1. How long does it take for a bank to approve a short sale?
· Multiple liens on the property
· A third party negotiating the short sale on behalf of a seller. Some states allow third parties to do this, for a fee; some states, like Virginia, limit this to real estate licensees, attorneys, and employees of attorneys.
· Private Mortgage Insurance (PMI) on the property
· Additional investors
2. Will the bank make repairs to the property?
· The bank does not have possession of the property and has no authority to make repairs on behalf of the seller.
· Many short-sale sellers do not have the financial means to make repairs.
· Many banks require the short sale to be sold strictly “as-is” and do not allow the seller to pay for any repairs.
3. How do other types of debt affect the short sale outcome?
· Surprisingly, tax liens are probably the easiest to clear off the title. The IRS has several avenues to collect back taxes, and doesn’t want to become a real estate holding company. Removing a tax lien can take up to 120 days, so it is imperative that this process is started well in advance of the short sale.
· Medical liens can usually be negotiated and a payment plan worked out. However, this is a time-consuming process and needs to be started as soon as possible.
· Mechanic’s liens are a little harder to get removed. There is not much recourse for tradespeople and bad debts.
· Child support judgments are also difficult to remove because they usually involve government agencies.