July 24th, 2011 6:05 PM by Jodie Ford
How long does it normally take to receive short sale approval? Sellers in the Charleston AFB area routinely ask us that question all the time. We tell them generally 6 to 8 weeks, but it depends on other factors. Mainly, THE BANK.
Once a property is listed for sale, we must secure a QUALIFIED BUYER. We routinely receive more than one offer on a short sale listing. Our job is to first determine who is actually a qualified buyer. If a buyer does not produce a legitimate mortgage pre-approval letter and an acceptable earnest money deposit (minimum 1% of purchase price), they are not considered a qualified buyer. It will take time to weed out the flakey from the serious buyers.
When the seller finally goes under contract with a committed buyer, that’s the offer we submit to the bank. That’s the secret to a successful short sale — we don’t send an offer to the bank if the buyers aren’t committed. The entire short sale package required by all banks must include a legitimate offer to purchase. From offer and complete short sale package submission, it takes about 1 week for the bank to acknowledge receipt of the package.
The bank then orders its BPO (Broker Price Opinion), which is very similar to a property appraisal. This usually takes anywhere from 2 to 4 weeks – again DEPENDING ON THE BANK we are working with on the short sale. About two weeks later, the file is assigned to the negotiator. Another 2-4 weeks later, the file goes into the hands of the final investors for review. About 2 more weeks and we should receive the short sale approval letter.
As you can see, the short sale process takes anywhere from 60 days (best banks) to 180 days (worst banks) from start to finish for the buyer.
Which banks are ‘good’ and which are ‘bad’? Based ONLY on our past experience with short sales and the feedback received from other agents regarding their short sale experiences…
BEST BANKS: WORST BANKS:
Wells Fargo Flagstar
CitiMortgage Bank of America
PNC Green Tree
What’s interesting is how many buyers were involved in this transaction to see it through to fruition. In some situations, we may deal with 2 or more potential buyers in any given contract. We have tracked the buyers from our closed short sales, and three out of every four buyers are original buyers.
Why do you ‘lose’ buyers? More often than not, buyers are not educated on the timeline of short sale process. The buyers’ agent may not be educated either. The short sale process is very lengthy compared to a traditional home purchase, and many buyers choose to walk away. Unfortunately, the same buyers who walk away from a short sale find that most of the current Charleston real estate inventory is short sales, and now they have to start over from scratch with a new property.
ATTN BUYERS: ASK QUESTIONS!! Ask: Which bank holds the mortgage? What is the standard turnaround time for that bank? Are all the seller’s documents in order? Is there a second mortgage? Who holds the second mortgage and what is their turnaround time? If the answers you get are acceptable, go ahead and make a move on the property.
If your agent can not get these questions answered, it may be time to consider a new agent.
Other buyers are forced to walk away because they were approved for a home mortgage at the time they submitted an offer, but now they no longer qualify. How does this happen? Buyers can do silly things to ruin their chances of home ownership.
HOW TO RUIN YOUR CHANCES OF OWNING A HOME:
1. Buy a car, or any other large ticket item, before closing.
2. Spend your down payment before closing
3. Open OR close credit accounts
For more info on what NOT to do to jeopardize your chances of home ownership contact Donna Williamson the mortgage guru.
So, to those of you hoping to buy a short sale in the Charleston area, when we ask to see your loan pre-approval letter, proof of funds, expect a reasonable date inserted into paragraph A of the short sale addendum and demand that your earnest money deposit go into escrow, it’s because we want to assure our sellers that you’ll stick around. It’s not personal; it’s the short sale business.
Jodie Ford, Military Homes of Charleston – Charleston Air Force Base/Joint Base Charleston, SC Real Estate For Sale I specialize in helping military families and Hometown Heroes enjoy a smooth transition in and out of Charleston, SC. I have a passion for helping people, and I love what I do. Call, text (843) 819-4398, or email and let me make this your easiest transition yet!
Torri Jacobsen, Military Homes of Charleston - Buying or selling a home doesn’t have to be hard, but choosing the right Realtor DOES make a difference. I specialize in making first-time home buying a great experience for military families moving to the Charleston, SC area. Call (843-475-9313) or email today, and let’s make this your best move yet! You’ll feel right at home with me.