The process of a short sale is really complex and creates a lot of confusions and frustration. The waiting time for a short sale approval may be very long and patience testing. Sometimes the sellers who face a lot of complications get dishearten and loss their patience.
The other bad thing with a short sale is that the home is often priced under the comparable sales. Some agent manipulates the listing of short sale home to get more offers. The offer that a bank accepts may be much higher than the list price because sellers often pick the highest priced offer.
Quick Overview of A Short Sale Process:
The banks will never approve a short sale until they get an offer from buyer’s side. In normal case short sale may be approved in a way that buyers submit an offer for short sale and get it approved.
The usual process of short sale is given here:
- Short sale listing agent lists the short sale.
- Short Seller provides all the required documents to lender’s agent.
- Buyer submits an offer subject to lender’s approval.
- Short seller signs the buyer’s offer.
- Short sale listing agent sends the seller’s package, accepted offer and a HUD to the bank
- Buyers have to wait that maybe for months.
- Letter of short sale approval is finally received by agent.
- Short sale agent calls the buyer’s agent to complete the short sale.
- Then buyer’s agent has to inform listing agent.
- Buyer cancels the transaction.
- Short sale listing agent communicates to the buyer’s agent and puts the home back on the market as an approved short sale.
This is the typical way a short sale is approved and buyers get the short sale home.
Short Sale is Approved and Buyer Cancels The Transaction.
Buyers always do not cancel the short sale transaction on the receipt of short sale approval. There are chances that buyer still may be interested in buying the home, but cancels the deal due to some other reasons. A number of real estate transactions are cancelled due to the buyer’s certain right of inspection and contract contingencies, which provides an opportunity to buyer walking away from the transaction.
Here are other reasons a buyer may cancel an approved short sale:
- A buyer may cancel the transaction in case home needs too many repairs and bank is not willing to pay.
- The bank may refuse the short sale due to low appraisal that perhaps may come due to HVCC
- The buyer is unable to satisfy the lender’s funding conditions and does not qualify for a loan.
New Buyer Can Close on the Approved Short Sale
Normally, an offer made by a new buyer should have the exact terms and conditions of the short sale approval letter. It typically works only if the short sale approval letter does not name a specific buyer. The short sale listing agent may need to request a new short sale approval letter in case the short sale approval letter is only specific to a buyer. Requesting a new short sale approval letter may initiate the complete short sale process once again, depending upon the bank.
The following things should be taken place to close the short sale on existing approval letter.
- The terms and conditions of new short sale offer must match the offer that was submitted and approved.
- The new short sale approval letter must not be specific to the previous buyer.
- The buyer must close the short sale transaction before the date mentioned in the short sale approval letter an extension may be granted.