December 16:
I've been spending a lot of time understanding this AR tool and I've learned a lot and made some great new contacts. It's time to get back to blogging about THE REAL ESTATE BUSINESS... at least for a while.
Although we have our fair share of cash buyers and regular sales, much of our business lately, involves Short Sales. The timeframe on these is the most difficult for our clients to deal with. Here is something we share with our clients so they have a better understanding of why it takes so long.
The Short Sale Timeframe
- A typical short sale decision can take 45-90 days from the date the offer is received. Several factors contribute to this timeframe:
- Day 1: Receive a legitimate offer (this includes the listing agreement, copy of MLS, preliminary HUD-1, hardship letter and a signed purchase contract)
- Day 2-15: Order appraisal (timeframe to obtain the appraisal is approximately 10 days)
- Day 15-25: Analyze: (obtain necessary financial documentation from the borrower to determine hardship and ability to contribute to the loss, dependent upon input from the borrower)
- Day 25 - 40: Negotiate delegated decisions. Be advised that non-delegated decisions will take an additional 30-60 days. Many investors (i.e. Fannie, Freddie) and insurers (FHA, VA, MI companies) do not delegate the short sale decision and require their explicit approval. If there are any subordinate liens then there must be a negotiation with them to accept a reduced payoff amount to release their lien.
- Day 40 - 75: Approve or Decline (Non delegated files could take up to 35 days for a approve/ decline decision)
- Day 75 – 90: Final Decision Communication
This may not be the timeframe for all Short Sales but I believe it's close. Each case is unique and has additional issues that need to be resolved, like HOA's qualifying or delinquent HOA dues need to be negotiated etc, but it's a start.
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