Pre-Approved Short Sales: Are They Real?
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Is there some such a thing as a pre-approved short sale? – a short sale whereby the seller calls the bank and the bank agrees to a short sale price and terms in no time flat?
In short, the answer is no and maybe. Often times, pre-approved means that the bank now rules the roost. The bank can dictate terms (including commission), and can also request that the terms and conditions for marketing the property (including the number of open houses required). In this instance, the terms have been approved, but the buyer has not yet been approved. The bank will still need to generate a short sale approval letter.
Another challenge of the pre-approved short sale is that the bank(s) may not approve of certain types of buyers (such as corporate entities or limited partnerships). Of course, this is wildly ironic since it is the seller who owns the property and accepts the purchase agreement, while the bank merely ratifies the sale.
When you hear agents pitch their homes as approved short sales, you must remember that there is more to the equation. Yes, there was a time when you could substitute a short sale buyer at the same terms and conditions and get a new short sale approval letter in a day or two, but these times are getting fewer and further between. With Equator (and Bank of America), you can request a soft decline and the next buyer’s offer is processed more quickly—but the bank may not accept the same terms and conditions.
There are definitely a few short sale programs that generate pre-approved purchases prices for short sale properties. Two such programs are HAFA (the government’s short sale program) and the Bank of America Cooperative Short Sale program. Sadly, these programs seem plagued with problems (slow processing times, dictated and inflexible terms, an exceedingly high list price).
While 2012 is definitely the year of the short sale, pre-approved short sales whereby a short sale is approved in a week or so (and you just have to write an offer) are still just a pipe dream for buyers and sellers alike.
Photo: flickr creative commons by malias