When Realtors advertise an “Approved Short Sale” it means the lien holder or lenders holding the note, have approved the price and closing costs associated with the sale. The most common reasons a short sale has been pre-approved are:
- The Realtor had a previous offer and the contract fell through. The bank has completed the review of the Seller’s financial hardship, they have done an appraisal or BPO (Broker Price Opinion) and the bank is satisfied with the sales price and/or the terms agreed upon by the previous buyer.
Is there still room for more negotiation? Sure, however, this may delay the process as many banks do not let you know what they are looking to net and the guesswork may have to start all over again. The Realtor negotiating the short sale probably has a pretty good indication if there is any flexibility in the terms. Most Banks will reuse some of the Sellers’ hardship documentation if a new offer is received within 30 days of the original approval. Although Banks may not tell you this, most of them will keep the same negotiator and pick-up the process right where the previous buyer left off.
- Another reason why a ‘Pre-Approved Short Sale’ is advertised may be that the Seller qualifies for HAFA. Under the new Home Affordable Foreclosure Alternatives (HAFA), if the owner qualifies for the program, the banks will send an appraiser or BPO agent to establish fair market value for the property. Once the seller is qualified and has completed the qualificatin process, the house is listed for sale at a price that has been established and approved by the Bank.
Why are Approved Short sales a good option for buyers? There is a higher level of certainty in terms of sales price and closing costs assistance; the wait time for approval is drastically reduced; in many cases appraisals and inspections have been completed by the previous buyer and may be available to the new buyer for review.
As always working with a realtor who is experienced negotiating short sales is very helpful and may save you time and aggravation.
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