We are asked this question daily. Unfortunately there is no hard and fast rule that applies to short sales. Approval could be as fast as 30 days or as long as 9 months. There are so many moving parts to each short sale and will depend on each individual property.
- How many mortgages? One? two? three?….*gulp* four??
- Any home equity lines of credit?
- Delinquent taxes?
- Delinquent association fees?
- Liens? (IRS, credit card, contractor, etc)
- Who is the investor on each lien/mortgage?
- Is the seller being cooperative?
- Does the list agent have experience or have they hired a short sale negotiator that does have experience?
So what does that mean?
The amount of liens and mortgages have an impact on timeline since each has to be negotiated individually. One lienholder can also impact another lien’s acceptable bottomline they’re willing to accept. Home equity lines often will require a certain percent of the amount owed just to release the lien.
Delinquent property taxes become a lien on the home and will have to be paid in full in order to transfer title; the same can happen for association fees.
Let’s say that Wells Fargo services the loan which means they have the final say regarding short sale approval, right? Nope. Wells Fargo just collects the money according to the mortgage terms. The investor who actually lent the money (hedge funds, Fannie Mae, Freddie Mac etc) will have their own set of criteria that is acceptable to them in order to approve a short sale.
Is the seller being cooperative with their lender’s requests in obtaining documentation in a timely manner? This is just as important as your ability to purchase the home if you’re the buyer.
Having an experienced team that understands what happens during a short sale can be the difference between disappointment and success. Ask questions of the people you choose to represent you on their experience with short sales – this is not the time to be shy or embarrassed!