How Long Do Short-Sales Take?

A very common question people ask me is, “How long does a short-sale take?” There is no exact answer to that question because short-sales are not a perfect science. Short-sales are like a trip to Vegas - you may come back with more money than you left with or you may come back broke, but you won’t know till the end of the trip. You won’t know when you will get the response from the bank(s) until the day you actually get one.

Average Time

The average - and I stress average time to hear back from a bank(s) on a short-sale - is 3 months. I don’t suggest using any amount of time in planning when you’ll hear back on from the bank(s), but if you really must, 3 months would be your best bet.

Fastest

The fastest response on a short-sale I’ve ever seen is 4 weeks. Unless “you’re in” a loan officer or loss mitigation officer at the bank you’re dealing with that can “fast track’ the short-sale (contact me offline for more info on this), don’t bank on this (pun intended).

Longest

There are short-sales still sitting waiting on a response from the bank(s) that went under contract over a year ago. Yup - a year ago. You REALLY have to love the house you’re buying and have all the time in the world to wait around this long.

Don’t forget settlement preparation time

Don’t forget about the time needed from short-sale approval to settlement date. Once the short-sale has been approved (not before) the buyer’s loan officer can tart finalizing the loan approval and everything that goes along with it (appraisal, title work, underwriting, etc). This takes at least 2 weeks, but more like 30 days.

To recap…the average time from ratifying a contract to settlement date is 4 months (3 months plus 30 days). The shortest is 2 months (4 weeks plus 30 days). The longest is over a year.

If you have would like more information or have specific questions regarding short-sales as a buyer or seller, click here to email me or call me at 703.582.6900.

Update on Short-Sales Involving CitiMortgage

CitiMortgage is currently running 45+ days behind on starting the short-sale review process. That means that once the ratified contract has been submitted to CitiMortgage, it takes them at least 45 days to even look at the file. Then it takes them another 45 to 90 days to review and process the short-sale. You’re looking at 90 to 135 days to get a response from CitiMortgage on a short-sale.

Why the delay? Three main reasons:

1. A huge increase in the number of short-sales.
2. Being short-staffed.
3. Lack of an efficient internal review process.

One title company who deals with them often said that the short-sale department of CitiMortgage is getting over 130,000 emails per day. Those emails are a combination of borrowers inquiring about the short-sale process as well as agents, sellers, title companies and short-sale negotiators submitting new short-sales or inquiring about ones already submitted. Some of the folks at CitiMortgage and other banks have literally hundreds of cases on their desks at one time and the pile is growing.

Real life example…

A short-sale I’m currently working on with buyer clients involves CitiMortgage as one of the creditors. It’s been about 75 days since the offer was ratified and submitted to CitiMortgage for approval. The case is still in the review process though we’re hoping to hear back soon. 

And we’re lucky - the only reason it’s this far along after 75 days is because the title company and negotiator knew the direct contact information of someone near the top of the food chain who pushed the process along and put this particular short-sale deal at the front of the line.

So, if you’re wondering why things are taking so long with CitiMortgage short-sales, now you know…

Percentage of Short-Sales Being Approved Increasing

Yes, there is actually good news when it comes to short-sales - more and more short-sales are being approved!

I've had 4 out of my last 6 offers on short-sale listings get approved. Is a 66% approval rate on short-sales a fluke? Perhaps. But it still is what it is and my clients and I will take it!

In speaking with other agents, they're also seeing short-sales going through at a higher percentage than before. Considering that the national average for short-sales being approved is said to be around 20%, anything more than 20% is great.

What's leading to more short-sales being approved? Here are some of the reasons…

1. Banks are finally realizing that accepting a short-sale is a way to avoid the inevitable (foreclosure)
2. Not having real estate inventory (foreclosures) on their books allows banks to lend and make more money
3. Short-sales are typically less expensive than foreclosures because they don't have to go through the foreclosure proceedings, incur carrying costs, etc
4. Short-sale properties typically have people still living in them which means that they will generally be in better condition than if they sat vacant as a foreclosure for 3, 6, 12+ months. This means that the bank will get more money for the property if sold as a short-sale than as a foreclosure
5. Public sentiment is helping push banks to "work with borrowers" as much as they can to avoid foreclosure, part of which includes negotiating and accepting short-sales
6. More sellers, real estate agents and title companies are using short-sale negotiators to help negotiate the short-sale. Many of these negotiators once worked as bank loss mitigation officers (the folks who work for the bank who approve/reject short-sales) themselves so they know exactly how the process works

Note: Though the chances of a short-sale being approved have increased, it doesn't mean that yours will or that they're any easier to maneuver through. Whether you're a seller trying to negotiate a short-sale or a buyer trying to buy a short-sale, you still have to know what you're getting yourself into and what you're doing (as does your agent).

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