Once an offer is made, it still needs to be approved by the bank, which can take weeks or even months. A conservative estimate should allow six months, from start to finish, in a short sale. It can take up to 12 months for a lender to process a short sale package, including an offer from a viable buyer. At that time, the buyer must wait for approval from the lender.
If there is no response from the lender, it may be time for the interested buyer to move to a different home. Once a mortgage lender finally approves a short sale buyer's offer to buy, the closing period is usually very short. For example, it's not uncommon for a mortgage lender to accept a short sale and demand that it be closed within a couple of weeks. In some cases, a mortgage lender who approves a short sale has wanted to close one day after the offer was accepted.
Once your mortgage lender approves the short sale buyer's offer to buy, be prepared to close your sale soon after. There is no mandatory limit on how long you can keep a job short. Short selling involves having a broker who is willing to lend shares with the understanding that they will be sold on the open market and replaced at a later date. Keep in mind that the short selling process could take much longer than the traditional home purchase.
Even with a qualified agent, it's not uncommon for short selling transactions to take six months or more to close. When an investor or trader enters a short position, they do so with the intention of profiting from falling prices. This is the opposite of a traditional long position in which an investor expects to benefit from rising prices. There is no time limit on how long a short sale may or may not be open.
Therefore, a short sale is maintained, by default, indefinitely. A short sale can take as little as a few weeks or several months. Because short selling is complicated transactions, they tend to take longer. In addition, the original lender must review the short sale offer to determine if they will accept it.
If the lender believes they can make more money through the foreclosure process, they may not accept the short sale proposal. Real estate professionals who have experience in short selling often find it easier to navigate the complex process of selling or buying a short sale. The variables are so wide and complex that a real estate agent specializing in short sales could only estimate the time elapsed from offering to closing, even if he were fully aware of the facts of his case. A Comparative Market Analysis (CMA) takes into account the value of similar properties to estimate the value of the home you are trying to sell.
The time frame for selling a home as a short sale varies by state and depends on the owner's actions, the bank's actions, the various internal processes within the bank, what is the difference between mortgage value and home value, and other factors. It's bad enough that you owe more for your house than it's worth, but having to sell it for less than you should aggravate the injury. For example, you probably want to make your offer subject to approval of the sale by the lender, while you're willing to wait for the short sale to be approved and the amount you'll pay in closing costs. On the other hand, finding a short-selling buyer smart enough to structure a deal that your lender accepts may require some work.
A landlord applying for a short sale should try to get an exemption to prevent the lender from trying to recover lost money in the future. To sell the house as a short sale, the homeowner begins the process by submitting a package, as required by the bank, which includes information about the owner's finances, information about the home's market value and the particular difficulties faced by the owner that would turn short selling into necessity. That's not to say that everyone is going to have such a painful experience buying a short sale, but it's important to set your expectations realistically. Homeowners who can continue to pay their mortgage while the short sale is taking place can avoid the worst credit impacts, which means that anyone trying to sell their home as a short sale must budget, plan and be prepared.
Some homebuyers choose to endure the complications of short selling because they could buy at a bargain price. Meanwhile, if a short position is used as a hedge against a long position, the investor can choose to keep the short position while the stock is owned or for as long as they choose to hedge the risk. If the broker's opinion on the price (BPO) or the valuation of the property is inaccurate, bank representatives may develop an unrealistic expectation of how much they can get by selling the house. The decision to proceed with a short sale depends on your individual situation and what is likely to work best for you in the long term.
A typical short sale involves a series of steps, generally in this order, according to Bobbi Dempsey, co-author of “The Complete Idiot's Guide to Buying Foreclosures”. . .