I can tell you the short sale sales price must be relatively close to the house's actual value (the realtor should be able to tell you what that is however some realtors mistakenly think the mortgage company is willing to let the house go for pennies so they list it for a low price in hopes of getting it sold quickly). Its odd that the house is tax assessed quite a bit higher than the asking price - all of the areas I've worked with seem to show the tax assessment is close to the actual value of the property (if not even lower). The mortgage company is going to review the short sale offer like this: 1) what is the house valued at? 2) they will likely accept any sales price that is at least 85% of that value. The reason why is because the only other alternative is for the mortgage company to foreclose and take back ownership of the property themselves...then they have to turn around and hire their own realtor, pay commissions, closing costs, and the carrying costs for the several months it will take to get that all finished....and in the end they still can only sell the house for what its worth and then their profit is reduced by all the costs I just mentioned - which the mortgage company has roughly estimated to be 15% of the value........hence why they will accept 85% in a short sale. I have seen a few cases where the mortgage company will request more than 85% BUT never more than the house is actually worth because virtually all new buyers must obtain financing and their new loan is going to be based on what the house is actually worth - they can never borrower more than the house is worth....so if the original mortgage company required a sales price higher than the value of the home, the only buyers for that property would be cash buyers who do not depend on a loan to buy a house - and that severely limits the pool of buyers. ONE MORE THING, sometimes the seller of the house has already approached their lender before they listed the house for sale and their lender responded back with a suggested listing price. Check with the realtor who listed the short sale to see if they already had the short sale price pre-screened by the lender. I should say this does not happen in a majority of cases, but it is a possibility.
As for how long short sales take - the sellers are ultimately the ones who must take control over hounding the lender for short sale approval. Some reviews take less than 30 days - but most take a lot longer. If the review is taking more than 60 days, someone is dropping the ball (trust me - I work for a national lender in the default area). The problem is determining who is dropping the ball. It could be the seller has not provided all the financials the lender required. It could be they faxed them all and some got 'lost' - sometimes they get 'lost' multiple times. It can be very frustrating. It will be virtually impossible for you to know who is dropping the ball - the seller or the lender. Hopefully the seller has a strong realtor who will press the lender for whats missing and likewise press the seller for the documents. If it does get held up by the lender, the seller can do several things to try to move it along: ask to speak to a supervisor, state the new buyer is about to walk (even though they are not), have the seller check to see if their loan is backed by Fannie or Freddie (just google 'how do I determine if my loan is owned by Fannie or Freddie' and you will find the links. If the loan is Fannie or Freddie, the seller should contact Fannie or Freddie to complain/escalate their issue. Fannie/Freddie will be all over it - because the longer the house does not close, the more money Fannie/Freddie lose....and if the house does not complete short sale and goes to foreclosure instead, Fannie and Freddie lose even more. Fannie/Freddie will contact the sellers mortgage company directly and make sure the review is escalated. Two more escalation suggestions: if the foreclosure process was already started on the house, the mortgage company has already hired an attorney/trustee to work the foreclosure. The seller can contact that attorney to have the file escalated - attorneys are very good for that! And lastly, the seller can google the executives of the mortgage company - look for executives whose titles are 'default services', 'loss mitigation', 'risk management'. You'd be surprised but those executives actually check their mail and escalate complaints.
