How Long Does Short Sale Approval Take?
Ahhhh… the million dollar question. It will cost us a million dollars to come close to a precise answer and I could make a million dollars by selling the secret to forcing banks to approve short sales in a timely manner. But let’s see if I can give you a bit of an answer for this question that is burning in everyone’s mind. (And causing heart burn, I might add).
So, how long does it take for a bank to approve a short sale? The first key to answering this question is to find out how many liens are on the property and what type of liens they are. If there is one mortgage lien on the property, the timeline will be shorter. If there are 2 mortgage liens on the property, add an additional 1-2 months for the banks to squabble over the money. If there are 2 mortgage liens and a home equity line, this spells trouble and time. I’m not saying that short sales that have more than 2 liens on them are impossible. I’m just saying that they are more complicated and take more time. I know several REALTORS(R) who have successfully negotiated short sales with 3-5 liens. It will all depend on the type of lien and who holds the liens.
Which brings us to the next piece of solving this mystery. The bank that holds the liens on the short sale property will be setting the timeline for approval. Some banks take longer than others. Some banks need an act of Congress to make a decision. No seriously, an act of Congress. Some are so easy to work with and are so fast you feel like you may be missing something. The banks that are notorious for taking the longest are: Wells Fargo, any lien formerly held by Wachovia (now Wells Fargo), Bank of America, and any lien formerly held by Countrywide (now Bank of America). Banks that take a pretty long time, but eventually get you an answer once you get through the initial short sale approval period are Chase, Aurora, BB&T (BB&T is getting worse at approving short sales), GMAC, and SunTrust. The quickest short sale approvals come from the small local banks and VHDA. If Fannie Mae is involved in the short sale approval process then you can tack on a few more weeks to the timeline. Here’s a key to the timeline, the bigger the bank – the longer it takes.
So, we’re back to the original question. How long does it take to get short sale approval? The easy answer is – prepare for 3-8 months of waiting for approval followed by 1 month of scrambling to get everything done to get to the closing table. I know! That’s a crazy amount of time to wait to close on a house! If you like the house enough, it’s worth the wait. Patience is a virtue… not one of my virtues, but a virtue, none the less.