Short sales typically take 3 to 6 months to close, though they can range from 45 days to over a year in complex cases. While the process requires lender approval of the sale, which is time-consuming, some transactions may close in as little as 10 to 45 days under ideal, quick-approval scenarios.
The short sale process has multiple steps, and it's common for a short sale to take 4-6 months to complete from the time the offer is accepted, and in rare cases, even longer.
Does “Short Sale” Mean It Happens Quickly? Unfortunately, no. Not even a little bit. The phrase “short sale” refers to the fact that the lender agrees to accept a sale price for the property that falls short of the actual amount owed.
After Short Sale Approval
Buyers may back out based on due diligence, appraisal, or financing at this point, just like any other contract. If it's within the guidelines of the contract, they're free to do so. If it's not, you'll get to keep their earnest money deposit as damages.
As stated above, the short sale process can get lengthy. There is a risk the homeowner can get into greater trouble with missing payments, and it can result in foreclosure. Foreclosure is a legal process that happens when the homeowner forfeits the property to the bank as a result of being unable to pay the mortgage.
In a short sale, the lender typically pays most of the seller's closing costs, including agent commissions, title fees, and taxes, because they are accepting a loss to avoid foreclosure. The buyer is responsible for their own closing costs, but negotiations are key, as the lender must approve all expenses, and sometimes the buyer may negotiate for the lender to cover some costs to get the deal done.
Avoiding Foreclosure: As mentioned earlier, a short sale can help sellers avoid the damaging consequences of foreclosure. Reduced Damage to Credit: Although a short sale still negatively impacts credit scores, it's generally less severe than a foreclosure, allowing sellers to recover more quickly.
The "3-3-3 rule" in real estate isn't a single guideline but refers to different strategies: for buyers, it's about financial readiness (3 months savings, 3 months reserves, 3 property comparisons) or a financial affordability check (30% income, 30% down, 3x income); for agents, it's a marketing habit (call 3, note 3, share 3) or prospecting (talking to everyone within 3 feet). There's also a developer rule (1/3 land, 1/3 build, 1/3 profit), though it's considered outdated by some.
A 30-day closing window is considered fast for most lenders. This means there were very few problems with the loan and each party worked quickly to approve the mortgage. A slow loan process can extend past 60 days. Your lender will send you a list of requirements to approve the loan.
How to Speed Up the Short Sale Process: Tips for Homeowners
In most short sale transactions, the lender (mortgage servicer) pays the real estate commissions, not the homeowner. The commission is typically negotiated and approved as part of the short sale approval process.
Yes, buyers often agree to pay part of the closing costs to make their offer more appealing, especially in competitive short sale situations. However, some loan types may limit how much a buyer can contribute. Since the lender is taking a financial loss, any cost added to the settlement statement must be justified.
If you're a buyer, a short sale can enable you to buy a property at a discount. Although, buying a property in a short sale may require patience as a short sale can take longer than a traditional home sale. Let's review more details about how short sales work for sellers and buyers.
If you're purchasing a short sale, your goal should be to make an offer that reflects the realistic value of the property while also considering any necessary repairs. A fair offer that aligns with market value—supported by a strong preapproval letter—goes a long way.
Short sales actually bring the bank more money than they would receive in the foreclosure process. This myth that the bank would rather foreclose remains prevalent because of the extreme difficulty people face during the loan modification process.
The 7% sell rule is a stock trading guideline to cut losses quickly, advising you to sell a stock if it drops 7-8% below your purchase price to protect capital, remove emotion, and prevent small losses from becoming catastrophic, a strategy popularized by William O'Neil's CAN SLIM method for growth investing. It assumes that truly strong stocks typically don't fall much below their buy point, so a dip signals something is wrong, requiring you to exit the trade to preserve funds for better opportunities.