Anyone that has been involved in a short sale in Las Vegas knows it can take a very long time to close and even then, there is no guarantee it will. From the time we enter into a short transaction, whether it is with a buyer or seller, we explain the process so they know what to expect. Even though we thoroughly explain the short sale process to our clients, we still get asked 30-60 days into the transaction, “Why does it take so long to close a short sale?” I can understand their frustration and disbelief that it can actually take a bank over 60-120 days to respond to an offer.
So why does it take so long for a bank to approve a short sale? Well, it really depends on the Bank that is holding the mortgage. Some banks can get a short sale approved within 45-60 days but for the most part most get approved within 60-90 days. One of the reason it takes so long is the bank requires copies of all bank statements, tax returns, w-2s, and other supporting documents to verify that the homeowners cannot afford to keep making their payment and have a financial hardship. Once this paperwork is received, it is reviewed by a loss mitigation specialist. After they review the paperwork and BPO (broker priced opinion), a fair market value of the home, and it’s approved, it just moves to the next step.
The next step is having the investors sign off. This may include a long list of investors who own pieces of this mortgage loan. If this is the case, each investor must sign off on the short sale. You can imagine these investors aren’t very happy about taking a loss on their investment, so don’t expect them to go out of their way to approve the short sale. If and when the investors sign off, you just may have your approval.
Once we have the approval, the seller could still be held responsible for the balance but this is another topic we will discuss in our next series, Las Vegas Short Sales: Consequences to the Seller.
If you are a homeowner in Las Vegas and have questions about selling your home as a short sale, feel free to give us a call for a free consultation at 702.376.0088 or complete our contact form.
Because there may be serious tax and/or legal consequences to the seller in a short sale transaction, we recommend you contact an Attorney and/or a CPA for legal and tax advice. We do not provide legal or tax advice!
{ 8 comments… read them below or add one }
My mother in law actually does short sales in Texas and she always runs into the same time problems and then people not understanding why. She can tell them 10 times the process from front to back, but they still dont understand. Short sales are a very hard transaction to deal with, both on the selling and buying side.
It’s a very involved process and I’ve found that while it sounds attractive to buyers they rarely have the patience to follow it all the way through.
So, why don’t they get all the approval and sign offs for the short sale done BEFORE they list the house? ….just sayin’……
Short sales can take forever but we have seen that in Texas they are taking less time to close. This is a good thing.
I’ve only just come to understand how the short sale cycle works. Definitely a “it happens when it happens” sort of deal. I imagine many Realtors shy away from doing short sales because of the time it takes for these deals to close.
Another thing I came up against recently was a Realtor who was shocked when the FHA GFE I worked up for their short sale buyer client contained higher than expected (on his part) total closing costs. Took a while to work through that issue. Many people don’t understand that the bank isn’t going to pay any buyer closing costs on these deals.
I had a client wait 14 months for a short sale and in the end we never got approved for the price. It was insane. the bank will probably sell it as an REO for less than we offered. no wonder they are all losing so much money.
Excellent article, Tony. People need to understand that it is a process. Because of the steps you outlined, some properties are going to be inherently better opportunities as short sales than others. The only people qualified to anyalze the viability of a short sale is an experienced REALTOR.
Just 23% of short-sale offers that homeowners receive from potential buyers actually close, according to a February study of 1,300 real estate agents by Campbell Communications. More than 90% of agents cited a slow response from the lender as the reason short sales were lost.