Why do short sales take so long?

10 Replies

I currently have an offer in on a short sale...it has been 3+ weeks since my offer without a response from the bank...I was told 8 days ago I would get a response with 48 hours...I still haven't heard anything to date...

Does anybody know why it takes so long to Accept, Reject or Counter on short sales? Is my offer just gathering dust on a desk somewhere or is the bank working deligently to evaluate the #s?

Is anyone familiar with the innerworkings of banks with regard to short sales?

Having done my fair share of shorts I have to say time is relative.

Most people earn between 40 - 60 thousand a year at a normal job. I've done shorts which took 6 months where I make 40k I've done some where I made much more in less time. The key is I was doing multiple shorts at the same time.

Our business is a matter of averages. Just fill up your pipeline and eventually profits will come weekly.

And if you really wanted an answer specific to your question, it is because banks are so packed with foreclosures and pre-foreclosures, they simply did not have the man power or the systems in place to handle it. You would think that after 3 years running, they would have improved on that. They may have in some very minor ways, but nowhere near where they should be. Sorry I don't have a better answer for you, but as Michael stated, don't sit and wait on one, have many going, the paychecks will eventually role in.

I have been working one of my short sales for over 2.5 months now and I was told we would have approval 6 weeks ago, still waiting . . .

I took me 4 over months to finally close on my Calabasas short sale due to the bank taking so long, but the wait was worth it, I am now countering on two offers I have received and will have a bid payday coming soon on that deal.

From what I understand its depending upon the size of the bank. Are you working with a local bank? In that case its possible to get a quick answer. Larger banks take longer due to the larger mortgage portfolio that they have and also they have a longer process to get to the decision that they need to make to release that property for less than what the seller owes. Basically you are making an offer to buy a property for less than someone had already committed to their lender to buy at a higher price and now is in default. Why would a bank be willing to let a seller off the hook so easily?

David, you really have to relax a bit. Our short sales average 60-90 days before we either get approval or close and it's only been 3 weeks??? It can take a Fannie or Freddie backed servicer up to 30 days to just LOOK at the file and then from there they make sure all the paperwork is up to date. If it isn't they go back to the seller to get updated paperwork. Once everything is in order they order the valuation, which can take up to a week or two to order, and get back. Once they get the valuation back they can usually see if it's within acceptable lender limits and that's ONLY IF THEIR is ONE LIEN. If there are two lien holders, it may take more time.

Be patient. If you want the house be prepared to wait. If you can't wait, a short sale was not the best option for you.

Thanks for the input all.. I have decided to wait this one out. As many of you have suggested, if the numbers are right it is worth the wait. I am still actively looking for other properties to make offers on, so this property will be my back-up plan if I find another property in the near future. I am only out a $1000 EMD, so its not that big of a deal...

I guess I'm just a little frustrated with how inefficient the process is and it seems like short sales and real estate transactions as a whole could be streamlined a bit...there's just got to be a better way!

Hi Dave,

The other thing that I don't think anybody mentioned yet is the ridiculous amounts of red taped involved in the approval process for the bank to take the short offer. There are layers and layers of departments IE. loss mitigation depts, portfolio Managers, that it needs to go through to be approved...

sit tight though and good luck!


If it's any comfort, I had a short sale deal that took 1 year to close! Bank took forever to negotiate it, then the mortgage insurance company refused to agree. By then of course, the BPO had expired and the house had been vandalized twice. Back to square one. Short sales are an exercise in patience.

I'm now into month 6 of another short sale. Same exact scenario, the mortgage insurance company refuses to play ball. Eventually they will, but by then, the BPO will likely expire and we'll have to start all over. That's the game.

I'm leaning hard toward buying a short sale or two for buy and hold - I'm looking at renting the properties for 15+ years. I want to build a rental portfolio slowly and for the neighborhood that I'm looking at, short sales offer the best price.

I'm thinking that I want to put in two short sale offers and just wait until something happens one way or the other. If one falls through, I'll just make an offer on another short sale.

Question: Would you put in a short sale bid and then wait to hear back from the bank prior to applying for a mortgage? I'd prefer to go this route, as I don't want to jump through the hoops of applying for a mortgage when it may take many months before I buy a property.
I'll have zero problems qualifying for a mortgage - 740+, zero debt (car paid for, currently renting), good income. My first purchase will give me a DTI around 10%.

I was at an investors meeting last week and this same topic came up. I have never tried a short sale exactly because of the time issue but many people at that meeting were saying that they have been seeing short sales moving a lot quicker mainly because of government rules forcing them to respond quicker.

I have yet to see a quick short sale but based on their feedback decided to give it a try. I did put in an offer on a short sale about a month ago now and am still waiting...


Short Sales cover the spectrums of time and satisfaction. In the realm of short sales, 3 weeks is just a few minutes. I have worked on hundreds of them, some taking literally more than a year. In fact, I've just had one resurrected from three years ago, where the lender had waffled somewhere between doing nothing and very little about our attempts to get a package reviewed.

All in all, its a great niche of real estate if you are poised to capitalize. I don't know your position in the transaction, but if you find yourself in the middle of a double transaction or some variation of buy and sell, you can realize very nice net margins.

Summarily, hang in there and don't get jumpy for that response. Short sale processing is very robotic - like a rusted old robot from the 80's, unfortunately. It's people don't care much for progress, content to bear the weight of another day at the cubicle beneath massive clusters of manila. Often, the processing is outsourced to Indian services centers, further blurring the lines of communication and efficiency.

Ultimately, those with patience and perseverance in this lovely niche stand to do very nicely for themselves. Feel free to ask questions directly - about five years ago, i wrote a book on the topic of short sales, before they became "en vogue" to realtors and investors alike!



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