Timeline in a NEW Short Sale Transaction
Usually when a new short sale property comes on the market, it is done as an offering from the current homeowner through a Realtor. The bank has normally not yet been notified and so at this point, if all goes well, it will be 2 to 4 months before it will close.
The steps are fairly drawn out but in short, here they are:
1. The seller (home owner) must first qualify for a short sale. In other words, the seller must prove to the bank they cannot make the payment. Filling out all the paperwork and providing the bank with all their requested documents takes a minimum of 4 weeks.
2. If approved for a short sale, the file is sent the short sale department. Approximately 1 month later the file will begin to be processed. We make sure the file regarding the Purchase contract is complete and the bank gets everything they require.
What we need from you, the buyer is:
1. Legal name, as you want it to read on the deed.
2. ONLY a copy of your deposit check. (This is 3% of the Offered Purchase Price).
3. Verification of funds- (you proving you actually do have the money) for the down payment and closing costs. If paying cash, we’ll be verifying the money is there for everything including escrow and miscellaneous costs.
3. Then once the processor acknowledges the file is complete and every box has been checked and all documents are in, it goes to the bank’s Negotiator. This step takes less than a month.
4. The negotiator/processor will order an appraisal. This takes an additional 2 to 3 weeks to get that ordered and back to the negotiator.
5. If everything checks out at this point, it then goes to the Investor (the entity that actually owns the mortgage). The investor is the final person that OK’s the sale based upon the property being aggressively marketed. During this process they verify the price is the fair market value, which all in all takes at least a month.
6. Once all of this is done and accepted, an ordinary escrow will be allowed to open. For some this will now become a familiar transaction. The escrow for a cash deal will be at least 21 days, if a loan is involved, you must allow for a 30-45 day escrow.
7. During escrow, other things can happen that may affect closing. Anything from an issue with Title to problems discovered during buyer investigations that include a home inspection and review of other reports such as HOA docs. Any problems uncovered may be cause to extend or cancel the escrow.
When all of these issues are resolved or when escrow is completed, we will be notified of Confirmation of Title and Deed Transfer through a Title company and you become a happy homeowner!
So now you know. I’m not trying to discourage anyone from buying a short sale. Rather its important to note that the process can be long and may not be for everyone or anyone who’s in a hurry to own.