Last year, I wrote a blog article about the process of buying a short sale.  This has become one of the most popular items on my website, and I continue to help buyers through the surreal process of getting a great deal buying a short sale. 

You can and should read that article now before continuing.  Go ahead.  I'll be here waiting.

Welcome back.  Ready to move forward? 

I want to add some additional information.  The market is changing.  There are fewer short sales on the market, as the economy imporves and home values are rising.  But, overall inventory of available homes for sale is also tightening up to the point of strangling the market.  Nearly every decent home is getting multiple offers.  However, buyers are still shying away from short sales, so there could be strong opportunities there for buyers not looking to compete and get a good value.  Though it still takes a lot of patience.

That last post gave you a bit of an idea what to expect.  But, what exactly happens when you have an accepted offer on a short sale.  Here are some slightly sarcastic thoughts on the next steps, from a buyer's point of view.

  1. Wait.
  2. Wait some more
  3. Wait a bit longer
  4. Realize how long you've been waiting
  5. Wonder if what you are waiting for is worth it
  6. Consider other properties
  7. Seriously consider the freewheeling lifestyle of homelessness rather than put up with the mortgage industry
  8. Finally get a response, but it is time to move in to an old age home.
 
I kid, of course. A little. If you are ever kidnapped and waterboarded, you may be able to survive because you have made it through the process of buying a short sale.
 
While you are waiting, I will be checking in with the listing agent about once a week.  The listing agent's team and the seller will be pushing their short sale request paperwork through the bureaucracy of the lender. I do not use the word bureaucracy lightly. It is like 1954 in those offices, only with fax machines that occassionally function. Things get lost. Things get re-done redundantly. And, there is no accountability. This is why I usually vet the listing agent prior to making an offer to make sure they know what they are doing.
 
There may be requests from them on occassion to review and sign forms from seller's lender. You will quite likely be asked to sign the same form multiple times, which is frustrating, but you will do it promptly.
 
Once we get a response from the short sale lender (maybe 3 months, give or take a decade), then there will be some action. They may accept the offer as is. They may have a counteroffer to a more market-friendly purchase price (in their opinion). You can counter that, but it may trigger another 1-2 month delay while the bureaucracy churns through a review.
 
The main sign of life I look for on the other side is when the seller's lender order what is called a BPO--or Broker Price Opinion. They pay an objective real estate agent who is not involved in the transaction to do a market analysis of the property's market value. The lender then runs that through their internal algorithms and formulas to see if the short sale offer is acceptable. The BPO is sometimes (but not reliably) a halfway point through the waiting period.
 
So, that is what is going to be going on behind the scenes while you wait and wait and wait. As always, I just want to be painfully honest and keep you as informed as possible.
 
One last piece of advice: Try to avoid trying to figure out why the lender is doing something (or not doing something). It is easier to explain the movie Inception to a 6-year old.