How Long Do Short Sales Take?
We often get asked from our buyers, "How long do short sales take to close?" I typically give a pretty vague answer because some of them happen quickly and some take what seems like forever. I prepare people that they will typically be waiting for several months to get a response.
Last year I closed this Lakewood Ranch short sale in just over a month. But that is because the bank involved was a local community bank and it was easy to get the decision maker on the telephone.
Clients of mine are currently under contract on a short sale home in the Hammocks. Last week we received a response from the bank. It took just over 3 months for the bank to respond to our offer.
There are many variables that affect short sales response times. Some of them include:
- What bank is involved? Some banks are more responsive than others.
- Has the seller provided all of the necessary documents to the bank/negotiator? Lazy/unorganized sellers will delay the process.
- Who is processing the short sale? Are they any good? Are they persistent in calling the bank?
Many Realtors give the standard answer of 4 to 6 months to close a short sale. Based on the data below this seems to be a pretty good rule of thumb.
Time to Close Sarasota Short Sales
I ran a search in our MLS system for short sales in Sarasota county that have closed from January 1, 2012 to May 2, 2012. These include all areas and price ranges. In this time period and geographic area there was a total of 3,579 transactions with 568 of them listed as short sale. Below are the statistics for the short sales.
|Sold Price||Sales Price/List Price||Days to Contract||Days to Closed|
The average days to contract is 163 and the average days to close is 273. The difference between these two numbers is the time it took to get the short sale processed and closed. The average difference is 110 days.
I listed the top 50 short sale transactions in terms of price.
|Address||Sales Price||Days to Contract||Days to Sold||Processing Time|
|2 SANDY HOOK ROAD||2,700,000||1136||1220||84|
|604 MOURNING DOVE DR||1,650,000||693||710||17|
|897 FREELING DR||1,525,000||361||557||196|
|7350 PERIWINKLE DR||1,400,000||1||252||251|
|535 SANCTUARY DR # A-702||1,170,000||774||1450||676|
|1400 SIESTA DR||1,100,000||30||331||301|
|9261 MCDANIEL LN||850,000||374||449||75|
|440 CAMILLE DR||845,000||27||423||396|
|6300 MIDNIGHT PASS RD # 1211||760,000||110||133||23|
|58 S WASHINGTON DR||725,000||281||453||172|
|7540 PRESERVATION DR||705,000||9||87||78|
|705 S CASEY KEY RD||700,000||147||205||58|
|801 LYTHAM CIR||700,000||274||323||49|
|563 S PALM AVE # 21||650,000||331||386||55|
|363 ARDENWOOD DR||610,000||0||27||27|
|921 INLET CIR||610,000||200||309||109|
|551 YARDARM LN||592,500||115||186||71|
|6512 Midnight Pass Rd # 306||575,000||1208||1305||97|
|101 SUNSET DR # 302||575,000||565||595||30|
|2633 RANCH CLUB BLVD||555,000||739||781||42|
|5328 HUNT CLUB WAY||549,000||992||1080||88|
|252 OSPREY POINT DR||500,000||5||169||164|
|690 N RIVER RD||475,000||20||84||64|
|3735 EAGLE HAMMOCK DR||435,000||160||248||88|
|7614 WEEPING WILLOW CIR||434,000||219||228||9|
|1657 RIDGEWOOD LN||400,000||67||204||137|
|650 INDIAN BEACH LN||400,000||156||316||160|
|1722 HANSEN ST||380,000||179||253||74|
|4753 ACORN CIR||380,000||139||225||86|
|4577 TUSCANA DR||380,000||89||146||57|
|629 ALHAMBRA RD # 904||380,000||4||76||72|
|1837 ORCHID ST||362,000||207||290||83|
|630 E BAY ST||350,500||115||271||156|
|6300 MIDNIGHT PASS RD # 4||350,000||49||162||113|
|8900 BLIND PASS RD # A112||350,000||176||339||163|
|392 PINE RANCH TRL||350,000||4||140||136|
|2045 GULF OF MEXICO DR # 204||350,000||439||665||226|
|101 TORCELLO CT||347,500||155||252||97|
|6150 MIDNIGHT PASS RD # V 5||345,000||34||120||86|
|1088 EAGLES FLIGHT WAY||340,000||55||191||136|
|4773 HUNTERS RUN||331,000||235||349||114|
|3606 BAY SHORE RD||325,000||64||191||127|
|464 ISLAND CIR||325,000||1283||1429||146|
|8875 MISTY CREEK DR||321,700||100||234||134|
|523 S PALM AVE # 9||319,900||67||171||104|
|6701 AVENUE B||319,000||96||244||148|
|2332 MCCLELLAN PARKWAY||317,000||1370||1400||30|
|1440 BAYSHORE DR||312,500||312||442||130|
|5016 SANDY SHORE AVE||310,000||8||91||83|
|1368 TEAROSE PL||309,000||84||155||71|
|Average Processing Time||
In the numbers above I calculated the Processing Time by subtracting the Days to Contract from Days to Sold. Based on the top 50 sales the Average Processing Time was 122 days which is pretty close to 110 days calculated from the total 568 properties sold.
Pre-approved Short Sales
If you scour the MLS enough you will notice that some listings are advertised as a "Pre-approved Short Sale." What usually happens is buyer #1 puts the house under contract, gets tired of waiting for the bank to respond and ultimately cancels the contract. The bank continues working on the short sale approval process and gives a response. The listing Realtor will then advertise that the property has a pre-approved price. Buyer #2 comes in makes an offer and can possibly get the property at the approved price. It depends on how much time has passed between getting the bank response and the new contract.
On some of the short sale transactions above you will notice that the processing time is very short. For example - 7614 WEEPING WILLOW CIRCLE only took 9 days from contract to close. You can see in the Realtor remarks, "LENDER APPROVAL WITHIN 48 HOURS."
Another example is 604 MOURNING DOVE DRIVE on Bird Key. This property closed in a mere 17 days. If you look at the Realtor remarks it says, "BANK APPROVED - FULL PRICE OFFERS ONLY!" This Bird Key short sale had been under contract a few times so that probably elicited the bank response allowing it to close so quickly when the final contract came in.
- The average number of days to process a short sale is about 110 days or almost 4 months.
- The processing time for a "Pre-approved short sale" is shorter than a regular short sale.
- Don't be afraid to pursue a short sale if you are patient.
- Make sure everyone (banker, seller, buyer, negotiator) is on top of their game to get a short sale closed as quickly as possible. Surround yourself with talent.
- 84% of the transactions in Sarasota county from 1/1/2012 to 5/2/2012 were NOT SHORT SALES.
- If you limit yourself to only short sales you are only looking at 16% of the market.
Mark, quit out doing yourself. I love this post.
Thanks Dave. Vegas this year?
As an investor, I have been through that a couple of times. I can assure that all Mark says is true. Be prepared to wait for 3 or 4 months with no information from the bank and then have to close in a few days because of a deadline they would set themselves. Better be cash buyer.
What I do not understand though is the banks'point of view. Why would they keep such a large backlog for such a long time while the real work they have to do on the file only lasts a few hours.
Sometimes, I have not had any answer at all. Sometimes, answers are inconsistent.
It shows banks are completely disorganised nowadays.
Wow Mark, great stuff here! Taking down notes as I write this.
Short sale approval use to take 3-9 months, recently the banks looks to be getting much better. I had short sales approvals as little as 3 weeks.
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