Home > Blogs > Tni LeBlanc, Realtor®, J.D. > Santa Maria, Orcutt, Nipomo & Lompoc Real Estate

What Makes A Short Sale Take So Long?

By Tni LeBlanc, Realtor®, J.D.

Real Estate Broker/Owner with Mint Properties, Lic. #01871795 Lic. #01871795

April 03, 2011 06:36 AM

What Makes A Short Sale Take So Long?

There is a lot of controversy about this issue. Given the term "short sale" often buyers and sellers alike are mystified as to why these sales seem to take so long. Well, the "short" in short sale refers to being short on the loan, not "short" in the time frame for the process. That said, it should be noted that not every short sale takes a long time. Some short sales take longer than others. There are a lot of different factors that can affect how long it takes to get short sale approval. It is clear that short sales do not have to take that long. A few factors that can affect how long short sale approval can take are:

•·         Submitting a complete short sale application
•·         Negotiations with second (or other) lien holders
•·         Processing times/work load with the servicer
•·         Timeframe on lender valuation of the asset
•·         Negotiating a waiver of deficiency
•·         Processing times with the investor
•·         Loan modification offered to the seller

Potential short sale sellers can control some of these factors; however, some of them they have no control over. Some servicers are just routinely (and notoriously) slow. Other servicers turn around files in 30-45 days. In my opinion and experience, servicers who take 5 months or more to review a short sale application are more of the exception than the rule these days. Receiving a response in 6 - 8 weeks is more typical, but of course, there is no guarantee. Also, processing times varies according to the short sale program you apply under, and accessibility of the decision makers seems to be the most important factor. I've received short sale approval in as short as two days on a file submitted to a local bank. So, short sales don't have to take a long time, and not all of them do. You don't have complete control over whether yours will be processed quickly, but certainly having an aggressive and experienced agent will aid in that process.

If you are considering a short sale of your Santa Maria CA, Orcutt CA, Nipomo CA or Arroyo Grande CA home, you should seek out an experienced short sale agent to guide you through this process. There are many pitfalls that can be avoided with the right upfront advice. If you would like a short sale consultation, please call my office to schedule a meeting or a telephone consultation at (805) 938-9950.

Tni LeBlanc is an independent Real Estate Broker, Attorney, Short Sale Agent, Certiified HAFA Specialist (CHS), and Certified Distressed Property Expert (CDPE) serving the Santa Maria, Orcutt and Five Cities area of the Central Coast of California.

*Nothing in this article is intended to solicit listings currently under contract with another broker. This article offers no legal or tax advice. Those considering a short sale are advised to consult with their own attorney for legal advice, and their tax professional for tax advice prior to entering into a short sale listing agreement. Mint Properties is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.

Re-Blog

Comments(16)

Comment

Show All Comments

Sort:

Sharon Kolb

Atlanta Decatur Homes - Atlanta, GA

Broker - Atlanta Decatur Homes

Tni - do you think the length of time to process "short sales" has shortened because of all the complaints, or have lenders hired more processors?

Apr 03, 2011 06:38 AM

Karen Fiddler, Broker/Owner

Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA

Orange County & Lake Arrowhead, CA (949)510-2395

Ok, I'm sorry....2 days? How is that even possible? I want to work with you on my Santa Maria Short Sale ;)

Apr 03, 2011 06:38 AM

Brandon Watters

Somerset, PA

Some servicers are just routinely (and notoriously) slow

Just to think about it from the bank/servicer perspective, they are (eventually) agreeing to a loss on the mortgage owed. There are additional factors for this lender to consider outside of a traditional full payoff. If they take extra time with this decision that is certainly within their right and any of us would do the same if we were offered pennies on the dollar for an owed debt.

Apr 03, 2011 06:41 AM

Allison Lahey

Cape Cod MA Homes, Second Homes, Seaside Homes - Marstons Mills, MA

Cape Cod MA Realtor

You make some great points and you've helped de-mystify the short sale process for me. Thanks!

Apr 03, 2011 06:42 AM

Valorie Stover, Realtor for Casta del Sol

Casta del Sol Real Estate / HomeSmart Everygreen Realty - Mission Viejo, CA

Mission Viejo,CA, Active Adult Community!

WOW! 2 days! The fastest time I had was 7 days and I was shocked! Let us know if there was a special reason that it went so fast! We all would love to have more of these!

Apr 03, 2011 06:43 AM

Vickie Rohrer

Prudential PenFed Realty - Salisbury, MD

YOUR REAL ESTATE CONNECTION ON THE EASTERN SHORE, MD

Ok, I am doing something wrong my shortest short sale was just under 4 months. Oh how I wish I could have 2 days..They can really suck the life right out of you..Sorry for the expression.

