What does bank approved short-sale mean, vice one that is not? Will this speed up the short sale process?

Asked by Hesterar, Golden Glades/The Woods, Jacksonville, FL Wed May 13, 2009

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Katherine Da…, Agent, Atlantic Beach, FL
Wed May 13, 2009
Hi Hesterar,

The short sale process is never sped up because of any one thing. It depends on the banks policies - good or bad - and their procedures - usally pretty bad. Also in play is the mood of the bank's negotiators, plus the diligence, quality, patience, stamina and incredible good work, of the listing Realtor - and a buyer's sheer good LUCK.

The long answer: I have had successes and also bitter disappointments working with banks on short sales. I've had them close in 6-8 weeks. But more commonly is this experience: on one home, I submitted three different contracts and the bank took months to work each one. Each time the buyers waited patiently and each time either the bank turned the offer down or the buyer simply got tired of waiting. Guess what? After one and 1/2 years of trying to short sell the home...that home is now 2 years empty. The seller and I just gave up trying to work with the bank (Countrywide, btw). Now it is going into foreclosure, and overgrown by weeds and bushes, i.e. a once great house is now an eyesore in the neighborhood and will probably be empty another year or two...given how slow the banks are doing anything now. It will probably sell for so much less than any of the offers I brought the bank, that you have to wonder what the banks' real agenda is when it comes to short sales.

The short answer: I have had "bank approval" and still the banks turned down the offers AND took months to do so.

If you have patience, and a gambler's constitution, you may well end up with a great deal. There is NO telling.

If you have any kind of time frame to work with, then a short sale is not for you.

The good news is that in this market, most sellers are having to compete with short sale and foreclosure prices. Honestly I think you are better off having your Realtor find you either a seller owned home for sale, or a foreclosure. Short Sales are just a mess with no sure conclusion at the end of the deal.

Clearly I am one Realtor that is OVER short sales until the banks start treating buyers with care and respect. The National Association of Realtors is working to get the Banks to stop being huge impediments to our coming out of the housing crisis.

BTW, the banks treat Realtors who are trying to do these transactions extremely BAD for the most part. They don't respond, they don't seem to care that we are working for families and they certainly don't want to pay us for our work.

But other than that, I don't really have an opinion ;-)

Good luck.

2 votes
Dana Schuster, Agent, Slidell, LA
Wed May 13, 2009
There can be no short sale without bank approval.until that hapens it is just a potential short sale. in order to do a short sale,the sellers must prove hardship to the lender. in these situations,the lender calls all the shots.
2 votes
Lisa Jones, Agent, Mount Dora, FL
Fri Jan 7, 2011
I work short sales and I can tell you that a Short Sale that an agent is advertising as "approved" can be quicker if, you come in at the price that was approved in a short time (within 30 days typically) from the original approval. Most often a property will have a 1st buyer that gets the process started and then a 2nd or even 3rd buyer that comes in and buys the home in a lesser time than the first buyer waited before walking.

Some lenders are approving quickly when the seller has had a failed modification. I had one that Bank of America approved and I got closed in 3 months from the contract because the sellers had been working with their lender for a long time trting to modify and were denied. Bank of America is trpically taking many months to even review files.

If you work with a Realtor to make your purchase, make sure that your agent asks the Listing agent for as much information possible. There are no gurantees with short sales. If you have a timeframe, you should look at Bank Owned or Traditional Resales. An educated motivated seller will price closely to short sales and you can get a great deal without the wait. Best of luck to you.
0 votes
Lena Williams, , Jacksonville, FL
Wed Sep 22, 2010
Good answer Pacita. Usually in my recent experience with short sales, if the bank receives an offer, completes a complete analysis, gives an acceptable sales price range to work with - this is "bank approved" short sale. If the offer is sufficient, you can close in 30 days or less. If the first offer is not sufficient, they will give a time frame to submit a new offer. And lately, the time frame is less than 10 days for approval on a new offer if the complete analysis has been done upfront. This has been my experience with at least 3 different banks in the last 6 months. Every bank is different but they are starting to get easier depending on the bank.

Lena Williams
Exit Real Estate Gallery
0 votes
Scott Sulliv…, Agent, Redmond, WA
Mon Aug 2, 2010

Typically what a bank approved short sale means is that the seller has gone through part of the short sale process already with another buyer, but the buyer failed to purchase the property for some reason. Usually in these situations the bank has completed their analysis and has established a sales price that is acceptable. It may have already obtained approval from internal departments and/or outside investors involved in the short sale. As long as the approval wasn't too long ago it probably means you can make an offer at the approved price and move through the balance of the bank's short sale process quicker than if you were starting from scratch.

Good luck!

Scott Sullivan
Prudential Network Realty
3535 Highway 17, Suite 10
Fleming Island, FL 32003

C: 904-327-5676
0 votes
Pacita Dimac…, Agent, Oakland, CA
Tue Jul 20, 2010
No guarantees. it all depends on the bank. Here are real-life examples (my own experience) of what happened after banks granted short sale approvals but the buyers walked away.

Wachovia: A second buyer stepped in, wrote offer. Wachovia approved, and buyer closed in 21 days.

Wells Fargo. An all cash buyer stepped in just 3 days after the first buyer backed out. One would think this is a cinch to close. Not so. Wells Fargo closed the first file, and wanted to start all over again with the second --- all cash,with proof of funds!

Bank of America. Same situation. File closed. We began the process again, and several months later, the sale closed.

With short sales, the only things that are short are TEMPERS!
0 votes
Brandon Mard…, Agent, Jacksonville, FL
Tue Jul 20, 2010
Basically it means the paperwork has been submitted into the bank and its hit the first 8.00/hour loss mitigator. You still have a few steps to go but with perserverance you can get yourself a good deal.
Web Reference:  http://brandonsellsjax.com
0 votes
Kathy, , New Jersey
Thu May 14, 2009
My husband & I have made an offer on a short sale property. So far it has taken 6 weeks, & has just being assigned to an appraiser at the bank. Now it is being assigned to a broker, who will do a further workup
of the comparative homes sales in the area & value. There is no quick process!
0 votes
Dana Schuster, Agent, Slidell, LA
Thu May 14, 2009
Thumbs up,Katherine. Great answer!
0 votes
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