Short Sale-What to expect?

Question

We wrote an offer tonight on a house listed on the MLS as being subject to short sale approval. It states that the selling price will be approved by the lender within 48hrs.  If we agree on a price with the owner what should we expect from the lender?  My agent wrote it for a 60 day closing but I've heard it can take up to 6 months or more. What are the lenders looking for in the offer and what are the chances of closing in the 60 days? Thanks in advance for any ideas.

Wayne Brooks · Answer

There's only two possible ways a bank will respond to price within 48 hours, and your agent should have verified.
1) If the loan was bought as part of pool by one of the funds at a huge discount, and their exit strategy is to dispose ASAP.
2) If another short sale just fell apart on this house, and they're trying to "slide another buyer in" before the approval deadline expires.

Either one is not likely.
For a normal short sale you need to allow 90-120 days for approval, then 30-45 to close.

Jodi M. · Answer

The offer was submitted to the bank on Tues and accepted on Friday. The bank told the realtor they want to close by the end of the month. Hopefully they will follow through with that but I learned from our first foreclosure that dates don't mean much when dealing with banks.

Jodi M. · Answer

Wayne Brooks I don't know the prior accepted offer. I know it sat on the market for quite a while the first time and was just relisted in March. According to the listing agent due to the failed inpsection they did drop the asking price by $5,000 when they relisted it. Hopfully it will go a little smoother than most short sales I've heard about, if not we don't need to have it at any specific time. Good or bad it will be another learning experience.

Wayne Brooks · Answer

Jodi Melssen Do you know what the prior contract price was?
They won't always leave an "approval window" open for a different buyer, but it's the best bet for a quick answer.

Jodi M. · Answer

Wayne Brooks Looks like one of your ideas is exactly what happened. Talked to the listing agent and another offer fell through during inpsections. When they turned the water on they found water leaking through one of the walls and with the recent amount of rain they found the roof leaking over a porch. We do almost all repairs ourselves so we are still going ahead with the offer. The agent thinks they will accept our low offer and close in 30days (seems to fast to be true). We are planning to keep this one as a buy and hold.

Offer $40,000
Required repairs $8,000 
ARV $80,000+
Rent $900/month (which is high for this area)

J Scott · Answer

FNMA is approving some short sale transactions within 24 hours of offer submittal, but this isn't very common in my experience.  You should have your agent ask the listing agent why they believe they can get a response within 48 hours...perhaps there is a good reason.

But, otherwise, you should expect that the transaction could take up to 12 months...or even longer!

Jodi M. · Answer

Thanks Ned, The listing agreement states the lender will approve the selling price within 48hrs. It was also posted that way on MLS. We are hoping by having that stated it will go fairly quick. I know none of them really go quick but hoping it's not 6 mo. Our agent has done several short sales and her office does quite a few so I'm hoping that will help. I don't know who the lender is yet, but I will ask that when I talked to her again.

Ned Carey · Answer

What states that? The listing or your contract.

Yes it can take six months or more. If your agent is experienced or their is an experienced short tale negotiator involved, that person may be able to give you some Ideal based on who the lender it.  Good luck - Ned

Short Sale-What to expect?

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