going through with a sale.
Web Reference: http://aic-chicago.com
0 votes Thank Flag Link Tue Mar 6, 2012
Why do they call it a short sale when it takes so long? Make sure you have some experienced negotiating the short sale and your offer is within reason of being accepted.
0 votes Thank Flag Link Tue Mar 6, 2012
Waiting, waiting.....lol.

It can take as short as 45 days and as long as the end of the world. They should fall between 90-120 days. Depends on the bank its through, and how experienced the lawyer is with these.
0 votes Thank Flag Link Mon Mar 5, 2012
there is no typical but it takes twice as long, you get a better value, and you might get nothing in the end.. hire a pro like me and you will e prepared because I do all the work.
Web Reference: http://www.joeschiller.net
0 votes Thank Flag Link Mon Mar 5, 2012
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