On my website you will see two possible values associated with the
Short Sale listing:Unapproved and Approved.
Unapproved Short Sale status means that the bank is still
considering the offer or no offer has been submitted yet, and the bank
has not yet started the process.
Approved Short Sale status means that the bank reviewed and
tentatively approved the Short Sale at the asking price. Approved Short
Sale transactions
have much better chance to close (final approval is still needed) and
the final answer from the bank will take a week ot two.
Before pursuing Short Sales, the Buyer should be aware of the following:
- It takes months to hear back from the bank.
Unlike regular sales or REO (foreclosures), where the Buyer gets an
answer quickly, it takes on average 2-3 months
for the bank to come back with an answer. And in most cases it is
either "No" or the bank counters with the higher price than the
original asking price. 5-6 months wait is not uncommon.
- The original listing price is not guaranteed
The bank might either not allow the Short Sale or ask for more money.
- Approved Short Sale price - is market price
In most cases the Bank is not the mortgage holder, but just services
the loan. The mortgage was sold in the secondary market -
Fannie Mae and Freddy Mac, which means that the actual owners of the
Seller X's mortgage are investors. The Bank simply can't approve a
short sale,
if the offer price is less than the market price, because the bank might be
exposed to the legal action on behalf of
the shareholders. Foreclosures and regular sales often bring better
deals than Short Sale.
- Very limited room for negotiation.
If the Short Sale is approved by the Lender at a specific price, and the Buyer brings a lower offer, the entire process of
approval starts all over again.
The Buyer can not ask for help with closing costs, early posession or inclusion of Seller's personal property.
