Congratulations! You’ve waited patiently for a response on your short-sale offer from the bank(s) and you just got word that it’s been approved - half the battle has been won!
So now what?
To best understand what happens next, let’s quickly go over a part of the short-sale process…
The majority of what needs to be done (loan processing, appraisal, title work, termite, etc) can’t be done until the bank(s) has approved the short-sale - in writing. The reason for waiting until then is that all of those things cost money and no one wants to spend the money and resources before knowing for sure that the short-sale will be approved.
And as far as timing, you typically only have 2 to 4 weeks from when the short-sale has been approved to get all these things done because that’s how long the typical short-sale approval from the bank(s) is good for. If you run past the deadline, you have to ask for an extension and/or a new approval. While this is more than possible, it’s a hurdle best avoided if possible.
Is it tough to get all those things doe and settle within that time frame?
Two weeks is cutting it close, but four weeks is not a problem with the right lender on your side.
Now back to answering the question, “So now what?”…
Here are some things you can expect as a buyer once the short-sale approval comes in:
- Schedule the settlement date and closing time based on the short-sale approval deadline(s) and when the lender can have the loan done and ready for funding
- Provide your lender with updated pay stubs, bank statements, financial statements, etc.
- The lender will now order an appraisal on your behalf
- If you haven’t already done so, you should set up a home inspection (click here for more about home inspections on “as is” properties)
- Order the termite inspection (sometimes it’s the seller’s responsibility and sometimes it’s yours)
- The settlement/title company will now order the title search, title work, survey, etc.
- If you’re renting, now is the time to put in your notice to the landlord/management company
- Obtain home owner’s insurance on the new property
- Contact the moving company if you’re using one (or call your friends/family and start bribing them with favors now)
- Put in for time off from work for the final walk-through and settlement (these can only take place during normal business hours Monday through Friday)
- About 2 weeks out, but not less than 1 week out from settlement date, transfer the utilities into your name
See..not too bad at all! Short-sales are a “stop and go” process. But, as many short-sale sellers and buyers will tell you, it’s well worth it! The seller ends up avoiding foreclosure and an even bigger ding to their credit while the buyer gets a great deal on a new home.