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Marie Harlow, Other/Just Looking in

What the heck is a short sale contingency? And is it true that you can count on more than a year for and offer on a short sale to be accepted?

Asked by Marie Harlow, Fri Feb 5, 2010

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Short sales aren't necessarily the best deals out there. It's just with limited inventory in some areas, we are
working with them more. The lender will do an appraisal or BPO (Brokers Price Opinion) after they get an offer. They usually want current market value or close to it in order to approve the sale - thus not the fire sale some people think it is. Lenders will crunch the numbers and if it makes sense to accept the short sale, they will - if not, they'll let it go to foreclosure.

How long does it take? Depends on a few things. Is there one lender or two? Is it already in Notice of Default - so there's a clock ticking on it? WHO are the lenders - that's actually the most important. If it's Wachovia - piece of cake. Citibank is getting better. Wells Fargo is starting to try. BOA, if you can believe it, is starting to try harder, US Bank - months and months. Does the listing agent have expertise in handling short sales or does he/she have a special negotiator they use? Working with the lenders is not for the faint of heart or inexperienced. Much time is involved and time can be lost if paperwork isn't submitted correctly or not followed up on - constantly.
0 votes Thank Flag Link Sat Feb 6, 2010
count on 6 months. a year is pushing it but has happened on occassion. there are however, "pre-approved" short-sales where the bank has already determined the price they will accept. if you agree to pay that price in full, you can close in several weeks.
0 votes Thank Flag Link Wed Dec 14, 2011
A "Short Sale Contingency" is a status which means the bank has received an offer and is reviewing it for possible acceptance.

Is it true that you can count on more than a year for a short sale offer to be accepted? No. The average time of acceptance is three months.

The variables are those which were stated below by Anna, and a few more. But as with any transaction, Murphy's law always rules.

However, if you prepare yourself as a buyer (pre-approved, motivated, identified your "must have's" and "can't stands"), aremed yourself with great representation (preferrably a full-time REALTOR who is experienced and successful in making offers in this market), there is a great possibility that, should you make an offer on a short sale, that the average time will prevail.

There are also ways that your agent can gain more control over the timeframe of the short sale and ensure that you are kept current on the activities of the short sale as it progresses. This indirectly forces listing agents who may just sit idly by to actually work the short sale.

For more tips and info feel free to visit my site, contact me by email keisha.mathews@century21.com, or contact our office at (916) 266-4835.
0 votes Thank Flag Link Mon Feb 8, 2010
Hey Mariee

A short sale contingency simply means that the seller has signed an offer and submitted it to the lender. It still has to go through bank approval which is where the time comes in.

From start to close my short sales have taken about 5-6 months. I have had some move faster and some that move much slower. I think the fact that they all take different times and are in general less reliable than other types of sale is what makes people so frustrated.

Short sales are one way to get the most bang for you buck, but can take a long time and there is no gaurantee that you even get the property. Much of the success in a short sale transaction lies with the skills of the people involved.

James
0 votes Thank Flag Link Fri Feb 5, 2010
A short sale contingency means that the sale of the home is contingent upon getting the seller's lender's approval of the contract. The reason a seller would need the lender's approval, is that the offer price is less than the outstanding amount of the mortgage. The seller will not have enough to pay off the mortgage in full, so must get the lender's approval to take less than the full amount owed. Sometimes, there are two or more lenders, such as when a seller has a first mortgage and then a second, junior mortgage to secure a Home Equity Line of Credit. In that case, both lenders must approve the short sale.

The amount of time varies, but a year is much longer than what we are seeing here. Several months is more like it. Recent government initiatives have streamlined the process somewhat and lenders are becoming much more experience with expediting short sale approvals. How to shorten the process? Make sure you are working with an experienced short sale negotiator (an agent or a law firm) who will make sure that all the parties - particularly, the sellers - promptly submit the required short sale "package" - the seller's financial documents, tax returns, "hardship" letter - and all the paperwork required by the lenders before they will consider whether to approve the deal. Best of luck.
0 votes Thank Flag Link Fri Feb 5, 2010
If your working with an agent, they should have explained this to you.

ALL short sales are contingent on lender approval. With the market the way it is in most parts of the country, it can take up to 14 months in my experience.

If you're willing to put an offer in on a Short Sale property, you need to be very patient but know that it may not happen. We always advise our clients to be "open" to put other offers in just in case our offer is not accepted.

Best of luck!
0 votes Thank Flag Link Fri Feb 5, 2010
Hi Mariee,

Short sale contingency means the seller has accepted an offer from a buyer. They are in contract waiting for the bank(s) approval of short sale. Short sales can take a month to a year to be approved, or they might not ever be approved.

Karen Burns
Web Reference: http://www.karenburns.net
0 votes Thank Flag Link Fri Feb 5, 2010
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