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Ask Phyllis: How long does it take for a bank to respond to a Short Sale offer?

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Dear Phyllis,

Three weeks ago, we made an offer for a short sale listing. The seller’s agent acknowledged receipt and said she forwarded our offer to the bank.  She says she still hasn’t heard from the bank and as you can imagine, we are anxious. In this case, we have a $28,000 deposit just sitting in escrow…. in your experience how long does it take for a bank to respond to a short sale offer?


Dear PRG,

Time frames vary greatly, but in my experience you should have a response within 30 days. Therefore there are so many variables. A strong listing agent who sends a complete package to the (short selling) bank is a big asset as is an experienced escrow team.  Of course some banks/servicers are better than others. You typically deal with the loan servicer and not the actual bank.

Several years ago, I was involved on the buying side of a short sale. After nine months of waiting my buyers finally cancelled escrow. The home was ultimately taken back in foreclosure and sold for less than my client’s offer. In summary, the weakest link in that transaction was the listing agent.

Have your real estate agent check to find out if there is a scheduled sale (foreclosure) date. You want to be assured that the home isn’t going to be foreclosed upon in the near future.

There are several other areas which should be addressed:

  • In some instances the servicer will allow the listing agent to get the short sale dollar amount preapproved. As a rule, these are the best short sales as the servicer has already determined at which price they will sell – therefore no long waits.
  • The standard 3% earnest money deposit is overkill on short sale transactions. The point of the earnest money deposit is to protect the seller. In the instance of a short sale, the seller really doesn’t have anything to lose; they are already losing their home – via short sale or foreclosure. I recommend my buyer clients make smaller earnest money deposits, really just for a sign of good faith.

Often the first buyers cancel escrow due to frustration because, as you have discovered, answers don’t come quickly.  Best of luck to you.

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