We are pre-qualified for FHA loan of $315,000 we want to buy a short sale but our realtor tells us its a long process, is this true?

Asked by przconnie, La Puente, CA Wed Jun 20, 2012

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Kawain Payne, Agent, Seal Beach, CA
Tue Sep 18, 2012
Hellos przconnie,

Congrats on your loan approval!!!!!

The short sale proces can be loneger than a regular sale, but they are not taking as long as they use to.

I would recommend that you be very ptient if you write an offer on a short sale. On a regular sale you can usuually close a FHA loan deal in 45 days. With a short sale it can be 75 to 90 days.

Things to know about short sales:

1. Tthe first stage of the short sale is getting the seller to accept your offer and submit it to the bank.

2 The bank has to approve the terms and conditions of the agrrement you and the seller have reached. In some cases the bank may not approve the agrrement you and seller have made. For example they may want a higher sales price.

3. If the home has more than one lien holder, you will have another issue to resolve. The jr lien holder may ask for a portion of the amount owed them or they may not agree to the short sale. Often times the buyer may be asked to pay or all of the amount requested by the jr lien holder.

4. If the property is a condo/townhome delvelopment or any development with a HOA, and there are out standing HOA fees you will have to pay the past due HOA fees.

5. In A SHORT SALE, the seller is in no position to give the buyer any credits.

6. Seller may not be in a position to make any repairs.

Again CONGRATS!!!!

I wish you much success.

Kawain Payne, Realtor
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Daniel Shi, Agent, Cupertino, CA
Wed Jun 20, 2012
It's true that Short Sales are actually Looong Sales...even though banks have been trying to streamline & speed up the process. This is usually due to the intricacies involved in the Short Sale: basically, bank has to persuade its investors to take a loss, since the value of the property is already less than what's owed on the mortgage principal; and to make matters worse, if two lenders are involved (first loan, and the secondary), they can be fighting over how much the secondary lien holder gets.

From my experience, Short Sales suits better for investors than owner-occupying buyers. Investors aren't usually looking for a place to move in; they have plenty time and patience to wait out, 45-60 days if lucky. OO-buyers however, usually have a target date and have made plans on moving, unless they understand the nature of Short Sale and don't mind waiting a few months for a Yes/No answer from the bank.

So my advice to Owner-Occupying buyers:
-- Be sure to have your agent find out the exact type of hardship current owners are into, this way you can assess how likely bank will approve the Short Sale if at all;
-- Don't get too excited about the listing price you see on a short sale! Too many times I had been asked by buyers "how come the price is so low? Is it an error?"
-- Remember, listing price on Short Sale may not be the finally approved price by banks; in fact after 2 months of wait, they can come back to you asking for more. Thanks to due diligence of listing agents and BPO's, nowadays, the listing prices on Short Sales reflect more like current market value;
-- Another common misconception is you can always get a good deal on a short sale, not true! If it's a hot deal and too many buyers pour in, then it could be overbids that get the deal, in other words, the winner may be paying more than its current market value;
-- So don't ignore the many regular sales out there, in a distressed market where these regulars fall victim to their value, you'll be surprised sellers' willingness to compromise.

Daniel Shi
1.888.785.8818 ext.100
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Cindy Davis, Agent, San Diego, CA
Wed Jun 20, 2012
It is a long process but if that's what you want to do, your Realtor should support you in doing it. You cansometimes get a better deal through a short sale.

My best advice is to seek the type of home you are are looking for without distinguishing between short sales, traditional sales, and foreclosures. Make the house your goal and be prepared to work witht he different types of listings you will find. Your Realtor should be comfortable and experienced with all types of sales.
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Todd Foust, Agent, Anaheim, CA
Wed Jun 20, 2012
It can be but it doesn't have to be. Overall, they are much faster than they used to be partly because agents are getting better at dealing with them. A lot will not only depend on the sellers cooperation but also with your offer price and terms. Strong offers make the short sales magically happen faster. Low offers prolong the process and get countered with something closer to market value.

Make your offers based on current market values (not list price) and offer to put some money in escrow as a deposit for 2 months while waiting for approval. Leave a little room in your offer to account for some negotiation and unexpected minor repairs...but still keep the offers NEAR market value.

There are many things a good short sale agent can examine (if the seller will share) to help pick and choose the different houses with the best chances of getting approval. (ie realistic hardship, personal assets of seller, sellers willingness to sign a promissory note, sellers willingness to make a cash contribution). Best of luck!
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przconnie, Home Buyer, La Puente, CA
Wed Jun 20, 2012
My husband wants a short sale and we don't mind the wait, but every time we ask our realtor about sending us short sales listings he seems to not want to. We are all set to go start looking but this is just
dragging on to a point where we no longer want to buy. We are approved for the ChDAP loan as well.
But we'll see what happens.
Thanks, all for your quick answers.
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Jun 20, 2012
The biggest obstacle is usually the seller, their lender gets the blame but it is often the seller that is the real problem. If the seller is not providing everything the lender needs to make a decision then the answer is “No.” If the seller is trying to hide assets, cash, etc. they are the problem.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
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David Alex W…, Agent, Newport Beach, CA
Wed Jun 20, 2012
There can be a lot of moving parts to a short sale and I have had some close in 30 days and other where the lender has taken 4 months to approve the price. You did your part and got pre approved.
Choose an agent who is very good at communication along with a property represented by an agent who is also good at communication. Both are where you can have impact. When the seller is not motivated to sell and is really just trying to mess with everyone for as long as possible you need to find that out early. good luck
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Mag Ali, , Whittier, CA
Wed Jun 20, 2012
Short sales can take a very, very long time. Ranging anywhere from 45 days up to 2 years (a personal record)!!!! But, if you're willing to wait it can be a great way to get a good deal on the home you want in this market.

There are some short sales that are quicker because of the lender behind the mortgage. In general, a Wells Fargo, Wachovia or World Savings short sale are by far the quickest. Next would be Chase, US Bank and a few others. It is my personal experience that the hardest and longest short sales have by far been BofA. They have the dubious award of the longest, toughest, longest, did I already say longest??? I still need to add a few more longest to really exemplify just how long theirs take!

Your agent can also make a BIG difference by asking the right questions to the listing agent when dealing with a short sale lender...hope this was helpful.
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Bonnie Hicks, Agent, Trussville, AL
Wed Jun 20, 2012
I agree with Connie on this one! Short sales typically take a considerable amount of time. If this is the home you really want, take the time to make it happen.
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Betty Lopez, , Whittier, CA
Wed Jun 20, 2012
The short sale process is different with every bank. I have closed short sales in as little as 45 days and currently have one that is going on 6 months! Sorry but no easy answer. It depends on the bank and the ability of the seller to get all documentation quickly to lender. When they do close they are worth the wait. Many regular sales are just as good as short sales too. In both cases an appraisal is done to estimate the value of the home and that usually determines the asking price. Good luck with your search.
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Connie Mitch…, Agent, South Padre Island, TX
Wed Jun 20, 2012
Ah ha! A short sale is anything but short. The time span relies on the seller's bank(s) and their tedious piles of paperwork. .........but if you are patient with the process you can walk away with a great deal for a great price. Well worth the wait!
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