A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on the loan. This page offers information about the basics of short sales and advice for the real estate professional.
Short sales appear on your credit report as “pre-foreclosure in redemption”, not as “debt discharged due to foreclosure”. What does this mean to you as the seller? Less impact on your credit score and all mortgage debt is fully discharged.
Perhaps the most important fact to understand is that in today’s economy short sales are a must to sell properties. Since property values have declined nationwide at such a rapid pace, The National Association of Realtors predicted that in 2008 and 2009 over 50% of all properties sold will be short sales or REO properties. It is unavoidable. If a house is to be sold in today’s market, then a short sale will be needed to make that happen. Short sales require hours upon hours of work, and organization is imperative in order to get them done. Also be aware that short sales will typically take approximately 3-4 months to complete depending on which state you are in (see below for typical lender timelines), and that is simply because the majority of lenders are overwhelmed at the moment, some receiving as many as 500 or more short sale packages a day! And in some cases 2 or 3 weeks may go by without any change in the status a file.
| Typical Lender Timelines (for each step in the short sale process) | |
| Get authorization on file with lender | 2 days |
| Compile short sale documents | 7-14 days |
| Get short sale package on file with lender | 3-7 days |
| Short sale package assigned to negotiator | 10-14 days |
| Get BPO/Appraisal ordered | 14-21 days |
| Schedule BPO/Appraisal with agent | 5-10 days |
| Time for BPO/Appraisal to get to negotiator | 21-28 days |
| Negotiate/obtain approval from negotiator | 15-20 days |
| Total: | 77-104 days |
Please note that these timelines can vary by lender and that the above timeframes are meant to provide a general timeline, again taking into account that nearly all lenders are overwhelmed with short sales.
