Short Sale process in order for a closing to occur. Most lenders will not even consider a Short Sale process until a contract is submitted.
Final approval from all lenders must be obtained in order for the closing to occur. This includes negotiating the amounts that are to be repaid at closing in order for each lender to release their liens and therefore make the property marketable for sale to the buyer. Most lenders have specific departments and personnel to handle these Short Sale processes and negotiations, and most of the time authorizations must be obtained from several different levels of a lender's management to receive final approval. A final approval must be obtained in writing from each lender in order for the closing to proceed to completion.
All parties have to allow the lender a reasonable time to review and approve or disapprove a proposed Short Sale. Every Short Sale lender has different procedures, and therefore their time frames are all different. It typically takes a minimum of sixty (60) to ninety (90) days to obtain approval from a Short Sale lender; however, if there are multiple lenders, it could take longer because further negotiation is necessary. You as a Realtorâ can help your seller expedite the process by assisting the seller to prepare a Short Sale package for the lender that is complete. The longer the seller waits to send the package to the lender, the longer it will take to receive the final approval. The purpose of the package is to make sure that:
(a) the reason for the default was unavoidable, involuntary, and beyond the seller's control;
(b) the seller has truly experienced financial hardship;
(c) the seller will not earn enough money to pay the deficiency in installments over time; and
(d) the seller does not have enough money to pay some or all the deficiency in a lump sum. Some short sales are very frustrating in the time it takes to complete them. Therefore, create reasonable expectations with the buyers and sellers up front that a Short Sale is a time-consuming matter, since the seller and Realtorâ must deal with lenders that are outside of the seller's control. Again, setting reasonable expectations up front is important. Remember that the lenders are all experiencing a large volume of Short Sale approval requests, and this adds additional time to the final approval process.
The seller and the Realtor must work hard and be patient but persistent because lenders are not only reluctant but also overwhelmed. It is important to follow-up with every document, every submittal, and every other action. Let them know the sale needs to happen as quickly as possible. You and your seller want to make sure the right people get the right information and want to "bug" them for approval without annoying them. It is important to set the contract up with the right time frames so as not to allow the buyer to back out too early. This would be very frustrating for you and the seller, since both of you would have spent considerable time, money, and effort.
