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What Is an Approved Short Sale?

Approved Short SaleThere are always tons of questions regarding short sales, one of them involves the Approval.

Let’s start with:
WHAT IS A SHORT SALE?
A real estate sale where the current owner (Seller) owes more on their mortgage than they can sell their home. In a short sale, the Seller asks the bank to forgive the deficiency- the difference between what the Seller owes and what the buyer is willing to buy the home.

Because the sale needs approval from the Seller’s Lender, this approval process creates a waiting period for the buyer. The buyer submits their offer, then the offer is accepted by the Seller, then the Seller sends the offer off to their Lender for approval of all terms. The buyer’s purchase contract terms may be modified by the Seller’s Lender. The Lender may not agree to the price, or some costs of the sale. The Lender has the final approval rights, so be prepared to negotiate during this Lender approval process.

Question: What is an Approved Short Sale?

Answer: A sale that has all terms approved by the Seller’s Lender. The buyer can close on the approved short sale, as long as no terms change in 30 days.

A SS is like any other real estate transaction, however, the Seller’s Lender (mortgage holder) must approve the sale. The approval creates a waiting period. The buyer submits their offer, the Seller accepts, the added step is the Seller’s Lender approving the sale.

Once approved, the Sale moves forward as any other sale. The buyer completes their inspection and then their loan, so the home can close. The closing takes an estimated 30 days.

The goal of the approval for the Seller is to have the entire debt fully forgiven. That way the Seller can walk away without any debt from their home and have a financial fresh start.

The goal of the approval for the Buyer is to have their price approved, so they can purchase the home.

Question: If the home is on the market as an “approved short sale”, does this mean it will only take 30 days to close?

Answer: Not necessarily. Any new buyer & terms must be re-approved by the Lender. In theory this should take no longer than 30 days, but in practice it takes up to 60 days.

To Recap: Short Sale Approval from the Seller’s Lender generally takes 30-90 days. During this period the Buyer and the Seller are waiting for the Lender to approve all terms, so the Buyer can begin their 30 day loan process.

Now, that you’ve learned about an Approved Short Sale, learn the 7 Questions your Arizona Short Sale Realtor should be asking you if you are in a short sale situation.

Charlotte Allred is the Designated Broker for Secure Real Estate in Chandler Arizona. Secure Real Estate works to help Sellers who are struggling with their home as well as Buyers to find their new home.

photo taken from:welcomehomesandiegocounty.com





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