What does an "approved short sale" mean as opposed to just a "short sale"??

Asked by Michelle Michaud, Norco, CA Sat Jan 16, 2010

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This question is about this property: http://www.trulia.com/property/1073239381-2450-Broken-Lance-…

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4
Jane Grant, Agent, Aguanga, CA
Mon Jan 18, 2010
Michelle: Great answers about what an Approved Short Sale is...so I will go into the property you are asking about. It was posted "Approved Short Sale", on the 15th of January, but is now in pending status again. They are preferring cash buyers probably because they are running out of time and expect that the bank may foreclose soon. Banks can start foreclosure proceedings 90 days after the notice of default is filed. After that they can give a notice of Trustee's sale and sell it when 21 days has passed which gives the borrower the time allowed by law to cure the debt.

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CJ Brasiel, Agent, San Jose, CA
Sun Jan 17, 2010
Michelle -

Some agents claim a "approved short sale" on listings and their definition does not always fit with mine. Some agents will submit the owners documentation to the lender prior to marketing the home (or right at the time of listing) to the lender(s) on the home. This step is meant to save time in regards to making sure they have all the documentation they want. Once the processor has indicated they have received a complete file, the agent advertises "approved". I disagree.

Some agents actually go a step further and talk with the negotiator and discusses the comps and decides a price that indicates what offer would be accepted. "If you can bring us an offer at this price and net us this much, I am pretty sure I can have management approve the sale". The agent advertises "approved". I disagree.

Some agents have been on the market long enough with the short sale that they submitted the offer and packet, received approval from the lender and then the buyer walked. They advertise a "approved". I disagree.

An approved short sale comes after an offer and packet have been submitted and the lender has sent the agent an approval letter, that letter has been signed by seller, and escrow has a copy. If the buyer is still there, you now have to work through contingency periods and get to closing the transaction.

If at any point the buyer walks (contract canceled), the buyer ask for concessions (credit for repairs, etc), anything that changes the bottom line to the lender, the deal must go back to the negotiator. The file does not automatically go to the top as one might imagine.

If the buyer walks and a new buyer is submitted at the same exact price, the timeline can be less than an offer that has difference in price or ask for a credit, etc..

Short sales can have many twists and turns. The term approval is being used to grab the attention of buyers that are hesitant about short sales. Make sure your agent knows what is meant by the advertised "approval".

Good luck!
CJ
Web Reference:  http://www.TalkToCJ.com
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Joe, , Riverside County, CA
Sat Jan 16, 2010
Hi Michelle,

Banks generally do not approve a short sale until the bank receives an offer from a buyer. So, the usual way a short sale can be approved is for a buyer to submit an offer and get that offer approved. This is how a typical short sale goes:

* Agent lists the short sale.
* Seller delivers lender's required documents to the agent.
* Buyer submits an offer subject to lender approval.
* Seller signs the buyer's offer.
* Listing agent sends the seller's package, the accepted offer and a HUD to the short sale bank.
* Buyer waits anxiously, maybe for months.
* Short sale approval letter is finally received by agent.
* Agent calls the buyer's agent to deliver the news.
* Buyer's agent informs listing agent that the buyer bought something else.
* Buyer cancels the transaction.
* Listing agent chokes the buyer's agent and puts the home back on the market as an approved short sale.

And that is typically how you get short sale approval.

Here is a great article on short sales: http://homebuying.about.com/od/shortsale/f/081009_Approved-S…

I hope this helps!

Respectfully,

Joey Dodge, MBA
Broker/Owner/Realtor
Riverside County Luxury Homes
Direct: 951.966.1389
0 votes
Cami Pinsak, , Camarillo, CA
Sat Jan 16, 2010
A short sale is a listing in which the property is being sold for less than what is owed to the bank. This type of transaction is still in the seller's control, however, the bank must approve the price, terms & conditions of such a sale. Often times a short sale listing is priced very low. The bank will get its own appraisal of what the property is worth and approve or reject any offer that comes in. An "approved" short sale is one in which the selling price, terms & conditions have already been approved by the bank.
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