Buying A Logan Utah Short Sale - What's Your Time Frame?
Posted by Lisa Udy on Thursday, April 28th, 2011 at 3:44pm.
When looking for Logan homes for sale, you'll notice that a few of them are short sale properties. These properties require a different process in order to be purchased. A short sale is where the home owner owes more than the home is worth.
These homes are subject to a third party approval (normally a bank or large investor) who must approve the short sale price. This is where short sales start to get tricky, and if you plan on buying a home that is a short sale, you'll need to understand the time frame a short takes to close.
Short sales, on average, take three to six months to close. A normal real estate transaction usually takes 30 to 45 days to close. Waiting around for three months for a home to close may not be a viable option for you and it's necessary to understand that there is no other way to buy a short sale.
You can't speed up the banks process as they have certain steps they must take to complete the process. Those processes include:
The Seller Submits Your Offer
In order for a bank to approve a short sale, the seller first has to approve your offer. Even though the bank has the final say on the price they will sell for, the seller still has to approve the initial offer and submit it to the bank. They submit your offer with their short sale package which includes many items listed below:
- Hardship Letter
- Authorization To Release Information Form
- Supporting Financial Information
- A Market Analysis Of The Property
- The Marketing History From The Sellers Agent
Learn more about The Sellers Short Sale Package
Bank Acknowledges The Receipt Of Offer And Completed Short Sale Package
It takes up to 30 days for the bank to acknowledge they have received a full short sale package with all of the sellers details and your offer.
It takes this long because many banks have so many files already, it goes on the waiting list. Depending on how large the bank is, this acknowledgement could take even longer.
Some of the big banks like Bank of American and Chase can be extremely difficult to deal with due to the sheer size and incompetence of their staff in this process. Which brings me to my next point.
Which Bank Are You Dealing With?
There are numerous forums and articles that detail working with each big bank. Many agents that I am friends with online have shared their experiences on dealing with the big banks.
The general feel is that, if you're working with BofA, Chase, and PNC you will most likely be extremely frustrated. These banks, although they have improved over the last few months, are still very difficult to work with most times.
I say most times because it's not always the case. Sometimes for an unknown reason, the short sale is done rather efficiently. So why so much difference in each transaction?
It's because there is no regulation in the banking industry when it comes to these processes. The banks get to make up their own rules. I've heard the argument on both sides that more regulation is bad or we need more regulation.
My personal opinion is that we need to set certain standards across the board. Something has to be done to speed up this process in order for the housing market to recover. You as a buyer are looking to buy a home and many times get too frustrated with the process so you walk away. This causes untold amount of home owners to go into foreclosure that can be avoided.
What I'm trying to say is, the process of buying a short sale can be quite simple at times, while others it can be a complete nightmare for both you and the seller. Once your bank has acknowledged your offer and reviewed the short sale package, they will order some BPOs and the appraisal.
Bank Orders BPO &/Or Appraisal - File Is Reviewed
A BPO is a broker price opinion and the bank has a list of trusted real estate brokers they have complete these for them. A BPO is basically a market analysis on the property.
They may have more than one of these submitted. This process of ordering a BPO from brokers takes time. They have to send out a mass mailing to their trusted agents and wait for someone to accept it.
Once the BPO is accepted the agent usually has a couple of days up to a week to complete it. Once the BPO is completed it will be submitted back to the bank for review.
The total time frame for a BPO to be completed and reviewed can take 30 to 60 days. After which they may also request a full blown appraisal on the property. If they have to have an appraisal, this can extend the time frame another 30 days.
Once the BPOs and Appraisal are submitted they will be evaluated by a short sale negotiator. This is a bank representative who will be in charge of the file and negotiating the short sale approval price.
The amount of time it takes for the review to be finished depends solely on the negotiator. If they have a large case load it can take up to 90 days or longer. The selling agent may also build a case to fight the appraised value if it comes in to high which can delay the process even longer.
File Is Approved Or Rejected
Average time for an approval from the bank varies wildly as you can tell from the amount of red tape involved.
Banks are not meant to be real estate agents, they are not built to make the short sale process efficient, and there are numerous steps that must be completed correctly for a final approval.
This entire process can be anywhere from a couple of months to a year or more.
If your offer is approved, you can move on to your due diligence and inspection period. Once you're at this stage you're almost done.
If you're offer is rejected/countered, you can re-submit a new offer based on the banks approved price or walk away.
If you walk, the home will be placed back on the market or it may be foreclosed upon and you could buy once the bank tries to sell is as an REO.
Do You Have Time For A Short Sale?
When dealing with short sales you have to be patient. If you're moving from out of town and you don't have time to go through this process, there are plenty of other homes out there.
If you're willing to wait out the process you have a good chance of getting a home below market value for some instant equity.
If you do put an offer on a short sale, keep in mind that threatening to walk away means nothing to the bank. They hold all the cards and it's best to not submit an offer unless you truly want the home.
If you have any more questions regarding the short sale buying process we are completing short sales all the time. We're here to guide you through the process and would love to help. You can call us at 435-213-9335 or contact us online.
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