The Timeline

The 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 majority of the tasks performed throughout the short sale process will be completed by the seller’s listing agent or by a 3rd party short sale mitigation firm specializing & experienced in short sale negotiations like iPower Source. It is customary for the bank to deal with a qualified real estate specialist or experienced agent in a short sale. The diagram above illustrates the short sale timeline.

 This section of the page will highlight what happens at each stage of the process and what might be expected of the homeowner:

1. The lender receives a 3rd-Party Authorization Form from IPS, granting them access to receive information from the bank on the seller’s behalf.
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2. Offer is received and approved from a pre-qualified buyer and the homeowner prepares a list of documents for IPS to submit to the bank for review. This will include income tax returns, bank statements, paycheck stubs, and other financial disclosures.

 While this information may seem intrusive, the information is needed because at this point you (homeowner) are showing the bank that you have or had a financial hardship impacting your ability to make any mortgage payments.
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3. Offer, pre-qualification letter, and HUD-1 are sent to the bank along with the homeowner’s financial documents. This is called a “short sale package” and may also be referred to at the bank as the short sale “file.” IPS will also include evidence of repairs needed to the property so the bank, their backing investor & possibly the PMI company can see for themselves the current condition of the property.
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4. File is assigned to bank negotiator.
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5. Bank sends an independent licensed real estate broker or agent ( 99% of the time an agent will conduct the BPO) to the property to perform a valuation called a “Broker’s Price Opinion (BPO).” The BPO is meant to give the bank a general snapshot of the property value and condition. The bank can also assign an independent appraiser to get a more in depth analysis of the property's value. The homeowner does not pay for the BPO or appraisal but the cost is added to the overall monies owed on the mortgage.
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6. BPO agent sends the valuation to the vendor responsible for receiving the order from the bank, the BPO is reviewed to see if there are any items missing, values are in line with true market values and then is sent back to the bank. Just this part alone can add an additional 5-10 days to the short sale timeline. 
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7. Short sale package and BPO are reviewed by the bank and their investor.
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8. Bank decides to either approve or reject the homeowner’s request for a short sale.
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9. 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.
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10. In the case of rejection the bank will discuss the reasons why the short sale offer was rejected. In most cases the bank (of course) wants more money. It is the job of the agent or mitigation firm to have experience in negotiations with a lender because there are a number of specific questions and counter offers that can be used to see why an original offer was rejected. The person handling your short sale must know the numerous ratios used by the banks to make their decisions and be able to find a number that would not only satisfy the banks acceptance requirements (better called "investor guidelines") but also satisfy the homeowner's needs to avoid deficiency judgments and/or promissory notes demanded by the bank or PMI company. In most cases it is this stage that makes or breaks a short sale being approved. 
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11. Once an approval is sent by the bank then the buyer performs their inspections and they proceed to settlement by the date indicated on the bank's approval letter.