Q. Why do short sales take so long?
A. Short sales happen because the loan on the property is larger than the sale price minus all the sale expenses. With a short sale, the seller is asking the bank to take less than the amount owed. Even if you've made an offer and the seller has accepted it, it's not a done deal. The seller's bank must approve the sale, and this is where the big delays happen. It's important to know that a buyer and their agent have no control over the process.
In order to approve the sale, the lender requests a complete short sale "package" from the seller. Much like the package you must submit to get a loan, the seller must submit their entire financial history. The lender will want to see the seller's debts and assets, review their credit score and the contract to purchase the home.
Most banks require hundreds of pages in the short sale package, and many of those pages require signatures from buyers, sellers and agents. If one page is missing or one signature left blank, the document doesn't get processed. It can take weeks to get a response from the bank, informing the agent that things are missing.
Once the initial documents are "processed" the file goes to the desk of a negotiator, who starts his own review. He may ask for the buyer's proof of funds, review the preliminary title report, counter the buyer on price, ask the seller to contribute to the sale, lower the commission or request more verification of the seller's hardship. The negotiator could request just about any additional information and the bank's request could kill a deal at any moment.
And there's no way to anticipate this ahead of time. It can be a very anxiety ridden process and a lot of buyers will simply not get involved in a short sale.
There's a lot more to it and I'd be more than happy to discuss this further with you and answer any questions you may have. Just give me a call.