The Short Sale Decisioning and Timeframe

August 9, 2008

A Short Sale is:

A transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies.

Short Sale Timeframe:

A typical short sale decision can take 30-60 days from the date the offer is received.  Several factors contribute to this timeframe:

  • Day 1:  Receive a legitimate offer (This includes the listing agreement, copy of MLS, preliminary HUD-1, hardship letter and a signed purchase contract).
  • Day 2-15:  Order appraisal (Timeframe to obtain the appraisal is approximately 10 days).
  • Day 15-25:  Analyze (Obtain necessary financial documentation from the borrower to determine hardship and ability to contribute to the loss, dependent upon input from the borrower).
  • Day 25-30:  Negotiate delegated decisions (Be advised that non-delegated decisions will take an additional 30-60 days.  Many investors such as Fannie or Freddie and insurers such as FHA, VA, or Mortgage Insurance companies, do not delegate the short sale decision and require their explicit approval.  If there are any subordinate liens, then there must be a negotiation with them to accept a reduced payoff amount to release their lien).
  • Day 30-35:  Approve or decline.
  • Day 35-80:  Receive successful approval of the offer and close.

All timelines noted herein may vary based on the volume of short sale activity, thoroughness of packages and the particulars of the specific transactions.  They are meant to be utilized as guidelines and as a means to set appropriate and approximate expectations. Please call me if you have any questions.


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