Buying a shortsale

e_jakiela · November 2011

Hi ladies, I sneaked around here in the past few months and now I have a question. We are buying a shortsale and I don't know what to expect. How long is the wait time? The bank opened our binder and is now sending an appraiser to appraise the house. This doesn't make sense to me because I thought the price they listed the house at came from them... Wouldn't they appraise it before listing? I feel that our offer is fair, but if the appraised value is lower, can we change our offer? Anyone else went through a short sale? What should we expect?

Justinlove · November 2011

If it is a SS, the price is negotiated by the seller first, then the bank decides if they are going to accept the offer. Some SS are preapproved to accept a certain price point, but not all.

jengratz · November 2011

My husband and I are late in the process of buying a short sale -- hoping to close in the next 2 weeks. Some questions to ask:

Is there a second mortgage, a HELOC, etc?
Who owns the investment --- if it is Fannie or Freddie there are additional negotiations, approvals that the sellers have to go through.
Are the sellers prepared to make a cash and/or "loan" type settlement?

We put our offer in on Sept 3rd - the BPO (the bank's appraisal) was ordered around Sept. 10th. The bank approved the offer around Oct 12th. Then Freddie had to approve the package (this was unexpected) -- Freddie approved the package on Nov. 2nd and put a stipulation on the deal that it must close by Nov. 25th. Then we learned that the second lien holder hadn't approved the offer yet. We hope to get that on Monday. Which leaves less than 3 weeks for us to go through our appraisal, inspection, make any necessary repairs, and go through underwriting. It is a VERY tight timeline, luckily our mortgage broker sent everything through underwriting prior to the approval so as long as our appraisal and inspection come back OK (and the second lien holder responds quickly) we should be ok, but there are still so many things that could derail the whole deal at this point.

e_jakiela · November 2011

jengratz:
My husband and I are late in the process of buying a short sale -- hoping to close in the next 2 weeks. Some questions to ask:

Is there a second mortgage, a HELOC, etc?
Who owns the investment --- if it is Fannie or Freddie there are additional negotiations, approvals that the sellers have to go through.
Are the sellers prepared to make a cash and/or "loan" type settlement?

We put our offer in on Sept 3rd - the BPO (the bank's appraisal) was ordered around Sept. 10th. The bank approved the offer around Oct 12th. Then Freddie had to approve the package (this was unexpected) -- Freddie approved the package on Nov. 2nd and put a stipulation on the deal that it must close by Nov. 25th. Then we learned that the second lien holder hadn't approved the offer yet. We hope to get that on Monday. Which leaves less than 3 weeks for us to go through our appraisal, inspection, make any necessary repairs, and go through underwriting. It is a VERY tight timeline, luckily our mortgage broker sent everything through underwriting prior to the approval so as long as our appraisal and inspection come back OK (and the second lien holder responds quickly) we should be ok, but there are still so many things that could derail the whole deal at this point.

Thank you so much for this post, this is exactly what I was looking for. In our case it looks like the bank is the only approver... I know it doesn't make much sense because they are still calling it a shortsale. There is no other mortgage, so that is good. I cannot believe how much faster your process seems to be... We were told 6 monthts is minimum.

curlylocks3 · November 2011

e_jakiela:
jengratz:
My husband and I are late in the process of buying a short sale -- hoping to close in the next 2 weeks. Some questions to ask:

Is there a second mortgage, a HELOC, etc?
Who owns the investment --- if it is Fannie or Freddie there are additional negotiations, approvals that the sellers have to go through.
Are the sellers prepared to make a cash and/or "loan" type settlement?

We put our offer in on Sept 3rd - the BPO (the bank's appraisal) was ordered around Sept. 10th. The bank approved the offer around Oct 12th. Then Freddie had to approve the package (this was unexpected) -- Freddie approved the package on Nov. 2nd and put a stipulation on the deal that it must close by Nov. 25th. Then we learned that the second lien holder hadn't approved the offer yet. We hope to get that on Monday. Which leaves less than 3 weeks for us to go through our appraisal, inspection, make any necessary repairs, and go through underwriting. It is a VERY tight timeline, luckily our mortgage broker sent everything through underwriting prior to the approval so as long as our appraisal and inspection come back OK (and the second lien holder responds quickly) we should be ok, but there are still so many things that could derail the whole deal at this point.
Thank you so much for this post, this is exactly what I was looking for. In our case it looks like the bank is the only approver... I know it doesn't make much sense because they are still calling it a shortsale. There is no other mortgage, so that is good. I cannot believe how much faster your process seems to be... We were told 6 monthts is minimum.

The speed is mostly determined by the bank. Sometimes the bank doesn't even consider/respond to an offer until several months after its been submitted. Normally when the bank accepts an offer things start moving really fast.

jengratz · November 2011

Early on in my process I found a site that listed out the average response time by bank -- I don't have time to look for it right now, but there is such a site out there. Fifth third (the bank that holds my seller's mortgage) was one of the quicker ones to respond -- averaging something like 54 or 56 days.

The sellers on our deal were also clearly motivated because they accepted a deficiancy settlement with fifth third very quickly.

e_jakiela · November 2011

Thank you, Ladies.

It's good to get some idea of it. I will look for that site too. This is much better than what the realtors tell us: "Expect early March, and if it happens earlier, it's going to be a nice surprise" which means nothing... Our lease ends on December 31, and we want to give our landlord at least 30 day notice (more if possible) so having a better idea of the possible timeframe would be awesome.

jengratz · November 2011

I hate to be a "party-pooper" but I would guess that your agent is right about planning for early March and if it's earlier be really excited -- especially if you just recently put an offer in (early March would be about 4 months). With the holidays, I have to imagine that everything slows down even more. And if you want things to move fast once you do get the seller's bank approval, if you haven't already, then I would have your mortgage broker line everything up for underwriting, etc so that "all" you have to do when you get the approval is update your pay stubs and go through the inspection and appraisal hoops (and hope that nothing is found in the inspection and that the appraisal comes out okay).

Do you know what bank the seller's have their mortgage with?

Buying a shortsale

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