We ran across a situation with a buyer this week where the seller is sending in tons of offers to the bank for a Jacksonville short sale property. This property was priced much too low, at a price the bank would never approve, to get lots of attention. (This presents a totally different issue, which I'm sure I will get to on a future blog post) We had been told there were already several offers in. Our buyer put in an offer of over $30,000 more than asking price, understanding the short sale process, and knowing what the home was worth.
When we called a few days later to check the status we found out that the seller is not signing an offer and sending in a complete package to the bank with that offer. Instead, they are sending in every offer that comes in, even though none are contracts.
This is a very bad method. The chance of success is very small. First, the purpose of having a ratified offer is so the buyer will be around when the answer finally comes in from the bank. Second, most banks we have dealt with won't even assign the file to the negotiator without a binding contract. In this scenario, even if you can get a negotiator to make a decision on the file without a signed contract, the buyer will probably be LONG gone. Supply is great which allows that buyer to find a different home in which the seller WILL commit to selling the home to them. Even if the buyer is still around, you don't have a ratified contract and the buyer can try to negotiate with you on the price and/or terms or walk away.
Many (possibly even "most") banks will require that the process start over when you find a new buyer at a different price rather than making adjustments to the file. The short sale process should be done correctly from the beginning.
Lately, it seems that the banks are taking longer and longer. We've seen banks that had previously given answers in 30 days or less taking 2-3 months. The simple fact is that they are buried in files. We were told by one bank the other day that they have 700,000 loss mitigation files. We don't know how many negotiators this particular bank has, but unless their loss mitigation department is massive...that is a pretty hefty case load per negotiator.
The way to get your file approved much faster is to send in a complete file on day one. If you owe more than your home is worth you need a real estate agent who understands the short sale process. You can't afford to waste time on incorrect file submission, especially if you are late on your mortgage.
Banks are NOT waiting until after the negotiator gets to your file to start and proceed with the foreclosure process. They will send your file to the foreclosure department where they are much more efficient than the loss mitigation department. In the foreclosure department your file will likely be handled before the negotiator from loss mitigation can even pull your loss mitigation package from his or her stack.