Short Sale FAQ's
Q: How long does the typical Short Sale take?
A: The amount of time required to close each Short Sale transaction will vary. The following 4 parties to a short sale have the biggest impact on the time required to close a Short Sale:
1.The Seller - Sometimes the seller does not want to move forward too quickly and drags their feet at the beginning. This may cause the file to be on hold until the seller decides otherwise. The downside to this is the seller may waste too much time and the Lender may end up foreclosing. We try not to take on uncooperative clients.
2. The Lender - Put yourself in the Lender's shoes. Would you take the first offer that comes across your desk on your own house, even though it is $100K below what it is worth? Of course not. However, if the short sale is presented right and the Lender can see that it is in their best interest to cut their losses early to stop the 'bleeding', they may move forward.
3. The Negotiator - Now, when we say negotiator, we mean the Agent or Investor that is negotiating the Short Sale with the Lender. Many times, an unexperienced or uneducated negotiator will cause the transaction to be on hold, when the Lender is willing and ready to move forward, as soon as a good offer is presented to them. Another term for Negotiator is Loss Mitigator.
4. The Buyer - Usually the buyer will only hold up a transaction IF he/she is not really qualified for their new home financing and are not able to close on their loan within the time allotted by the Lender accepting the Short Sale. Also, some buyer's get cold feet or find another property without notifying us. In this case, the next chronological offer is usually given the chance to perform and close the transaction.
Q: What kind of time line / expectations should I give my buyer?
A: Expect 8-10 weeks after submitting an offer before you will hear if the offer has been approved by the bank. The seller is the one who 'accepts' the offer, but the Lender must 'approve' the Short Sale in order to have a successful transaction. Communication with Loss Mitigation is usually slow, long and drawn out (because of the Lenders volume of calls and number of short sale packages being submitted). As far as updates, you and your client can visit this site weekly to see status updates for the listing on which you have submitted an offer.
Q: What exactly is a "soft escrow"?
A: Read through our Guidelines for more in-depth answers
Q: How can I help the Short Sale process move along quicker?
A: Usually the best way to help things progress is by responding quickly to our calls, faxes and emails (within 24 hours). Besides that, just make sure your client has his/her financing in order for the moment that the Lender says GO.
Q: Why didn't I hear back from anyone after I submitted an offer for my client?
A: If sending offers via firstname.lastname@example.org the autoresponse will be one response. Due to the high volume of calls with Lenders and clients, the most effective way for us to communicate with you (the buyer's agent) is by email. If you did not receive a confirmation email within 24 hours of submitting an offer send an email to email@example.com
Q: Does my buyer have to use the lender who is referenced in the agent remarks?
A: Please note that the pre-approval from one of our approved lenders needs to be submitted with ALL 4 items indicated in our Submitting Offers page. OTHERWISE, YOUR OFFER WILL BE REJECTED.
Q: What will the bank/lender accept on the property that is listed OR What is the current price?
A: While we do have a good idea of what price range the bank will consider 'reasonable', each lender is different and some are not willing to take much of a loss at all.
Q: How come the commission offered is lower than what I am used to receiving on a transaction?
A: In most cases your buyer is getting a property at 10%-20% below market value and the bank is taking a huge loss to make that possible (Banks/Lenders don't like to own Real Estate, so they are willing to take a loss now rather than take more of a loss later). On your side, as a buyer's agent, the process is fairly simple. As long as you set up proper expectations with your buyers, they will not be calling you for updates every other day. We receive updates on a monthly basis. Calling or emailing us weekly detracts from our efforts to get the file approved so please be patient and check with us every 30 days if you need to.
Q: What should I do to make sure my client can close quickly once the Short Sale is approved?
A: If your client is the offer on a property that is under lender review, make sure that your buyer has been pre-approved for their purchase financing. The only outstanding prior to doc condition should be the Appraisal. Once the lender has ordered a BPO (Brokers Price Opinion), it usually means they are within 30 days of making a decision. When the bank/lender notifies us of approval we will notify all buyer agents.
Q: Why are the properties you have listed so inexpensive?
A: In some cases the property is in average or poor condition and/or it needs to be sold quickly to avoid foreclosure. The Lender is usually going to save money in the long run through a Short Sale vs. a Foreclosure Auction or taking the property back and trying to market it and sell it with their REO Broker. Even though they may be losing $50,000 or more by accepting a Short Sale now, it will still probably save them money in the long run, especially in a declining market.