How Long Does A Short Sale Take
Most people looking to get their house off the market these days want to get their home sold quickly. On the same token, people looking to buy a home do not want to wait til they can buy their home and move in. Short sales would seem to be the answer for all the parties involved in this situation. There are some things that you need to know about short sales however, before pursuing this option when it comes to buying real estate.
The first thing most people want to know about is how long does a short sale take? The best way to answer this is first to discuss what a short sale is and second all the factors that are involved. This will better help you to determine what to expect when trying to nail down a time frame.
A short sale is for a type of sale on real estate, usually a home that is for less than what the real estate is mortgaged for with the lien holder. Most people assume short sale means the amount of time it takes to sell and approve the home. However, this is not the case. Short sale means the seller is asking the mortgage lender to take less money for the property than they have it mortgaged for and the lender would agree to this most times only to avoid foreclosure.
It sounds simple, but it really is not. The first thing that would have to happen in one of these cases is for a real estate broker to connect a potential buyer with a seller. The seller would have to agree on the terms. Once this is all done, the broker would file all the necessary paperwork with the company or bank handling the mortgage and then the wait begins.
The bank usually has somewhere between 30 to 90 days to respond whether or not they would agree to take the offer. The bank is probably going to require the seller to prove that they cannot pay off the remainder of the balance due on the mortgage. The potential of a short sale can be eliminated if the seller cannot provide the hardship paperwork or the bank does not agree with the information they have been provided.
Also noteworthy in this instance is the fact that there may be more than one lien holder on the property as well. If the seller has a home equity loan, a second mortgage, or even something like a Mortgage Insurance Company, this can slow the proceeding and may potentially end a deal if all parties do not agree on taking a financial loss. An example of this would be an insurance refusing a deal because they were obliged make up the difference that he seller cannot pay.
All of these things can slow or end a short sale; they can also delay a short sale for up to a year or more. Before entering into a contract, you should make sure that you have all the information you need. The reasons short sales fail are numerous. The most common issues are a lack of information being given on all of the lien holders, issues with the sellers’ financial situation, and poor condition of the property being sold.
If all of these things go through and the short sale is approved, you still have to make it through escrow, inspections, and final approval of the sale. This can take from 30 to 60 days. If you are waiting on a quick sale, you should make arrangements to wait it out till the end of approval.
So how long does a short sale take? Well if everything is in order, the process should be fairly simple. A short sale could take anywhere between 3 to 6 months for approval, and another 1 to 2 months for escrow and finalization. This is the typical average for a short sale; however it can take much longer if the information given to lien holders is not current or accurate.