"Not a short sale BUT 3rd party approval required" Huh?!?

Question

Anybody know what this means? Is this an agent that's reporting WRONG data on the MLS? I spoke with the agent and, basically, she said the bank has to approve of the offer and it should happen within 2 months.

....uuuum sounds like a SS to me. Anybody have any other "perhaps"?

Should I make an offer on a listing like this?

....uuuum sounds like a SS to me.  Anybody have any other "perhaps"?

Should I make an offer on a listing like this?

Scott Hubbard · Answer

I agree with what Jake said.  You will see more and more of these where the investor has sold the NPN and may very well be working with the seller for a deed in lieu.  Many are large hedge funds and private equity companies buying large pools from investors.

In order to avoid the costs to present proper documentation in order to foreclose, they are offering the borrowers and tenants cash for keys in order to avoid further damage and vandalism.

A broker friend of mine actually witnessed a used car being given to a borrower in exchange for leaving the home in good condition and the keys.

Since there is so much controversy over the foreclosure proceedures coupled with the sheer number of pending actions this is the best way around it for the investor.

J Scott · Answer

If:

1. The bank must approve the sale; and

2. The sale price is less than what's owed on the property,

Then it's safe to assume this is a short sale.

While I guess that technically there are probably other explanations for this (I don't know what they are, but it sounds like Allen had one), there more chance the agent is lying, in my opinion.

Not sure why it matters at this point -- as you have the pertinent information -- but if you're really curious, just ask the agent, "If this is not a short sale, why specifically must the bank approve the contract?"

If you can't give you a good answer, she's lying.

Jake Kucheck · Answer

If it walks like short sale, talks like a short sale, and looks like a short sale, it's probably a short sale.

However, I've run into listings where some private equity company bought an NPN of what was previously a short sale, called the listing agent and told them they could continue to list it, but on their terms.  What's strange about that is that the point of these companies taking over the note is that they don't have the bureaucracy that takes 2 months to figure out whether or not they have an acceptable net.

Like J said, it probably doesn't really matter a whole lot, but this agent might specialize in such deals with a particularly inefficient private equity company.  Or it could just be a short sale and she's clueless.

J Scott · Answer

Sounds like a short sale to me...perhaps the listing agent is trying to keep prospective buyers from immediately turning away by advertising it as a short sale.

Why not ask the agent directly if it's a short sale, and if she says no, ask her why the deal needs bank approval...

Nemi W. · Answer

Thanks for explaining Steve.

Scott, I think I've been taking a little of each approach.

Scott Hubbard · Answer

I too look for days on market as a qualifer.  In my opinion, with short sales, there are many other factors to consider and the least of which is DOM.

Some people prefer the shotgun approach where multiple offers are  submitted with little or no methodology.  Others prefer to screen their leads for certain qualifers in order to maintain a higher turn rate.

There is no right or wrong way.

Kathy Utiss · Answer

Interesting. When I was reviewing properties recently I talked with the realtors saying they had short sales available.

Short sales are usually given to homeowners. But these realtors were selling for the bank after possession as a short sale needing approval!

They make it confusing. You may be better off to submit deal to lender if you haven't talked w/them and see if they can approve short sale any faster.

Steve Crawford · Answer

"preferential kickback" would be when a Seller has knowledge that he/they are going to discharge creditors in BK and they sell an asset or some assets "before" they file.  The Court would want that sale to have an approval to ensure it was not a fradulant conveyance.

So, if they have large portfolios, sometimes, they still sell, or follow through with a sale, but they make it subject to approval of a Court approved 3rd party.

Nemi W. · Answer

@Vikram-I'll keep that in mind while we wait.  I'll work it from the "Ms. Agent, I thought this wasn't a SS" angle.

@Scott-she said the bank has to approve.  Why would you not make an offer just because they want a retail buyer?  I mean, they could still be motivated couldn't they.  To determine possible motivation, I look for listings that have been on the MLS a while.

@Steve-I'm not sure I understand your example.  What do you mean by "preferential kickbacks".  Can you please elaborate.

Steve Crawford · Answer

We have offer in on a property in CO where the Seller is "qualified" for BK, but has yet to file.  The listing, as per his agent and counsel, required pre-approval by a trusee......even though he/they have not filed to avoid a "preferential kickback" when they do file.

Just an example.

"Not a short sale BUT 3rd party approval required" Huh?!?

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