Short Sale Timeline
The Short Sale Timeline diagram is a general illustration of the stages involved in completing a short sale and the number of days each stage usually takes. Short sale timelines differ between banks and do not always follow the process illustrated on the diagram. While few banks will ever process short sales in the same amount of time, most banks will still adhere to the same stages illustrated in the diagram with very few exceptions or revisions.
Short Sales: Step-by-Step
The short sale process is complicated and must be done right in order for the result to work out in the best interest of the homeowner. For this reason, many banks require that the homeowner be represented by a licensed real estate agent. The majority of the tasks performed throughout the short sale process will be completed by the listing agent. The next section will highlight what happens at each stage of the process and what might be expected of the homeowner:
- The listing agent sends the lender a 3rd Party Authorization Form. The form authorizes the agent to receive information on the mortgage account on the homeowner's behalf.
- The homeowner will prepare a list of documents for their agent to submit to the bank in order for the short sale to be reviewed. This may include income tax returns, bank statements, paycheck stubs, a hardship letter, and other financial disclosures.
- Once an offer is received from a pre-qualified buyer, the offer is sent to the lender by the listing agent along with the homeowner's financial and other documents. This is called a "short sale package" and is referred to at the bank as a "file."
- The file is assigned to a bank negotiator.
- The bank sends an independent licensed real estate broker to the homeowner's property to perform a valuation called a Broker's Price Opinion (BPO). This is not typically a full appraisal, but it is performed to give the bank a general snapshot of the property value and overall condition.
- The BPO agent sends the valuation to the lender.
- The short sale package and BPO are reviewed by the bank and the investor who actually owns the mortgage.
- The bank decides to either approve or reject the homeowner's request for a short sale.
- In the case of an approval, a written acceptance is sent to the homeowner for review and the buyer initiates their mortgage-loan approval process.
- The buyer performs their inspections and they close on the property.
