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How Long Does it Take to Buy a Short Sale Home?

by K.C. Hernandez

Buying a short sale home generally takes longer than buying a traditional, non-distress sale. Buying a short sale is a two-part endeavor: you have to wait for the seller's lender to approve the sale and you need to get through the escrow period in which you and the seller complete your contract obligations. Together, these processes can span as little as two months or more than one year, depending on the lender and particulars of the short sale deal.

Approval Pace

Convincing a mortgage lender to take a financial hit is no easy feat, as it requires substantial documentation and time. In a short sale, the seller must persuade the lender to take a loss by allowing the property to be sold for less than the amount due on the loan and releasing the mortgage lien. Some lenders process short sales more eagerly than others, thereby escalating the home sale process and timeline; however, other lenders, particularly those with a high volume of short sales, take longer. As a buyer, you generally have little influence on the lender's pace. It typically takes at least two months to get approval on a short sale with a single lender, and takes four months or more when a second mortgage lender is involved.

Escrow Time Frames

Much like a traditional escrow, the short sale escrow period lasts between 30 and 45 days. Because of the time-sensitive nature of escrow documents, escrow holders typically don't start the escrow process until the lender provides written approval of the short sale and sales contract. You obtain mortgage financing during the escrow period, a process that involves a home appraisal and a mortgage underwriting review. You also conduct property inspections and complete and review property disclosures. Buying with cash might shorten the escrow period.

Prolonged Short Sales

A seller's and buyer's response times can affect the short sale approval process and closing time line. Lenders typically set deadlines for documents needed from buyers and sellers, such as financial statements and disclosures. Short sale packages usually include hundreds of pages and lenders might give several days or require immediate response. In turn, lenders can take several days to several weeks to review documents. Signatures left blank, missing or incomplete paperwork and lost documents can further stall the short sale approval process.

What Lenders Say

Lenders often give estimated time frames for short sale processing. At the time of publication, the Chase website stated that the process could be completed in as few as 30 days upon receipt of complete documents. Bank of America stated that its short sales typically take 90 calendar days after acceptance of the initial short sale offer. In general, time lines vary by market conditions, lender volume, transaction complexity and how quickly all participants work to gather required information.