Buyer Myth #3; ‘Short’ Sale Implies a ‘Shorter’ Closing Period

This is where many people have misguided perceptions about short sales. People hear the term and they think it means that the process will be ‘shorter’; because both the bank and seller want to sell the property as quickly as possible. That’s true in one sense, because they do want to get it off of their books sooner rather than later, however, they will still take whatever time they need to get the best return on their investment. In addition to the extra diligence they will take to make the decision, keep in mind that a many banks are now too understaffed to handle the growing number of short sales and foreclosures in a timely manner.

Because most banks are stringent in the short sale approval process after an offer has been submitted, it can often drag on for several extra weeks, if not months. You need to go in knowing it could be quick close or it could take much longer. It can be frustrating in that you may not know for certain until after you’ve made a offer. This is where an agent can ‘scout’ the listing for you by speaking with the listing agent – and sometimes, the bank itself – feeling out the situation to see what the desired terms may be.

When I work with buyers to create a short sale offer, I always recommend they put a relatively short close period – 30 days or less – in the contract. Why? That proves to the bank that you are ready and willing to close quickly. They will be drawn to your offer when they understand that you are serious. This also allows you an ‘out’ later if they drag on the escrow process.

But even though the bank may be more apt to accept your offer because of a short close period, it does not necessarily mean escrow will close within that timeframe. Most of the time, it doesn’t. The escrow process can be extended as long as they need it to be in order to make a financial decision. This is very important to understand before you make your offer, especially if you are in the process of selling your current property and trying to ‘time it’ accurately. Make sure your agent stays on top of the listing agent – and the bank, if needed – keeping the process moving forward and avoiding getting your contract get lost in the shuffle.

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