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Jenn, Home Buyer in Deerfield, NH

What does subject to third party approval mean?

Asked by Jenn, Deerfield, NH Sun Dec 6, 2009

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Third party approval typically means "short sale" where the current owner's lender is asked to accept less for the house that the current owner owes on it. Short sales can be a great way to buy a home at a discount; however they can be difficult to close on. It is my experience that lenders are very difficult to work with in getting approval for the short sale and many supposed short sales end up getting foreclosed on prior to acceptance of a short sale offer from a new buyer. Another concern with a short sale is that the buyer may have more than one mortgage, or lender and both lenders would have to agree to the terms of the short sale making it even more difficult to get approved. If thinking about a short sale, I recommend asking the seller or seller's agent whether or not they have begun short sale negotiations with their lender and where they are at in the process. You may want to discuss this with an attorney as I am not qualified to give legal advice.

Best of luck, lee
1 vote Thank Flag Link Sun Dec 6, 2009
The link attached can help you understand the short sale.
0 votes Thank Flag Link Sun Dec 6, 2009
Hello, Jenn:

As Lee points out, that third party is the lender that has the mortgage on the property. When a seller has to sell the property and the price that it is expected to bring or is listed for is less than what the seller owes it is called a short sale. As Lee also points out, there can be a fourth party approval required as well because the seller may have more than one loan.

There are advantages to buyers and sellers in short sale properties because the property is still occupied and while there may be some deferred short sales are rarely in as bad condition as properties that have been foreclosed on. According to a recent article, about 25% of homeowners owe more than what their property is worth today if they had to sell. Sellers who enter into short sales often have other budget pressures or have to relocate for work.

If you are considering a property that is identified as a short sale I would suggest talking with The Loan Workout Group in Londonderry Tom Girard is the managing partner there. This Group is affiliated with the Carter Law Office in Windham and is skilled in working with lenders to get offers approved in short sale situations. Even as a buyer, having the Group involved can help ensure approval. The Group gets paid by the lender so there is no cost to you or the seller.

There are a few things to keep in mind in pursuing a shaort sale property. First of all it will take time to get approvals so your offer will want to refelect that as part of the timeline. Your offer should include a short sale addendum to make it clear what the milestones in the contract are based on. Secondly, the lender is under no obligation to accept your offer and the property will remain on the market while you are awaiting the third party approval. Another higher offer can come in while you are waiting and the lender may go with that instead. This is why it is a good idea to have the Loan Workout Group on your side.

We have a lot of experience working with buyers in short sale situations. Be sure to have a buyer's agent who understands the process and knows how to keep a short sale transaction together. This costs you nothing as the seller and lender will pay the fee. So I say, "Why not put someone else's money to work for you?"

Good Luck!

Chuck Braxton, REALTOR GRI
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0 votes Thank Flag Link Sun Dec 6, 2009
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