Why Does A Short Sale Take So Long?
If you aren’t familiar with the term, a short sale occurs when a home loan is larger than the price that the home is sold for — similar to being upside-down on a car loan. When this happens, the seller of the property is asking the bank to accept less than what is actually owed.
This process can get complicated, leading to the sale taking much longer than anticipated. A short sale isn’t quite as simple as a regular real estate transaction. Here are a few reasons why a short sale can take such a long time.
In order to perform a short sale, the seller has to get approval from the lender. This process is similar to applying for a loan.
Your lender will likely require you to submit information regarding your finances, including your debts, assets, and credit score. This is necessary as the bank isn’t going to approve a short sale if it turns out that you have enough money to pay off the home.
In order to speed up this process, it’s important that you have all your financial information collected and ready to be submitted before trying to complete a short sale.
The package that you are required to submit to your bank when trying to complete a short sale will typically include hundreds of pages of documents — many of which require signatures from all parties involved in the sale, including the seller, buyer, and agents.
Often, due to the number of documents involved, things go missing. Unfortunately, it can take quite a long time to review the entire package and notice any missing documents. You might not hear from the bank for up to a month only to find out that they haven’t completed the review due to missing documents.
As the process of having a short sale approved drags on, many important documents may become outdated.
When information becomes outdated, it must be resubmitted and re-reviewed before being approved. By the time your lender realizes your information is outdated, you might have already wasted weeks.
You should be sure to review all information before it is submitted to ensure that it is completely up-to-date.
In many cases, foreclosure departments and short sale departments do not work together and foreclosure overrules everything else.
You might be on your way to having your short sale approved; however, if you are behind on your mortgage payments, you might still be foreclosed on. When this happens, the bank takes ownership of the property, so you have no right to sell it to an interested buyer. As a result, a foreclosure can make the weeks or months of planning and preparing for a short sale completely pointless.
Multiple loans can severely complicate the short sale process.
Dealing with banks can be very difficult. Dealing with multiple banks is even worse. When dealing with multiple lenders, the short sale process can be set back by several weeks or months as the lenders don’t communicate or cooperate with one another. Approval times and deadlines can make your short sale take much longer than you anticipated.
Short sales are, unfortunately, a necessary process for individuals whose home loans are more expensive than they are able to sell their homes for. Short sales can be delayed by a number of factors, so be prepared to deal with these obstacles if you are attempting to perform a short sale.