Are you thinking of doing a short sale on your home? If so, knowing what to expect and how long it will take are essential in planning your next move. In this video, I’m going to walk you step-by-step through the 3 stages of a short sale. If you want to rid yourself of debt and move on to the next chapter, this guide will help you navigate the process.
If you find yourself falling behind on payments, knowing the short sale timeline can ease your stress. You have options, and a short sale is one of them if you’re looking to avoid foreclosure. Settling your debt and salvaging your credit are huge advantages to committing to the short sale process, but horror stories may have you wondering if it’s the right move. Let’s walk through the 3 short sale stages to give you an idea of what to expect.
Stage 1: Get An Offer And Send It To The Lender (Days 0-30)
The first thing you’ll need to do is get an offer on your home; you’ll then need to send in a short sale package to your lender. The short sale process cannot begin until the bank receives this package with all pertinent information and documents. Since every 30 days that passes is another late payment on your credit, it’s important at this early stage to get an offer as soon as possible. Pricing isn’t your primary concern at this point, but avoiding foreclosure is.
The reason you shouldn’t worry about pricing has to do with the BPO. A BPO is a Broker’s Price Opinion, which the lender will order on the property as soon as the short sale package is received. Similar to an appraisal, the BPO gives the bank an estimate of the value of the property as it currently stands. This is how your lender decides how much the house is worth and is the number they’ll use to negotiate. Forget what you paid for the house, what you owe on it, or what someone else feels that it’s worth: the BPO will set the price.
Once your BPO comes in, you’ll get a counter from your lender. If the buyer doesn’t accept the terms, you can then look for a new offer with your approved price in hand. If the buyer accepts, then we can move on to the next stage in the short sale process.
Stage 2: Negotiations (Days 30-60)
If the offer and bank’s evaluations are in line, the negotiations of pricing and terms will begin. Depending on how many liens are on the property—as well as the amount of the offer—the negotiation process can take anywhere from several weeks to several months.
During this process, remember who actually owns the property: you. You are the only party with the power to accept, reject or negotiate any offers. While the bank does own the lien, you still own the house. You can expect to receive a short sale approval letter once the negotiations are complete, which will dictate the terms of your release.
Stage 3: Accept The Terms of The Negotiations (Days 60-Close)
When you start receiving short sale approval letters, you’ll want to make sure you review the terms carefully. I strongly advise having an attorney review the terms to make sure you know exactly what you’re accepting. You’ll typically have 30 days from the approval letter receipt for you to close and, once you do, the transaction can proceed normally.
Remember that a lender can only approve a short sale; they can’t force you to take the deal. Keeping this in mind will allow you to negotiate with the upper hand, as most banks would rather not deal with foreclosure. Be sure that the terms you’ve been approved for truly work for you.
While the process can be lengthy, depending on the situation, a short sale is your best bet to releasing yourself from debt and avoiding foreclosure. If you’d like to discuss your specific situation or want more information, please don’t hesitate to contact me here and I’ll be happy to get in touch with you!