Bank Short Sales: A Guide To The ProcessBank short sales are still a baffling process to many people, buyers as well as agents. Even a short sale listing agent may not understand the intricacies of a short sale. The reason banks grant short sales is that the seller has a hardship and owes more on the mortgage than what the home is worth. Some examples of hardship could be unemployment, reduced income, divorce, bankruptcy, or medical emergency. Although each bank will have its own guidelines, the basic procedure is essentially the same. The seller's short sale package will consist of a letter of authorization (which allows your agent to speak to the bank), an HUD-1 or preliminary net sheet, a completed financial statement, a seller's hardship letter, two years of tax returns, two months of bank statements, and a comparative market analysis of recent comparable sales. If you're considering making a short sale offer, be sure to ask your agent for a list of comparable sales. Despite the common impression that a bank may want to get rid of a short sale at a ridiculously low price, the bank will still want to receive an amount somewhere near market value. Bidding above the listing price can often be a good idea in short sales. When the seller accepts your offer, the listing agent will then send the following items to the bank: An executed purchase offer, a buyer's preapproval letter, the listing agreement, and a copy of the earnest money check. However, if your package is incomplete, the short sale package may be significantly delayed, or denied altogether. This is why it can be incredibly valuable to retain the services of an experienced attorney in short sale cases. It's also extremely important for the listing agent to call the bank back on a regular basis and monitor the short sale process as it progresses. Often, buyers get so exasperated from waiting for short sale approval that they may threaten to cancel without an answer within a certain time period. Unfortunately for them, patience is often imperative in the short sale process, as there can be large amounts of red tape and delays to deal with. But it will pay off in the end, as those who have persevered have discovered. Just the acknowledgement of file receipt can take anywhere from 10 days to a month, after which a negotiatior will be assigned, which can take 30 to 60 days. The short sale process may be approved in as little as 6 to 8 weeks, but others may take as long as 90 to 120 days on average. If your dream home happens to be a short sale, it's true that you may have to wait, but in the end it will likely be worth it. Lender 411 has many resources for homebuyers, including tools, calculators, and articles. |
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