Having dealt with several short-sale’s in the recent months and having spoken with several other agents that have dealt with them, I have come across a similar situation in all of them.  The process takes a LONG time. 

I am now advising clients, that they should expect the enitire process to take 6 months or more from the day they make an offer on a short-sale property to the time of closing.  If you are looking for a primary residence, a home you will live in immediately, unless you are willing to be extremely patient, you may not want to consider them. 

Here is what is happening:

Client writes an offer on a short-sale property and it is submitted to the Seller’s agent.  Seller’s agent then presents it to his/her client.  The client approves it and he/she gets a copy of the HUD-1 statement from the escrow company to be used and faxes/emails the offer in to the lender for their review and approval (since all parties (lender included) have to agree to the terms and conditions of the Purchse Contract).  This is where the process slows down.  If the seller has not taken care of the hard-ship paperwork, then the lender has to review the paperwork to see if they will agree to a short-sale.  They review the seller’s situation, once approved for a short-sale, then they assign a negotiator. (Took over 1 month for a negotiator to be assigned)  The negotiator does just what the name implies and then once everything appears to be agreeable between all parties, it gets sent to a committee for final approval.  It has been 2.5 months now and we are just finishing up with the negotiator.  This is on a property with only one mortgage attached to the property.  Imagine a short-sale with a first and second mortgage, where lender #1 and lender #2 have to negotiate with each other over some of the proceeds.

Even though Hawaii has a very low number of foreclosures and short-sales compared to some areas of the country, the files here get grouped together with the rest of the countries short-sales.  The lenders are clearly backed up with files to handle.

If you are looking at purchasing property and are willing to consider a short-sale property you need to have the understanding that the process may take 6 months or more and you must be patient.