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Why do Short Sales Take So Long?


Why do Short Sales Take So Long?

Realtors® know that short sales are anything BUT a short process.  Even though we are in an improved market, short sales and foreclosures will always be something we contend with.  It is important for agents, buyers and sellers to know about the process and why it can take longer than a traditional sale.


Step One:  The Short Sale Package

The bank is agreeing to take less than is owed on the property, therefore they want to get a complete idea of the seller’s finances and why the sale will be short.  This can be a time consuming and an invasive process.  The seller will be asked to provide bank statements, pay stubs and tax information.  These items are time sensitive and will need to be updated throughout the sale.  Once everything has been submitted it could take up to 30 days for the bank to review.

Step Two:  BPO or Appraisal

Once the bank has determined that a short sale is an option they will order either a BPO (Broker Price Opinion) or an appraisal.  This could take anywhere from 10 days to 2 weeks.  Occasionally the figure the bank requests is much higher than market value.  The selling agent builds a case and presents their own evidence of why it should be lower.  That could add an additional 30 to 45 days.

Step Three: The Offer

Once a offer is presented the bank will assign a negotiator and they will have 30 days to review it.  During this time the selling agent will provide closing documents so the bank will know how much of a loss they will be taking.  Sometimes there will be a next level negotiator that could add an additional 30 days to the process.


Things that can hold up the process even more!

  • Multiple Banks ~ Properties with both first and second mortgages can take double the time since both mortgage companies will need to approve the sale.
  • High appraisal ~ if the appraisal comes in higher than it should, the selling agent could be building a case to get a new appraisal.
  • The lender is dealing with internal issues.  It is not unusual for banks that don’t have a streamlined system to be backlogged and require multiple submissions of documents.
  • Sellers that take some time to get documents together to submit.

Getting the job done

If you are working with an experienced short sale agent, they are working hard to get the sale to go through.  Patience from all parties is key.  Threatening to walk away from the sale will not cause the bank to work faster, in fact it can cause them to work slower.  Why would they want to put effort into a sale that could potential walk away at any moment?   Make sure you are working with a Realtor® that understands the short sale process.  Open communication and patience is what is needed for a successful transaction.

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