How long does it take for the bank to approve a short sale?
I bid on a townhome on March 31st. It is now May 4th. There were two other contracts on the townhome besides mine – but I was the highest bidder and I have really good credit. We are still waiting to hear from the bank on who is approved. I know nothing about the home buying process let alone the short sale process, which I heard can take months. How much longer am I going to have to wait to hear anything from the bank/seller’s realtor? I’m scared because I have a lease on an apartment that will end in the next few months! Originally the seller’s realtor said we would hear back by the end of April but she has still not responded yet. Also, if they tell me that I am approved for the home, I then have to put in a loan application – so how long will it take after I do that? Thank you!!
Just after I posed this question, the seller’s realtor called my realtor and said that the bank wants to order a BPO and that we would have an answer on who won the townhome by the end of the month…and also that we would have a closing date by the end of the month. Does anyone know anything about BPO’s? I know they are like appraisals of the property – but if the apprasial comes back more then I bid, would they then counteroffer or how does that work? Thanks!
Honestly you are in for a long wait on this, no one can give you an answer though, short sales are like that.
Seems you put the cart before the horse if you are not already pre approved for a loan. IF you indeed aren’t then someone who has presented a preapproval will get the home even over your higher bid.
Where is your buyer’s agent in all this since you are way in over your head in the process?
December 29th, 2009 at 11:43 am
We are waiting for an answer on one we wrote in mid january.
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December 29th, 2009 at 11:51 am
the loan process is only about 10 days to a month. The bank is in no hurry and there may also be a PMI company involved as well who must approve the loss
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December 29th, 2009 at 12:33 pm
Keep shopping now. If you find a more suitable house, withdraw your offer and put one in on the new house. If you get a house that is already bank-owned, or one that isn’t remotely in foreclosure, you won’t have to deal with this.
Short sales are really weird. The situation is that the previous owner is about to go into foreclosure, so to prevent this, they are lining up other alternatives for the bank. The bank could choose to foreclose and then see if you want to buy it. They could decide to take your offer and let the owner off the hook for the rest of the loan. They could decide that the owner is no longer in financial trouble and that they are not going to foreclose–they will give them a break or at least a chance to make good on their loan.
If you can go month-to-month on your apartment, then you can still try for this or other short sales and see if you get one–it will be a great deal if you can. If you have a date that you have to move by (or sign for another year), then you may want to put an offer on a house that is actually for sale–rather than simply listed to see what kinds of offers come in.
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December 29th, 2009 at 12:53 pm
If you understand exactly what a short sale is you will realize that you will not EVER have a binding answer from the bank until you actually own the house.
The bank is being asked to accept a short pay on the mortgage and still release the entire lien so that the buyer will get a clear title. The bank is not a party to the contract and is not signing the contract or anything else until the time of closing.
The bank will look at data from the sellers personal finance to see if they have cash that can be used to make up the shortfall and they will look at the house to see what it would sell for if they foreclosed and will look for possible fraud (for instance if the owner is selling the house to his daughter or something) and looking to see what happens if the house doesn’t sell-(if the bank does not believe there is any likely-hood that the house will be foreclosed then the bank would have no incentive to agree to a short sale).
The bank will take whatever time they feel is necessary to protect themselves and their interest. They are under no time schedule- they are being asked to do a favor and not required to do anything.
Unless you can be very flexible in your time of closing, I would suggest that you buy another house instead.
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December 29th, 2009 at 1:19 pm
Honestly you are in for a long wait on this, no one can give you an answer though, short sales are like that.
Seems you put the cart before the horse if you are not already pre approved for a loan. IF you indeed aren’t then someone who has presented a preapproval will get the home even over your higher bid.
Where is your buyer’s agent in all this since you are way in over your head in the process?
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December 29th, 2009 at 2:02 pm
I also have a bid in on a short sale and am waiting to hear. it is basically up to the seller’s realtor to really push the offer through and if they’re not experienced in short sales it can be a long process.
Anywhere from a month to 9 months is not out of the realm of possibility. I’ve even heard of ppl waiting for a year! If I were you I’d have other options available. The loan won’t take nearly as long, maybe 2 weeks if you’ve already been pre approved.
I would recommend seeing if you can get a 30 day rider on your current apartment.
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December 29th, 2009 at 2:20 pm
Unfortunately, there is no set or correct answer. In a short sale, the party who approves the transaction is typically the behind-the-scenes investor who actually owns the underlying mortgage. This could be a high net worth individual or a fund. It is not, contrary to popular belief, the bank or entity to whom the mortgage is paid. The party servicing the mortgage will never allow you to know the true lender’s identity. The party servicing the mortgage will typically not even allow you to speak with the negotiator assigned to the file. You therefore have two layers between you and the key decision-maker. On top of that, any one of the bureaucrats working for the loan service provider can throw a monkey wrench into the mix and delay things – deliberately or not. Crucial papers that need to be placed in the file may never get there. Appraisals are tweaked or manipulated if someone has an axe to grind, especially if the short seller, or his broker clashes with a customer service provider on the other line. In the best case scenario, a reasonable lender will accept your offer if it is within an appropriate range because the lender also has monthly carrying costs for the property. In the worst case scenario, a very large lender is not immediately concerned with such carrying costs, or the absence of any fallback offer.
I have handled many short sales, and am currently working on brokering the short sale of a 14-property multifamily portfolio. This transaction involves multiple daily communications with five different lenders. It has been fascinating to compare the lenders’ vastly differing levels of professionalism.
http://www.multifamilyinvestor.com
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