Can a Short Sale Close Fast?

by Ann Johnson

Short-sale listings have a reputation of taking a long time to close. It is not necessarily the escrow process that takes a long time but the contract approval process. In some short-sale offers, it takes a buyer weeks or months before having an offer accepted. Once all necessary parties agree on the purchase contract, the sale might close in less than a month.

Short Sale

Short sales are often an alternative to foreclosure, when property owners must liquidate but owe more than their properties are worth. The property owner is the seller in a short-sale listing. However, the property owner cannot sell the property without the permission of his lender. The property is sold for less than the amount needed to pay off the property's debt. In order to close escrow and convey title to the buyer, the seller's lender agrees to release the property lien and accept the insufficient amount. After the close, the lender might issue a deficiency judgment to the seller or forgive the unpaid amount.

Non-Short-Sale Acceptance

In a non-short-sale listing, when the seller accepts an offer from a buyer, the property typically begins an escrow process to finalize the sales transaction. This typically involves a title search, buyer's inspection and finalization of the buyer's loan to purchase the property.

Short-Sale Acceptance

When a short-sale seller accepts an offer from a buyer, the offer then goes to the seller's lender instead of into escrow. The lender accepts or rejects the offer. Because of this additional step, acceptance of a short-sale offer can take a long time. If the listing has more than one mortgage, a successful short sale will require the acceptance of all lenders holding liens against the property, extending the process. Some lenders might take weeks or months to respond to an offer, while other lenders might respond within 24 hours after the seller accepts an offer.

Escrow Process

Once the buyer, seller and seller's lender or lenders all agree to the purchase contract and sign the necessary papers, the short-sale transaction begins an escrow process. A timely escrow might take about 30 days. The buyer's lender has the power to delay or accelerate the escrow. If the buyer pays cash, it is sometimes possible to close escrow in less than two weeks. However, real-estate practices and laws vary by state, which might delay the process.


Photo Credits

  • Jupiterimages/ Images