This is the perfect example of how a short sale can take an incredible amount of time from listing and pre-approval to final approval and closing. Many short sales are originally listed at a price that is not yet confirmed by the bank. Most banks will not consider a short sale until the property has been listed for more than 7 days and a signed offer has been submitted.
This means that the process hasn't really even started yet and the buyer is in for a long wait. After the bank receives the offer they start a financial background check on the seller that includes a monthly financial statement, hardship letter, tax returns, bank statements, and investment summaries.
The long wait is typically due to missing paperwork and ongoing requests for more information if needed. A seller can certainly expedite this process by having all necessary financial information ready to go prior to listing the house.
The lender completes their financial check on the seller and then they perform a BPO and/or an appraisal on the house. This is going to give them a current market valuation to factor into their final net. The bank will determine a final net amount that they will accept and submit a counter offer based on those numbers. If they original offer meets their criteria they may even accept it without a counter offer.
Most contracts determine this to be the beginning of the contingency periods where inspections and appraisals are ordered and performed by the buyer. The bank will set a deadline with conditional approval and when all the conditions are met both parties should be ready to close.
It is a long process and sometimes it does not work out in the favor of the seller. Foreclosure is a very real possibility should the bank refuse the short sale. Contact a local short sale professional if you need to sell your home and you owe more than what it is worth.
