Sacramento Real Estate Views

Anatomy of a Short Sale

Real Life Example

I get a lot of questions about the short sale process and timelines in the Rocklin/Roseville housing market so I thought I dedicate this article a listing that I had that just closed.  I’ve gone through my emails to recreate the record so that you can get an idea of what the process is like.

Keep in mind that not all short sales are created equally.  The lender and investor will dictate the pace and whether or not the process is completed.  With that in mind, this is just one example of how a short sale goes.

Ok…with that, from start to finish, here goes!

Listing Date

The home in question was listed February 12th.  I gave the seller the list of required documents.  They got those together and back to me by February 15th.  The home was placed on the MLS on the 13th.

That documentation was digitized and held until we got an accepted offer on the house.  The bank scheduled an appraisal for March 1st.

Showings

The seller requested no sign in the yard and that showings be concentrated to one day when they weren’t home.  This home is in a very desirable, in demand area and got a lot of attention as soon as it went on the market.  I hosted an “open house” of sorts on the following Friday.

We had 3 offers by the following Monday.  I presented Monday evening and accepted the strongest offer.  The status was changed to “active short sale cont.” in the MLS on February 23rd.

All documentation including the listing agreement and the offer was uploaded to the bank by the 25th.

First Buyer Backs Out

April 12th – Due to family issues, the first buyer had to back out of the purchase.  The property was then opened back up for showings on the 13th.  We had received a counter offer from the bank and the approval was just days away.   This set back the seller, which was no problem for them as they were living in the home for free as all do when they are having to sell short or walking away.

That started the process over again essentially.  This particular lender didn’t allow substitutions of one offer for another so we were back to square one.

Scheduled another “open house” for the April 16th and had another offer in hand that evening.  Seller accepted and was uploaded to the bank on 19th.

Second Appraisal

My negotiator had said all along that, due to the new buyer and the reduced purchase price, that there would in all likelihood be a second appraisal.  She was right and it was scheduled and completed by May 1st.

Counter Offer From Bank

The bank counter offered the buyer at $40K above their original offer.  The buyers agent was very experienced and only went up $10K and the bank accepted.  This has happened repeatedly in my experience.  This is good for the buyers as they typically get a great discount on the home to appraised value when the bank doesn’t counter the counter.

At this point it’s relevant to know that the bank or mortgage servicer isn’t the investor on the mortgage.  Another entity actually owns the note be it Freddie Mac or Fannie Mae or a private investment concern.

The bank just wants the property off the books so they, so it seems, and they aren’t willing to stretch out the process to some extent.  It’s not their investment so who cares what it sells for.

An addendum was created changing the terms of the agreement and turned into the bank.

Approval – June 15th

In the past, it was typical for the bank to just give a verbal approval and it took forever to get something in writing.  For the most part, approval letters come and with that, the buyers lender can get to work on the loan and the transaction becomes “normal” to some extent.

Escrow is “activated”, disclosures are completed by the seller and delivered to the buyer, the buyer begins inspections and the process from here usually lasts 30 to 45 days or a normal escrow period for a single family residence.

This was the case here and the home closed 40 days later on July 26th.

Start to Finish

While there were little bumps here and there in this short sale, I kept it to the bigger events for the sake of brevity.  This one closed in 161 days.  This is normal now while in 2008 you’d be lucky to get one closed at all and in the last half of 2009 it took about 200 days to get a short sale completed.

It is possible, and is happening, to get a short sale closed in about 30 to 60 days depending on the lender.  Wells Fargo/Wachovia short sales can get done in about 30 to 45 days and don’t require the borrower to be late on their payments.  They are about as painless as it gets.

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Tags: short sale process rocklin roseville sacramento lincoln

This entry was posted on Thursday, August 26th, 2010 at 9:44 am and is filed under Short Sale Information. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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