Short Sales, Got Patience?

You need patience with a Short Sale.

Short Sales can take a long time. As a realtor I have seen some homes on the market for over a year. The best time to bid on a short sale is after a buyer has walked but the listing agent already has an acceptance from the banks.

Typically a short sale is created when a buyer defaults on their mortgage payments. The buyer owes more on the home than it is worth. Making the payments month after month sends the owner into financial distress. Eventually they stop paying.

The bank usually waits a few months hoping the buyer will catch up and continue to pay on the property. When this doesn’t happen they will file a notice of default. This means the bank is starting to foreclose on the home.

The owner will list the property with an agent who will need to acquire certain documents that show the owner incapable of making payments. They will send someone out to do a BPO (valuation of the property). Sometimes these BPO’s are way off and the bank thinks the property is worth more than it is. In this case a lot of negotiation will be necessary.

All these negotiations can take 3-12 months and you never have a guarantee. Hopefully the bank will take the money but in some cases they have sold a property on the courthouse steps while a buyer was waiting for a response from a negotiator from the same bank.

You can get a really great deal but you will need to be patient and I recommend keeping your options open. Until you have an acceptance from the bank you really don’t have a deal. Which is why if the bank has already approved the short sale your chances are much better. You could have a closed transaction in 1-3 months if the bank is ready and willing to accept your offer.