Prior to listing a property for sale, the seller must document hardship and the inability to pay the promised mortgage to receive approval from the lending bank to allow a short sale. Those documents must be updated monthly. Once the property is listed, showings and offers begin.
From a buyer’s point of view, once he’s decided to make an offer, the homeowner accepts, rejects or negotiates the offer. If and when all terms are agreed upon, the home goes under contract with the homeowner. The Offer to Purchase and Contract package is sent to the lender’s loan liquidation department along with a proposed HUD or settlement statement.
From there, an asset manager, sometimes called a file manager, is assigned. That can take hours to days, depending upon the bank’s volume of sales in the short sale department. Once the asset manager is assigned, all paperwork is forwarded and reviewed. Back up offers from other interested sellers are also received and submitted for consideration.
If all goes well, within 30 days or so, the investor who purchased the loan from the bank reviews the Offers/Contracts and decides whether or not he also accepts the terms offered. The bank then communicates the decision back to the seller who lets all parties know the verdict.
Behind the scenes, the bank must also eliminate or settle any second mortgage or other liens to make way for a clear title to be transferred to the buyer. Title companies won’t issue a title policy assuring no one else can step forward to claim ownership with any money still owed.
It can take as many as long as 6 months to iron out all the details. At any time, until the day and time of closing when the documents are signed and recorded, the investor may accept any other offer and bump the buyer’s to a null position.
Because many buyers don’t stay in the game for the duration, and for other reasons, fewer than 40% of short sales close. The property then becomes a foreclosure owned outright by the bank. It’s negotiated simply and can close in 15 days for a cash buyer, 30 days for conventional loan, and 45 days for an FHA loan.
It takes a special kind of dedicated buyer to pass by all other listings and continue hammering through a short sale for weeks and months at a time with no update from the bank. It you think that’s you, let’s talk. There are many great deals out there. Call me to discuss your big picture. 704-562-1030