Apr 03, 2011 06:49 AM

Maria Couto

RE/MAX Premier - Berkeley Heights, NJ

Realtor with "Results That "MOVE" You'

2 days or 7 days are incredible for a short sale closing. I gotten use to seeing several months, and after that buyers often loose patience and walk away.

Apr 03, 2011 06:52 AM

Richard Iarossi

Coldwell Banker Residential Brokerage - Crofton, MD

Crofton MD Real Estate, Annapolis MD Real Estate

Tni,

I think in general, the inconsistency is what drives everybody in the transaction crazy. That being said...there has been an improvement.

Rich

Apr 03, 2011 06:58 AM

Tni LeBlanc, Realtor®, J.D.

Mint Properties, Lic. #01871795 - Santa Maria, CA

Tenacious Tni (805) 878-9879

Sharon - I think initially banks were in denial about the sheer number of short sale applications that they were presented with. That time has clearly passed. Although I'm certain there are spikes, short sales are a part of a new normal and reasonable processing time is rightfully expected by those involved in the transaction. Equator has certainly helped BofA.

Thanks Karen! - the lender was primed and ready for the deal. When lenders want a short sale, in my experience, the process can move quickly.

Hi Brandon- I would have to disagree with you on this. Because I think they make the situation worse by moving slowly. So, no if it were my decision to make I would make the decision in a quicker fashion. Of course every file is different, and in some cases the loss is insured and motivation for them to do a short sale is low. But, in general short sales are a lot easier and less costly than foreclosures and the amount recovered is higher. You are correct it is certainly their right, a short sale (and a timely short sale) is not a constitutional right. A lender may certainly decide not to accept a short sale.

Allison - Thanks for stopping by!

Apr 03, 2011 07:11 AM

Tni LeBlanc, Realtor®, J.D.

Mint Properties, Lic. #01871795 - Santa Maria, CA

Tenacious Tni (805) 878-9879

Hi Valorie - The lender was local and had already considered the file for loan mods etc. An auction date was pending. Rather than extending the foreclosure date out substantially, they simply processed the short sale application quickly to minimize any additional delay (and loss).

Vickie - They are definitely a marathon not a sprint most of the time. When I had the approval in two days, I think the buyers were actually stunned!

Maria - Yes, it is important to properly prepare the buyer for how long it will actually take. If they need something right away they don't need to buy a short sale.

Rich - I think you are right there has been improvement and there is still a lot of inconsistency about the process. I am hoping that this proposed new settlement makes things even easier across the board.

Apr 03, 2011 07:39 AM

Peggy Hughes/pha logistix, inc.

pha logistix inc - San Francisco, CA

SF NYC LA

Thanks for a wonderful explanation of the "process", Tni.

Apr 03, 2011 08:08 AM

Pam Dent

Gayle Harvey Real Estate, Inc. - Charlottesville, VA

REALTOR® - Charlottesville Virginia Homes / Horse

Tni - Good post explaining why short sales often are not short; I think this is a mystery for many people.

Apr 03, 2011 12:14 PM

Jack Mossman - The Nines Team at Keller Williams in Lodi

The Nines Team at Keller Williams in Lodi - Lodi, CA

The Nines Team in Lodi

Tni - Some of the Chase "invitation" short sales are closing in record time ... not 2 days but not 200 either! I will observe ... that many times the time consuming part of the short sale may be caused by the sellers' files being incomplete or out-of-date.

The other issue is for the listing agent to negotiate the junior liens first ... you don't always get what "they" want ... but you at least have them on board for the process and know who to contact when the first comes back with a different opinion!

Apr 03, 2011 12:52 PM

Conrad Allen

Re/Max Professional Associates - Webster, MA

Webster, Ma, Realtor

Hi Tni - Local lenders are wonderful to work with when there is a short sale. Listing agents should begin negotiations with the lender prior to listing the property.

Apr 03, 2011 04:37 PM

Tni LeBlanc, Realtor®, J.D.

Mint Properties, Lic. #01871795 - Santa Maria, CA

Tenacious Tni (805) 878-9879

Thanks for stopping by Peggy!

Pam - I'm glad you liked the post. Yes, it is a mystery for many people.

Jack - Yes, I've heard reports of days not weeks on those. However, I've found them to be one of the ones that take 5 months or more on their other short sales. Glad to see them turn a corner at least on some of their files.

Conrad - Yes, local lenders tend to move a lot quicker on short sale files. It is often difficult to begin negotiations prior to listing though - but yes early contact with the lender is ideal.

Apr 03, 2011 05:55 PM

Paul Gapski

Berkshire Hathaway / Prudential Ca Realty - El Cajon, CA

619-504-8999,#1 Resource SD Relo

Well sometimes i dont know what to think of short sales. They are getting better and then they are not!

Aug 13, 2011 12:44 PM