What is an “Approved Short Sale” or what does “Short Sale Approved” mean?

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What is an “Approved Short Sale” or what does “Short Sale Approved” mean?

 Great information. There is a lot of confusion about short sales and the more information people can find the better.

If you are in the market to purchase real estate in Miami, Fl, chances are you have looked at some properties that are Short Sales.  A sale is “short” when the market value of the property no longer covers the loan the owner has on the property AND the owner has a bona fide financial hardship which will not allow him/her to bring the difference betweeen the sale price and the mortgage balance to the closing table.  The lender(s) must agree to the sale. 

Miami Approved Short SaleFor the lender to agree to the sale, they must analyze both the value of the property (in today’s market) and the situation of the owner.  They must be convinced that it is better financially for them to allow the property to sell for less (causing them to take a loss) rather than foreclose on the home and trying to sell it themselves after taking possession.  They rely on third party neutral real estate professionals to provide a BPO (broker price opinion) in order to make their decision.

IF they feel the price is a fair one, or if they have been able to negotiate a price with the buyer that works for them, they STILL must be convinced that the seller does not have the funds to make up the difference.  For example, if the morgage on the home is $400,000 and the market value is $350,000, the lender may “net” $325,000 after all taxes, fees, commission etc. are paid – resulting in a net loss of $75,000.  The seller must prove that he/she does not have the $75,000 via a “short sale package“.  The package is lenghty and includes past taxes, bank statements, budgets, pay stubs, etc. 

The process of determining an acceptable value and proving the financial hardship can take anywhere from 2-5 months and can be very very frustrating for a buyer.  They don’t know if their offer is going to be accepted or if someone will outbid them while they wait.

This is where the “Approved Short Sale” comes in… the seller, listing realtor and lender have already completed the leg-work. (This is normally due to an offer that was submitted, triggered the analysis process and fell through – ie the buyer became impatient, wouldn’t come up to the lender’s price, etc. but stil allowed the listing agent to know what the lender would release the property for).  The price is APPROVED ther seller is APPROVED and the sale (at the APPROVED price) can go through as if it were a normal sale.  If a buyer makes an offer on an approved short sale for the APPROVED amount, they have a very good chance of going right to contract, and closing.  No long wait for approvals, no chance of being over-bid (assuming their offer is the one accepted) and a quick close.  For buyers who don’t have patience or time, this is especially valuable.

NOTE:  Since the sale is approved at that amount, if the buyer offers any less, the waiting process may start all over while the new offer is analyzed. 

if you are looking to buy real estate in Miami or if you may have a property you need to sell which you believe requires short sale approval, do not hesitate to conact me at 786-252-4970 or janie@janiecoffey.com

Janie

 

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