How long does a short sale usually take to close? we are interrested in purchasing another home and renting our current one by the end of July

Asked by Rebecca, Maryland Fri Jan 7, 2011

We tried to sell our curent house last year with no luck. We have decided to rent it out instead and still plan on moving hopefully in July. We would like to look for a short sale for the new house to maximize our budget. How long do they typically take to close? we dont want to start looking too late

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..., , Lexington, MA
Fri May 13, 2011
Why not have your agent focus on value versus who is selling the property?

A short sale can be great but many are priced at market to best protect the bank's interest. Most take considerably longer to close and many need repairs, may have other liens and often less favorable contracts than regular homes. Get yourself an agent familiar with both short sales and conventional sales and if you're planning on moving in July it's not too soon to start now.
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Vladimir Kats, Agent, Baltimore, MD
Fri Jan 7, 2011
Rebecca,
Everyone who answered your question is absolutely correct or is absolutely wrong, depending on how you look at the situation :) Short sales are so different from one another that you simply do not know how long it will take from contract to approval. You might have a range and even that is sometimes not accurate.

I want to piggyback on Don's answer, however. He's absolutely right: look at other types of sales as well.

What most short sale buyers do not realize is that short sales are rarely steals. The entire process centers around the BPO that shows the shorted lenders how much the property is worth. Many lenders, as well, do not allow the BPO agents to use distressed comps and want to see a "regular" market value. This piece, precludes a lot of short sales from being as good of deals are say REOs or estate sales where the seller can make the decision to sell it much cheaper than the market due to other factors deemed more important to that person/entity.

Most of my team's business is centered around short sales on the listing side and REOs on the buying side. Short sales are rarely great deals that bank owned are.

Look at everything Rebecca and make sure that your agent is knowledgable in the distressed property field.

Take a look at this article http://essex.patch.com/articles/process-plays-role-in-succes…
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Don Tepper, Agent, Burke, VA
Fri Jan 7, 2011
Don't restrict yourself to short sales. Yes, there are some good bargains there. But there are good bargains with traditional sales and with foreclosures, too.

The drawback to short sales is the uncertainty--both as to approval and to timing. You'd like to move in July. That's fine. And maybe you can do that while buying a short sale. But do a search of some past questions here on Trulia. There are quite a few from people who had to move out of their current home and were expecting to move into a newly-puchased short sale, only to find out that the bank hadn't approved it, or it approved it at a higher amount, or that the bank was still pondering.

It's fine to say that, on average, a short sale might close in 90-120 days. But I've known plenty that have taken 6 months, and have heard about ones that have taken over a year. So, if you go that route please recognize the risks involved.

Hope that helps.
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Mary Jane Ma…, Agent, Ellicott City, MD
Fri Jan 7, 2011
Normally you can expect to close in 90 to 120 days. The process is not quick, although it is getting better. A HAFA Shortsale may go faster because the owner bank has done the appraisal and set the price in advance. However, the price is not necessarily negotiable. It's the price the bank has set to cover all the liabilities on the property. Foreclosures may go faster since they are bank owned and you are dealing directly with the bank.

Please let me know if I can be of further assistance.
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Lisa Scott, Agent, Bowie, MD
Fri Jan 7, 2011
As has been stated, it really depends on the mortgage company as well as the skill of the listing agent in preparing the short sale package. Typical time frames range from 60 days to 4-6 months. The sucess of your offer on a short sale will also be impacted by how many mortgages are involved, how close your offer price is to the bank's estimated value, and how many other offer (if any) are submitted to the bank for consideration. I would sugges that if you want to make an offer on a short sale be sure that your are committed to waiting for a response. Many buyers get frustrated after a few weeks and want to start looking at other properties. In many cases cases if the buyer walks away from the deal, the seller has to begin the short sale review process over from the beginning once a new offer is received.

With regard to your purchase of a new property, be aware that most lenders' current guidelines will require that you qualify for both your current property AND the new property. In most case rental income will not be considered unless you can demonstrate that you have been receiving it for some time and have claimed it on your tax return.
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Elliot Ward &…, Agent, Columbia, MD
Fri Jan 7, 2011
Rebecca,

Your question is a good one. Traditional sales (Homeowner/seller to Buyer) in Maryland usually take on average about 60 days to close. Short sales tend to be much longer due to the Third Party (Bank) participation/approval. One of my short sale transactions (with 2 lenders) settled in under 90 days. On the other hand, an offer we received on one of our short sales in late July is still currently pending Bank approval. I've heard that bank approvals in Maryland have been averaging roughly 6-9 months from the date of offer delivery, but as you can see they vary widely. Much of\ this variance is based on each individual bank's internal review procedures with short sales. Some banks seem more efficient than others too. FYI, I understand that only about 30 percent of short sales ultimately make it to settlement. Also, depending on your budget, keep in mind that not every short sale may be a true value. Many short sales are not only financially distressed, but also physically distressed, and may require much post-settlement investment and improvement. Most banks only allow short sales to transfer in 'as-is' condition too, as is the case with foreclosure sales. I understand that fresh foreclosure inventory will be forthcoming this year too, and I've experienced considerably more 'buyer control' with foreclosures for numerous reasons. Which type of distressed property purchase is right for you will depend on your PATIENCE, confidence, understanding, each individual short sale property, and the bank(s) and agents involved. I'd be happy to provide you with some good information. Feel free to contact me. Good luck with your search. This sounds exciting for your family - happy hunting!
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Mary Wagner, Agent, Crofton, MD
Fri Jan 7, 2011
Hi Rebecca
It all depends. On the sellers bank or banks? How appoved the sellers are to get a short sale (they must have a hardship) It depends on the sellers giving the bank the required information, the sellers Realtor knowing what to do, who to contact. Ive seen them take 5 months and 2 months. It all depends. Im sorry there is not a for sure answere for you. Mary
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Matthew T. S…, Agent, Perry Hall, MD
Fri Jan 7, 2011
Hi Rebecca,

It varies with each bank that holds the defaulted mortgage. I have had some contracts get approved by the bank within five days and others it took five months. It really depends on how much of a loss the bank is willing to take on the mortgage and how well-staffed the bank is in dealing with the short sale requests. I find that the smaller local banks are much quicker to approve a short sale then a larger national bank. If you need assistance with the process, please do not hesitate to contact me. I am experienced with the processes and procedures to get short sales done as quickly as possible.

Best regards,

Matt Smoot
Web Reference:  http://www.SoldwithSmoot.com
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Dallas Texas, Agent, Dallas, TN
Fri Jan 7, 2011
Close a short sale IF the bank accepts your offer can be approx. 60 - 120 days

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
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