How Long Does a Short Sale REALLY Take?
A year ago most of us probably didn’t even know what a short sale was. And now they are all the rage–buyers want to know what hoops they have to jump through and how much can they save on their home purchase, and sellers want to know how to unload a home that is draining their resources and can’t be refinanced or sold conventionally.
Well, here are answers to some of those questions. This is a short sale timeline from one of the larger lenders in the US, showing how the process may go and the time each step generally takes.
The Short Sale Timeframe
A short sale approve / decline can take 30-60 days from the date the offer is received. Several stages determine this timeframe:
- Day 1: Legitimate offer (legitimate means all needed documents are included, such as listing agreement, MLS listing, preliminary HUD-1 from the title company, hardship letter from the owner, and a signed purchase agreement)
- Day 2-15: Order appraisal
- Day 15-25: Owner considerations: (owner to provide needed documentation to determine hardship and ability to contribute to the loss, this timeframe depends on current owner’s compliance)
- Day 25 - 30: Negotiate delegated decisions. Non-delegated decisions will take an additional 30-60 days. Investors like Fannie Mae and Freddie Mac and insurers (FHA, VA, MI companies) have to approve the short sale before it can procede. Subordinate lenders (such as those who hold second mortgages) must agree to accept a reduced payoff amount to release their lien.
- Day 30 - 35: Approve or decline.
- Day 35 – 80: Proceed with sale until closing.
So, if you are the buyer, note that many of these stages depend on the seller complying with the lender’s requirements and providing needed documentation. Even a fair offer can be derailed, if for example your seller misrepresents the degree of hardship claimed. If you are the seller, note that some of these steps vary greatly in the time needed to complete them. You should plan on making your mortgage payments through this period; it would be terrible to be foreclosed on when a successful sale was making its way through the approval process.
Tags: avoid foreclosure, how long does a short sale take, how to buy short sale, how to do short sale, short sale
July 17th, 2008 at 9:18 am
That time frame is pretty good. I have had short sales take as long as 9 months due to lender restructuring.
July 21st, 2008 at 11:13 am
Yes, this represents the procedure for one large lender, and deviations from this schedule indicate when “escalation’ is needed to get the deal through. However, as you discovered, each lender is different. I would ask for a timeline from the lender when considering making an offer so I would know what to expect.
February 23rd, 2009 at 3:33 pm
Ours took 4.5 months from start to close. What a gut wrenching process. A lot of waiting and a ton of people walking through your home at all hours to try and get some buyers.
Also, we had heard that it would take about 60 - 90 days to have the short-sale show up on your credit. That was wrong as it showed up less than 30 days from the closing date.
June 24th, 2009 at 8:05 am
Well, I’m now on day 82 from the day I made an offer…..and every week for the last month, I have gotten the same response “you should have an answer by Friday”.