Foreclosure in Plano>Question Details

Plano,  in Plano, TX

Short Sales VS. Foreclosures

Asked by Plano, Plano, TX Sat Jan 31, 2009

When it comes to short sales and foreclosures, what time lines are you seeing? Which are faster to get an answer back on the offers? At first I assumed short sales because the owner is still there pushing to get things done, then I rememberd why you should never "assume" anything. :)

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Our experience is that "short sales" that are not bank pre-approved take considerably longer than "foreclosures."

There are a number of obsticles that need to be overcome that go beyond the initial mortgage. ie. second mortgages, taxes, liens, divorce etc. By the time a property reaches a foreclosure status, these issues have all ready been resolved.
0 votes Thank Flag Link Sat Jan 31, 2009
Loss mitigation had been a small department at most lenders. They could take their time and didn't have that many cases to handle. The disposal or foreclosure department had been handling cases in a timely fashion for many years.

When the wave of delinquencies started, first the loss mitigation department became overloaded, because they were charged with attempting to contact the borrower and see if something could be worked out. Eventually they staffed up or outsourced those contacts, but the volume in backlog is still rather high.

Loss mitigation also had to handle all the workouts, reviewing financials, getting BPOs and approving whatever disposition made sense. Short sales may mitigate losses or the proposed sale price may be larger than just foreclosing and selling the REO. This judgment call is important and takes time. Nobody wants a file audited to find that the BPO was significantly higher than the approved sale price.

Listing agents should be contacting the seller's lender for a bottom line, but the lenders are not forthcoming about that , because disclosing to the agent would create a conflict of interest. So, the agent guesses, submits whatever low-ball he gets in (some are ridiculous), and finds the bank dragging their feet. The bank sends out a contract agent to do the BPO and eventually processes the file. The answer is painfully slow, and usually not good when the price is low ball or commissions are over 5%.

At this point the file is in a similar state to a REO, a few weeks after the offer was submitted. They know roughly what the property is worth and what their approvable bottom line is.

This is why Short Sales are very much slower than REO sales.
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1 vote Thank Flag Link Tue Feb 3, 2009
If you have a house in mind I have a team that can close on 99% of the houses in less than 45 days. most even sooner.
They specalize in working directly with the Bank employee that controls the property and speeding up the whole process.
They close 40+ a month this way.
If you want more info e-mail me at or call 972-827-7890
0 votes Thank Flag Link Sat Oct 2, 2010
I'm finding faster answers on foreclosures. It's still slower than most buyers want to take, but still so many things can go wrong with a short sale.

30-45 day offer to close on foreclosures is what I find.
60-90 day on short sales.

Obviously there are many exceptions and not all work out.
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0 votes Thank Flag Link Tue Feb 3, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
Unless the Short Sale has a set price that the lender has pre approved it will take longer and it will usually can still take longer. Foreclosures can take a long time.
Your homes are usually in better condition the Short Sale.
0 votes Thank Flag Link Sun Feb 1, 2009
It's safe to presume a short sale will take longer. There are more parties involved. We have the buyer's agent, the buyer(s), the listing agent, the owner(s), and the bank. Expect a short-sale to be exhausting and be pleasantly surprised if it isn't.

A foreclosure cuts out one of the parties. The owner is the bank. The timing of a foreclosure totally depends on the bank carrying the house and the title company if they force you to use one you don't normally work with. Some are slower than molasses.

In either case, just don't consider your closing date as set in stone, and have a backup plan for what to do if it shifts out because things can move at a snail's pace.

Hope that helps!!
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0 votes Thank Flag Link Sat Jan 31, 2009
GREAT QUESTION: Been listing / buyers agent for both, banks respond in their own time, take bidding wars and etc. if we place an offer on a property with delayed response within 3 days my buyers & I are out searching againg. I have had bank respond in less than 2 hours with an executed contract. Each offer stands alone.
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0 votes Thank Flag Link Sat Jan 31, 2009
Short sales generally take longer in my opinion, because the Bank is hoping for other higher offers and tends to "sit" on the offer. I've seen a couple get done within reasonable timelines but generally, I've seen them take anywhere from 6 months or longer. I've also seen many completely fall apart after months and months of work!
0 votes Thank Flag Link Sat Jan 31, 2009
Foreclosures already have a system in place and the seller is the bank. They still may take a week or more to get an answer. FANNIE MAY is a week to ten days. Short sales usually have not established the relationship with the lender and the seller needs to provide the lender with lots of information to back up their need for the lender to cooperate. There are more variables with the short sale so it will take longer for an answer and probably twice as long to close. With either one you need to educate your buyer to be patient. Good luck!
0 votes Thank Flag Link Sat Jan 31, 2009
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