A short sale is a transaction where a homeowner sells their property for less than the amount owed on the mortgage. The lender agrees to accept a lower price to satisfy the debt. Short sales can help homeowners avoid foreclosure and provide relief from financial hardship.
Key Facts
- The timeline for a short sale to be approved can vary depending on various factors such as market conditions, price, and the efficiency of the involved parties.
- Before the short sale can be considered, the property needs to be marketed and a buyer needs to be secured.
- The average time to secure a buyer can vary depending on market conditions and price, but it is generally within the first month.
- After the buyer is secured, the average short sale approval time is about 6-12 weeks.
- After approval, there is usually an additional 30 days needed to close the sale.
Factors Affecting the Timeline
The timeline for a short sale to be approved can vary depending on several factors:
- Market conditionsIn a competitive market, it may take longer to find a buyer for the property.
- PriceThe price of the property can impact the time it takes to secure a buyer and obtain lender approval.
- Efficiency of the parties involvedThe responsiveness and cooperation of the seller, buyer, lender, and real estate agents can influence the speed of the process.
Timeline of the Short Sale Process
Marketing and Buyer Securing
Before the short sale can be considered, the property must be marketed and a buyer must be secured. The average time to secure a buyer can vary depending on market conditions and price, but it is generally within the first month.
Short Sale Approval
After the buyer is secured, the short sale approval process begins. This typically involves the following steps:
- Documentation collectionThe lender will request various documents from the seller, including financial statements, tax returns, and a hardship letter.
- Property valuationThe lender will order an appraisal or broker price opinion (BPO) to determine the property’s value.
- Negotiations and investor approvalThe lender will negotiate with the buyer and the seller to reach an acceptable price and terms. The lender’s investor must also approve the sale.
The average short sale approval time is about 6-12 weeks after the buyer is secured.
Closing
Once the short sale is approved, the sale can close. This typically takes around 30 days.
Conclusion
The timeline for a short sale to be approved can vary, but it generally takes several months. Homeowners considering a short sale should be prepared for a lengthy process and should work with experienced professionals to ensure a smooth transaction.
Sources
- How Long Will a Short Sale Take? Get the Scoop on Short Sale Timelines!
- How Long Does a Short Sale Take? Your Ballpark Buyer’s Timeline
- The Complete Short Sale Process from Beginning to End
FAQs
How long does it typically take for a short sale to be approved?
**Answer:** The average short sale approval time is about 6-12 weeks after the buyer is secured. However, the timeline can vary depending on factors such as market conditions, the price of the property, and the efficiency of the parties involved.
What is the first step in the short sale approval process?
**Answer:** The first step is to market the property and secure a buyer.
What documents will the lender request as part of the short sale approval process?
**Answer:** The lender will typically request financial statements, tax returns, and a hardship letter from the seller.
What is a BPO, and why is it used in short sales?
**Answer:** A BPO (broker price opinion) is an estimate of a property’s value provided by a real estate agent. Lenders often use BPOs in short sales to determine the property’s value.
What happens after the lender approves the short sale?
**Answer:** Once the lender approves the short sale, the sale can close. This typically takes around 30 days.
Can a short sale be rejected?
**Answer:** Yes, a short sale can be rejected by the lender. This can happen for various reasons, such as if the lender believes the property is worth more than the offered price or if the seller’s financial situation has improved.
What are the benefits of a short sale?
**Answer:** Short sales can help homeowners avoid foreclosure and provide relief from financial hardship. They can also help homeowners improve their credit score more quickly than if they went through foreclosure.
What are the drawbacks of a short sale?
**Answer:** Short sales can take several months to complete, and there is no guarantee that the lender will approve the sale. Additionally, homeowners may have to pay closing costs and other fees associated with the sale.