This has been a very sought after question as of late, so I thought I would delve into it and give everyone THE ONLY CERTAIN THING ABOUT TIME FRAMES REGARDING BANK OWNED REOS AND SHORT SALES; UNCERTAINTY!
There are simply too many people, eyes, hands, feet, opinions, number crunches, hours, gallons of coffee, and sugar brimming snacks that go into distressed properties to EVER ascertain a formula for the exact timing. You can get good approximations and get it close… but there are just too many factors that have to all go right to get it done lightning quick and accurate; Murphy’s law has a field day with this.

Short sales for example have to first be crunched and assessed by the listing agent to get a good idea to market the house for. Once a good figure has been sought out, then the short sale package is put together (If buying a car is the camelback mountain of paperwork mountain ranges; a short sale is the Himalayas, rockies and Mt. Fuji. Letters of explanation, a plead for financial amnesty, statements, calculation explanation, assessments, BPOs. . . Let’s just say a small forest is razed to make it happen. So within all this, in itself… there is a recipe for a long and unknown time period. Once the package is in… the lender themselves have to pick it apart, order some BPO’s, crunch numbers… and determine how much Mortgage insurance will cover, and how much they will eat, what they need to net… Is it cheaper than a full blown foreclosure, etc. Once you pass all of those landmines, and your offer has been beaten, burned and bloodied… then it gets carted off to the investors (usually Fannie) to get the short sale approval letter… it’s the secondary market that’s taking the shot. Then once you get that sought after letter… THEN, and ONLY then… you start your regular escrow time periods. Day 0 of Inspection and COE period. Whew! So after all that waiting, you have your regular closing time to deal with; Loan documents to get in, conditions to be cleared, inspection, appraisals, etc. 30 days on the average. Does this give you an idea why it’s hard to nail down a time frame?

On a CRUDE rule of thumb… you’re probably looking at right around 8 – 10 weeks from GROUND ZERO (Ground Zero being when your buyer signs the purchase contract, and it’s thrown into the listing agents hands) This hasn’t even included the time beforehand of getting the house ready to list, and the package together. Offer submitted to listing agent, and them sifting through their other offers, and having their seller sign the one they like, and send it off to the bank (assuming multiple counter offer) that right there is roughly 3-5 days. Off to the lender the offer goes! It gets received, and due to the workload, will be shuffled in the lenders hands for 2-3 weeks. Questions come back… put it up against their data to see if applicable… then a negotiator and the BPO is ordered (broker Price Opinion) to make sure that the value the contract calls for is legitimate (Even though some BPO agents are absolutely terrible at it). BPO takes about 7 days to complete and turn in… this puts you at 5 weeks already. Negotiator gets more stuff needed. Grooms the listing agents to put together file for approval from investors. 6 weeks roughly now… Then OFF to investors for final sign off, and get the short sale letter back… this is ROUGHLY 10 business days… so another 2 weeks… puts you right around 7. Letter comes back… WHAM! You open escrow and on with that… Now this example I put forward assumes very small setbacks. Some setbacks and hiccups can be colossal! See Short Sales are a PAIN! Ok now on to REO Time Frames!

NOW, REO response times are WAY better than Short sales by a long shot! You can’t argue with 3 – 5 days to get acceptance! (Some are more… I have personally gotten approval with one in 18 or so hours… Nice work Kevin Jennings) But there are a lot of thorns on this rose. If multiple offers come in… YAY you find yourself in a multiple counter offer situation. Everyone loves those. You counter, and play and negotiate and fart around for about a week til it gets resolved and the winner of small gauntlet gets the opportunity to be . . . . . . . . YES you guessed it… they are ALLOWED to be countered *you just won 10 cents in the lottery.* In this counter they basically render the AAR purchase contract VOID, and supercede it with their own boiler plate addendum, with the first two pages being the terms (price, COE date, title company, etc.) So right now, you’re looking at right around 2 weeks… not bad right… well now for the hard part. The banks love being very hands off… being strictly as-is and even covering their butt against mold. (On a sidenote I wish these turkeys would learn; there aren’t a lot of lenders that are going to provide financing to someone for a house completely INFESTED with mold spores and fungus! Or any other huge issues for that matter… they just clog up the drain that leads to a clean transaction, anyway that was my small diatribe) So in their quest to be as inhumane and safe as possible, they CLAIM an offer isn’t accepted *Even though they let you fight, and counter, and draw blood to be countered* until their signatures are on it. Basically they counter you with a counter offer… that’s not really a counter offer… it’s way more unilateral. They give the terms, they make YOU accept the terms, and then they leave themselves the option to just kill the deal with no recourse allowed. Slimy REO addendums! Anyway, to get the counter back, takes about 10 business days again. NOW make sure you get everything signed you needed. . . if you have to make an addendum, they will DRAG their feet on signing it! So ok, all in all you’re about 3 weeks to a month in when you get the addendums back. Now, you go into escrow like anything else. I have seen REO’s close in 10 calender days. *Not super common* but it is possible. So there are your rough Time frames in a nut shell for Short sales and REO’s. Let’s recap

SHORT SALE from ground zero will ROUGHLY take 8-10 weeks til you open escrow
BANK OWNED/REO from ground zero will ROUGHLY take 3-5 weeks to open escrow

THANKS again for reading! Remember, there are no foolish questions; It is ONLY foolish to NOT ask questions!

-Jason Caballero