Many people are passing up on great opportunities by not looking at short sales when purchasing property. For individuals looking to close on a property in a normal 30-45 day period, then I agree short sales are not a good option. If timeframe is of no importance for you, then don't miss out on an opportunity to by a pre-foreclosed home.
Typically, if the listing agent has done his part correctly, the bank should have an approval in 6-8 weeks. Here are some key things to have your realtor ask the listing agent when offering on a short sale.
1.Who holds the mortgage? If Bank of America is the lien holder, it may be a little longer than the average wait time as they have many more properties to deal with than any other bank and the listing agent must stay on top of the file in order to get an approval in a reasonable timeframe. Most other banks should be pretty painless to deal with and again a 6-8 week timeframe should expected.
2. Has the listing agent submitted the complete short sale package to the bank(this includes all the seller's updated financial information, along with purchase agreement and preliminary HUD statement.) As long as the listing agent has done this, it is in the hands of the bank but you should get your approval in 6-8 weeks.
3. Is there a second mortgage? If so, has the listing agent sent the package to both banks? If not this will clog up the approval process.
4. Is the listing agent only submitting one offer at a time? Technically, the seller has the right to send as many offers to the bank as he/she wants, but most of the time they leave it in the hands of their realtor and if that realtor is competent in the short sale process, they should know to only submit one offer at a time, otherwise, the bank will get confused and it will only halter the process.
TWO KEYS TO KNOW YOUR OFFER IS GOING SOMEWHERE
A. Has the bank requested a BPO(Broker Price Opinion)?
B. Has the short sale been assigned to a negotiator with the bank?
Ask your realtor to find out the answer to these about 3 weeks after the offer has been submitted. If the answer to these are yes, then that is a good sign things are going smoothly and you are that much closer to an approval.
Another frustration is that there is no guarantee that the bank will approve the list price. The best way to know if your offer will be approved is to have your realtor do his own broker price opinion by running the comparable sales and see where the list price matches up. The bank will be looking at the same data and base their decision on that. If the sales are between 150,000 and 175,000 and the property is listed at 99,000, there is a good chance the bank will counter in the 150,000 to 175,000 price point. Be realistic with your offer and there should be no worry about the bank approving your price.
So don't be afraid of short sales, just be well informed and you will be on your way to taking advantage of the one of the best buyer's markets we have seen in a long time.
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