I AM being positive (and trying to interject some levity into the situation) when I say that it means absolutely nothing! And in Minnesota, our laws regarding redemption periods and short sales are very different than in Florida which makes the situation much more complicated than in your area.
My point is that there IS NO PRE-DEFINED MEANING TO THE TERM in reality. This is simply an attempt by agents are to attract more buyers. It is not set in stone, regardless of how many times you have talked to the lender and how much paperwork you have submitted. It can be changed by the lender at any time without notice prior to the date of Final Acceptance. So in reality, no one can tell you up front (with any degree of certainty) how long it will take to get an approval on a short sale.
Sure, people can make promises, but they are often broken.
Also, just because a listing is not advertised as "pre-negotiated" does not mean (as you stated) "that the owner has decided to market the property for a price much lower than he owes the lender, without the lender's consent or approval, and we have no idea whether that price would even be considered by the lender". Who is being negative now???
Some lenders will not give you a price up front regardless of how hard you try or what paperwork you submit. It depends on the lender, they are all different. That is why it is wise to have an agent who does BPOs (Broker Price Opinions done for banks to determine value) on a regular basis because they can perform the same analysis and come up with a good price for the listing.
And ANY so-called pre-negotiated price is only good for 30 days anyway.
I just don't like to get people's hopes all up and then have to shatter them. If someone REALLY NEEDS to close quickly, a "pre-negotiated short sale" is NOT a guarantee that they will close on time.
Buyers should be well informed and I tell it like it is. The short sale process is gut-wrenching enough for buyers without giving buyers false hopes or false impressions. There are some good deals out there, but you have to be patient. If you have a hard and fast deadline, a short sale may not be the best thing for you.
By the way, I am a SFR: Short Sale and Foreclosure Resource, a GRI: Graduate REALTOR Institute, and licensed in Minnesota. I specialize in Short Sales and representing Buyers in purchasing Foreclosures.
You can generally close quickly on pre-approved short-sales (30-days or less), but be somewhat cautious as there can always be some hiccups.
Here are just some of the issues that can and do arise all the time....even if it's pre-approved:
- Lender does not get investor/M.I approval prior to "pre-approving the short-sale"
- Depending on the how the pre-lim HUD was done, accurate pay-off and delinquencies may not be accounted for and could cause an issue.
- The terms of the short-sale were not given and/or agreed upon by seller (mostly pertaining to the release and satisfaction).
Again, these issues come up all the time, and MOST of the time they are resolvable. The good news is that pre-approved short-sale are generally a lot smoother; just be cautious and have a back-up plan for where you can move if the closing gets delayed a day/week/month.
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Is that carved in stone? of course not, but at least you would know that there is a very high possibility of getting it approved. On the other hand, if the short sale is not pre-negotiated, it would mean that the owner has decided to market the property for a price much lower than he owes the lender, without the lender's consent or approval, and we have no idea whether that price would even be considered by the lender, whom by the way, is the only party that can approve it. Not the owner
PS: This is a small note for my fellow agent Patti-Ann Kasper. In the picture you are all smiles, try to have the same smile when you answer any questions here. I am not saying that you are wrong, you may even be right. and please don't take it the wrong way, just be positive and always, always be happy!
Pre-negotiated short sales are typically situations where the owner's lender has reviewed the owners documentation and approved a short sale for releasing the mortgage. Typically, a minimum net amount is provided to the seller and their agent. The terms of your offer are still reviewed by the lender and depending on the lender and underlying investors this could still take some time. A recently closed "pre-approved" short sale took a month for the lender to approve the terms of the offer. Weekly status updates are typical and the lisitng agent should be sharing them with your agent.. Good luck.
With any short sale the buyer has to have agreement on the contract price from both the owner and their bank. A pre-negotiated short sale is one in which the bank has already established a price that was acceptable to them to complete this transaction. This likely occurred by having gone through the negotiation process with another buyer in a transaction that did not work out.
NOTE: This amount may or may no be accepted by the bank for your transaction but it is usually a good reference point to have as a serious buyer.
Of course all lenders are different, but for the most part... Regardless of whether the listing is advertised as a "pre-negotiated" short sale or not, the lender will still have to go through their internal process for approval of all short sales. And if their paperwork is more than 30 days old, you can throw that "pre-negotiated" notion right out of the window!
The new HAFA program attempts to decrease the wait time for approvals to 14 days, but this is only on certain homes, not all houses/sellers will be eligible for HAFA. The rules say that you have to have an answer within 14 days, so think about it for a minute. If the lender is swamped with files and they can't do their work in that amount of time, what do you think the answer will be? They can easily say no, but often it takes more than 14 days (a lot more in some cases) for a lender to come up with a yes.