From an Investor/Buyer Perspective:
As an investor, buying a Short Sale is a great way to find an under valued property. Many Buyers who are purchasing a primary residence are unable to play the waiting game that a short sale often takes. However as an investor, time is on your side—you’re able to wait it out for a favorable response where a Buyer of a primary residence is not, in most cases.
If some part of you feels somewhere inside that buying a Short Sale property is wrong because it preys on Sellers who are in distress—think again! Sellers are eager to have a Buyer for their property even if it is through the Short Sale Process. Getting an offer on the property is just what it takes to stop the foreclosure process on many of these properties that are at the brink of foreclosure. The Seller is in a bad predicament with the home for whatever reason—loss of job, transfer to another area, bought at the height of the market and forced to sell on the low end, etc. You may just be the answer to the Seller’s prayers! Look upon yourself as a problem solver. The Seller has a problem with needing to sell their home in a down market and you can solve that problem via the Short Sale process, making it a win-win for both parties.
When buying a short sale you might ask just exactly how long you can expect to close after making an offer. Currently, since approximately 1,000 short sale packets are received daily—including Saturdays and Sundays (up from 200 per day at the beginning of 2009), the average time to get a response from the seller’s lender on your offer is anywhere from 90 to 120 days. If the offer is approved by the seller’s lender, the ball would be back in your court to get your financing going (assuming you are financing the purchase). From that point you are looking at another 30 to 45 days, depending on your financing, to close on the property.
There are 4 lenders who typically take longer to approve short sales they are as follows: Countrywide, Bank of America, SunTrust, and Chase. Since these lenders are so large, their short sale volume is quite high thus, resulting in longer response times on offers.
What factors determine the timeline for a short sale?
- The investor (private or government insured such as Freddie Mac)
- The lender’s communication process with both investor and seller
- The seller’s ability to get the short sale package together in it’s entirety (see more information on short sale packages)
We recommend that if the Seller is not already working with a professional third-party Short Sale Negotiator, that you make it part of your offer to purchase that the services of a Short Sale Negotiator be enlisted. You might even seek out such a person or persons in your area that you establish a relationship with to be called upon for all of your Short Sale deals. As discussed in the Seller section of Short Sales, in many cases you can find professional Short Sale Negotiators who are associated with a Real Estate Law Firm or Title Company and their services are not paid by the Seller, Buyer, or Realtors but, by the Seller’s lender as part of the closing costs on the HUD/Settlement Statement.
