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In our real estate market there are 3 types of sellers.
By far, the 2 primary ones are short sales and bank owned homes.

Equity Seller
A ‘normal’ sale where the seller has enough equity in the home therefore a short sale is not needed. Negotiations are conducted directly with the seller, and no lender approval is required.

Short Sale
A short sale is a sale which the proceeds from the sale fall short of the balance owed on a loan secured by the property being sold. With a short sale, the lender agrees to accept less then full loan payoff due to an economic or financial hardship on the part of the mortgagor (seller). A short sale must be negotiated through a bank's loss mitigation department.  

With a short sale, the lender has the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks/lenders will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

Bank Owned
Real Estate Owned or REO is a property owned by a lender or bank, after an unsuccessful sale at a foreclosure auction.  A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossesses the property, it is listed on their books as REO – Real Estate Owned – and is categorized as an asset (non-performing).  

What happens when you submit an offer on a home
being sold via short sale or that is bank owned?

Short Sale Timeline
Day 1
Offer Accepted (Any counter offers between buyer & seller were done before this day)
HUD closing statement ordered for Short Sale (SS) file  

Day 3
HUD closing statement received
Offer and HUD statement added to SS file
SS file forwarded to lender  

Day 10
SS file received by lender and processed into their computer system
Appraisal/BPO is ordered at this point

Day 21
SS processor assigned to review file for completeness
Appraisal/BPO completed and into lender

Day 35
SS processor has completed review of file and if complete the SS file is assigned to a negotiator

Day 50
Negotiator reviews the file and will either accept the offer, counter the offer or reject the offer. Once there is agreement the negotiator will forward the offer for final approval to the ‘Investor’.

Day 65
Investor receives file for review and final approval

Day 80
Short Sale approval escrow can now officially be opened

This is a general overview of the time line to get a short sale approved. Some short sales are approved quicker. It all depends on who the lender is, some are more efficient then others.  

Bank Owned Home Timeline  

Most banks respond to offers within 2 – 10 days. If there are multiple offers, a bank will typically reply back to all buyers who have an offer submitted to send in their highest and best offer. At this point you can stay with your original offer, bump the offer price or change some of the offer terms to make your offer a bit better. If your offer is selected by the bank, they will then send out their addendum package. Once the addendum package is signed by all parties there is a contract to sell the home. Escrow is then opened and will proceed normally from this point. . .  inspections are done, your lender begins to work on completing the loan and the tile company begins working on title transfer.

 Steve Lewis
760.476.9560 - Direct Line
For any questions call or email me directly