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How Long Can Your Short Sale Take?
You hear the term “short sale” all of the time but do you actually know what it means? Before we can figure out how long your short sale can take, let’s define what a short sale is. A short sale is when a home seller owes more on their mortgage than their home is worth. And, in order to sell, a special arrangement needs to be made with the lender to accept less than the amount owed in the sale.
Now that you know what a short sale is, you can understand why it is slightly different from a standard transaction. For that reason, there are some factors that could slow a short sale down.Lender. For a short sale transaction, you are not just dealing with one lender but sometimes two. Each lender has hundreds of files. Since they are in charge of so many loans, they are waiting for calls back from multiple clients and agents. They need specific documents to keep the transaction moving along. Seller. The seller has to have the short sale approved by the lender. They also must make sure they have all of the documents for the property in order. Buyer. If the buyer has to have a loan of their own, then they have to make sure that the loan is good to go, possible credits from the seller or agent are in order and all of the proper documentation is in to the lender before closing. If the seller or buyer delays in getting any of the paperwork to the lender, it can cause delays in the close of escrow. If a short sale can take longer than a traditional transaction, then why do people agree to a short sale? We’ll look at it from a couple different perspectives.
From the lender’s perspective:
- The lender loses less money but doesn’t have to go through the foreclosure process.
- The lender still gets a large portion of money from the closing of the deal.
From the seller’s perspective:
- Most of the seller’s debt is absorbed by the buyers.
- The seller avoids foreclosure and does not have to pay the agents commissions.
From the buyer’s perspective:
- They are able to purchase a home for less than market value.
- People tend to shy away from a short sale because it can be a longer process but that means there are less buyers attempting to buy the home.
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