Here's the short answer to why it takes so long to go through a short sale: There's little incentive for lenders to take a loss on the books until they absolutely have to do so, and lenders will want to make sure the borrower absolutely can't pay what he or she is supposed to pay.
Why does a short sale when selling a home?
A short sale typically occurs when the homeowner has fallen behind on the mortgage payments due to financial hardship. For the bank or other lender that owns the mortgage, a short sale is preferable to letting a home go into foreclosure. A short sale home can be a good opportunity for some buyers, but also presents challenges.
What are the steps to short sale?
There are many ways to negotiate a short sale but here are the basics steps that you need to accomplish: Find a Realtor experienced in short sales and hire them. Since many banks are requiring your property be listed for at least 60 to 90 days before they will consider a short sale... Send your bank ...
What are the requirements for a short sale?
What Are the Requirements for Buying Short Sale Homes or Foreclosures?
- Financing. Having pre-approved financing for either a short-sale or foreclosure purchase is necessary in today’s market.
- Credit. Work on getting your credit score as high as possible. ...
- Short Sales. ...
- Foreclosures. ...
- Contingencies. ...
- Negotiating Points. ...
What does an approved short sale mean?
- A short sale does way less damage to a homeowner’s credit report and credit score than a foreclosure. ...
- Homeowners have the dignity of being able to sell their own home. ...
- A short sale enables homeowners to stay in the home until the sale is completed. ...
Why do short sales take a long time?
Short sales can take longer than regular home sales due to the need for lender approval. They often fall through, too. The buyer may find another property while waiting for an answer from you. Be prepared for this possibility.
How long does a short sell take?
Longer timeline: The paperwork process is more complex and considerably longer for a short sale (up to 120 days) than for a traditional home sale (around 45 days). Once an offer is made, it still needs to be approved by the bank, which can take weeks or even months.
How can I speed up a short sale?
Speed up your short sale closing date by making your offer as free of contingencies as possible. Submit your mortgage approval with the offer. Contribute a substantial deposit to show your good intentions.
How long does it take to close a short sale?
Be aware the short sale process could take much longer than a traditional home purchase. Even with a qualified agent, it's not uncommon for short sale transactions to take six months or more to close.
How often do short sales fall through?
Even when the buyer and the seller have both signed the paperwork -- indicating a binding contract -- only about 40 percent of short sales ever close at all.
Can a seller make money on a short sale?
Why a Short Sale? In a seller's ideal home transaction, the sale price will pay off the existing mortgage and the seller may even make a profit.
Why are short sales so difficult?
Short sales are a mixed bag for the buyer, the seller and the lender. If you're a seller, a short sale is likely to damage your credit — but not as badly as a foreclosure. You'll also walk away from your home without a penny from the deal, making it difficult for you to find and pay for another place to live.
Can I negotiate a short sale price?
Can You Negotiate A Short Sale? It is entirely possible to negotiate a short sale, but doing so can be a time-consuming process. Instead of negotiating with the seller alone, as is the case with most traditional sales, short sale negotiations must be approved by the lender, too.
What are the disadvantages of a short sale?
7 Disadvantages of Buying a Short SaleLong Process. ... Subject to the Mortgage Lender's Approval. ... Lender Could Counter, Reject or Not Respond. ... Opportunity Cost. ... Property 'As Is' ... Is the Seller Approved? ... Lenders Prefer All Cash or Large Down Payments.
Do you owe money after a short sale?
After the short sale is completed, your lender might call you or send letters stating that you still owe money. These letters could come from an attorney's office or a collection agency, and will demand that you pay off the deficiency. Your lender or the collector might even try to intimidate you into making payments.
How long does it take for a bank to respond to a short sale offer?
Normal Waiting Period Some banks get approvals in less than 30 days, while other banks' short sales can sometimes turn around in 24 hours.
Which of these lenders would be least likely to approve a short sale?
Which of these lenders would be least likely to approve a short sale? junior leaners (Because they're in a secondary position when it comes to liens against the property, they realize that there may not be any money left to pay them after the lender in first position is paid.)
What is the penalty for short selling?
Rs. 1,00,000 per client, whichever is lower, subject to a minimum penalty of Rs....Short Reporting of Margins in Client Margin Reporting Files.Short collection for each clientPenalty percentage(< Rs 1 lakh) And (< 10% of applicable margin)0.5%(= Rs 1 lakh) Or (= 10% of applicable margin)1.0%
Can I short sell for more than one day?
You cannot carry forward the short position for multiple days. To understand why shorting in the spot market is strictly an intraday affair we need to understand how the exchange treats the short position.
What happens if a short seller can't cover?
Short covering can result in either a profit (if the asset is repurchased lower than where it was sold) or for a loss (if it is higher). Short covering may be forced if there is a short squeeze and sellers become subject to margin calls.
Do short sellers have to cover?
There are no standardized regulations relating to just how long a short sale can last before being closed out. A short sale is a transaction in which shares of a company are borrowed by an investor and sold on the market. The investor is required to return these shares to the lender at some point in the future.
Why Does Short Sale Take So Long?
Many real estate agents are saddled with this question from their prospective clients. Their clients have always asked why sales take so long, and many have no justifications for their answer.
How Long Does Short Sale Approval Take?
This might depend on the bank. Some banks can get approval for l as many as 30 days, while some can take up to 90 days.
How long does it take to get a mortgage approved?
Getting mortgage approval can take the seller some fewer weeks (maximum 6 weeks).
How to approve a short sale?
In order to approve the sale, the lender requests a complete short sale “package” from the seller. Much like the package you must submit to get a loan, the seller must submit their finances. The lender will want to see the seller’s debts and assets, review their credit score and the contract to purchase the home. After all, why would a bank approve a short sale if the seller had $1 million sitting in the bank?
How many pages are needed for a short sale?
Most banks require hundreds of pages in the short sale package, and many of those pages require signatures from buyers, sellers and agents. If one page is missing or one signature left blank, the document doesn’t get processed. Often, the listing agent will fax in 100 pages and just wait. Sometimes it will take a month to get a response from the bank, informing the agent that things are missing.
