I have a very close acquaintance that is purchasing an “approved” short sale home in another city and is frustrated. To protect the innocent, I
will call him “dad” from now on.
Dad called me the other day, very frustrated as mentioned, annoyed with the banks taking their sweet little time on his “approved” short sale. He has bought the furniture and cannot understand why they cannot close on this “approved” short sale ASAP.
I had to explain several things to dad about “approved” short sales. First of all it has to be determined at what capacity the short sale was “approved”. Did it have a buyer that walked away? Did the servicing company mention to the seller that there is no workout solution available to them and they should “try” to short sale? Did they attend foreclosure mediation (Nevada specific) and was a short sale mentioned as a possible solution?
That brings other questions: Who is the servicing company? Who is the investor? How many liens? Is the HOA current? (and so on and so forth.)
Basically none of the above matter because an “approved” short sale – no matter the scenario – still needs to be approved for the buyer specific. New accepted buyer offers will need a new approval.
Even if it seems like a “slam dunk” situation where dad can waltz in, many things can still happen in the approval process for the new buyer:
- HOA can go delinquent or other liens may appear
- Vacant homes may experience deterioration or vandalism which may affect the ability of the home to be financed
- Servicer can order a new appraisal or bpo which comes in high and can skew the whole situation
- Servicer may not think this is an arm’s length transaction
Then the question comes up – how long will this re-approval process on a short sale take? Well for the most part it isn’t that long, you should know within a month – typically. But it can be anywhere from two weeks to two years. Hope that narrows it down for you dad!
The problem with short sales is that so many shenanigans can be pulled that the banks want to make sure that everything is in place: valid hardship, solid pricing, arm’s length & so on and so forth (again.) Every new approval will have new price, terms & conditions that the sellers will have to sign off on. These price, terms & conditions may have lasting consequences for the sellers and they do not have to accept the terms and conditions if they don’t like them. This means the home may not be sold via short sale.
There are no concrete rules or answers in the short sale game (purchasing or selling). Each short sale selling scenario is like a thumb print – no two are alike.
Unfortunately. The only thing “short” about a short sale is the payoff amount.
Sorry dad.
Renee, Your article shows us all what a true professional you are in the Las Vegas Real Estate market.
I see far too many buyers get excited only to be let down later, because their agent wasn't knowledgeable about the process.
If I have have a buyer/seller in the Las Vegas market, you are my go to person. Your knowledge of the Las Vegas real estate market is impressive. Combine that with your extensive knowledge of short sales and foreclosures and you are a true winner!
Renee – excellent and well written article about short sales – and approved short sales. There are so many considerations with short sales.
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Sad situation that is happening more and more. We find that some agents will call the bank and ask if their sellers can short sell the property and when the bank says, "Yes!" then, they put in agent remarks, "Approved Short Sale!" UGH–if only everyone knew what they were doing with these, I believe more sellers would avoid foreclosure.
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Who better to advise your Dad on this than you, Renee.
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Renee… another excellent post with some common sense information. This was easy to understand. So many agents don't give accurate info to why short sales take so long and you laid it out very well here… great post…
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Renee – Excellent post about "approved" short sales and I hope your dad closes soon.
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