Getting Your Short Sale Approval ~ You DO Accept the Offer!

By
Real Estate Agent with Real Living, Real Estate Professionals BRE#01299346

Short SaleI see a number of posts on short sales and it seems that the majority of people doing short sales, collect all these offers and send them to the bank.  The other thing I see are agents that try to get approval for a short sale prior to listing or before accepting offers.

In our area, my partner and I list the property 10% below market value (based on the last sold comp and based on the subject property specifics). Based on the sellers criteria of late payments we determine how aggressive we must be in lowering that price to get a solid offer. Once we receive a solid offer that the bank will find attractive, we accept the offer and open escrow. We educate the buyer's agent and hopeful through them the buyer on the process that will be going forward. We usually obtain approval within 5/15 days. We submit a BPO, a hardship letter (you must be able to prove hardship), market analysis of our declining market, 2 pay stubs, 2 bank statements, 2 tax returns and a financial statement for the seller (assets/liabilities/income/expenses).  You include the Listing Agreement and all Addenda for a Short Sale and the Purchase Agreement and all Addenda for a Purchase Agreement.

Once you receive the offer, you notify the bank of your intention to send them a complete short sale package. I usually overnight the package....safer than faxing. I then follow-up daily until I am assigned a Loss Mitagator. I then call daily until a BPO is schedule. Once I accept an offer, I take the lock box off, so that I am the main point of contact and can meet the BPO provider at the house. I try to ascertain if their market knowledge will get the job done, and if not I provide my BPO.

Within one week of the BPO, you should get approval. Our shortest approval has been 5 days, with COE in 14 days.  We have been successful in all of our short sales to date. We have not done that many....we only want it to be about 15 percent of our business and we interview our clients to make sure we can get it done. There are circumstances where you cannot.

The bank will typically accept 80% of market value for the property. The 10% below market gets your buyer and the other 10% is your commissions and closing costs. We try to keep our sellers from paying any out of pocket costs. They usually do not have money for commissions or closing costs. The banks will accept and approve these short sales.  

Also, you should be striving to get back up offers. It is still hard to keep the buyer. 

Note: The criteria for determining that we cannot help the seller are based on original purchase money, second lien holders and PMI. 

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Location:
California Shasta County Redding
Tags:
getting approval for a short sale
you do accept the offer
get a backup

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Anonymous #47
Anonymous
Vinni

It has been 2 months since we made an offer (at 92% listed price and zero buyers agent commission on a short sale property-is not listed on the MLS as a short sale though). The seller's agent said that 3 BPOs have been done and we are 'close' to approval. Are we being used as bait?

June 16, 2010 11:40 PM
Rainmaker
895,371
Tony Marriott
Associate Broker, REALTOR
Haven Express @ Keller Williams Arizona Realty

Throwing multiple offers at the lender is a recipe for potential disaster when attempting to get a short sale approval.

July 23, 2010 06:22 PM
Rainmaker
904,820
Bill Gassett
Metrowest Massachusetts Real Estate
RE/MAX Executive Realty

The reason so many short sales do not get approved is because buyers agents should be asking short sale questions to the listing agent. The answers to these questions can be a great indicator of success.

July 27, 2010 09:21 PM
Anonymous #50
Anonymous
steve

i just made an offer on a short sale.....the offer was accepted by the owner listed for 150k and we offered 150k.  however, the seller now has to present it to the bank- they never had approval for the sale price.  My question- is this the norm?  i was under the impression that the bank would agree to a price with the seller, the seller then puts the house on the market in an attempt to get close to that agreed price.  I am unfamiliar with the short sale process!  my next question- what basis do you believe this asking price of 150k comes from.............im assuming after reading your blogs that it is based on the 80% of the comps for that area.  Wouldnt it be smarter to get the bank to agree to a certain price and then put the house on the market?  This would save alot of time for the seller, wouldnt it? 

August 06, 2010 11:54 PM
Anonymous #51
Anonymous
phil waldron

Agreeing to an acceptable price upfront prior to listing would be considered "risky" to any selling party or any 3rd party who has interest in that sale. Not only do real estate market conditions change with time, additional liens such as taxes and other current conditions may have an impact on the bottom line and the potential approval. There are just too many variables with a short sale and things can and often do change over the course of the listing time. The lenders are approving more than just a price. Just think of these homes as "kind of for sale" and if you submit an offer and the seller accepts it, then it's "kind of pending". Ask your agent to get as much information as they can upfront about not only the lender(s) who have to approve the short but also what is going on with the seller.

 

Good luck.

August 13, 2010 12:17 PM
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Jeanean and David Gendron

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