How long does a short sale take?
That brings us to the time frame of short sales. Contrary to what their name suggests, short sales are usually anything but short! While the processes have become a bit more streamlined over the last few years, the fact remains that short sales take a while to get pushed through the bureaucracies of large banks. We won’t go into all the details of why this is in this guide because it is really not important. What is important is that your expectations are set appropriately going into the purchase of a short sale. Buyers with a need to buy and close on a home within 30-45 days should generally not pursue a short sale. While we have seen short sales completed in 30 days before, it is the exception to the rule. The buyer will have to be flexible with their time table, so if you are leasing and can go month-to-month for a while, that is advisable until we hear back from the bank that the contract has been approved and get a timeline for when the deal can close, from the bank.
As a rule of thumb, expect a short sale to take between 90 and 120 days unless it is truly lender approved. That being said, some banks move more quickly than others (and some more slowly) so you must be prepared to close sooner or later than that as well. This poses a challenge to the buyer as we have no way of telling really, how long it will take for the process to complete. Everything depends on the seller’s lender, the seller’s level of cooperation with the process, and the skill level and experience of the seller’s agent when it comes to negotiating short sales. Your buyer’s agent can also help in coaching the seller’s agent on the process if they are more experienced.
We’ve had clients that have taken 6 months to close on short sales, and we’ve also seen clients wait 6 months and then have the short sale fall apart at the last minute because the seller would not agree to one of the bank’s terms in the end.
Bottom line, the deal needs to be worth it to you and you need to understand that there will be a lot of “hurry up and wait” involved with the process. If you can be patient, your reward will be a really good deal and hopefully some solid equity in the house. If that is not worth it to you, it’s better to concentrate on the listings for sale that are not short sales.