Rumors, just like viruses, spread like wildfire. And, of course, since I reside in San Diego County, I have my own experiences with wildfire. Like wildfire, there were waves of rumors spread throughout 2011 about the pre-approved short sale. Is there some such a thing as a pre-approved short sale–a short sale where the bank throws out a price, you send over and offer, and bam, bam, boom–the short sale is approved? Read more to find out.
Here’s are some James Joyce-style musings on pre-approved short sales:
- Often times, pre-approved means that the bank now rules the roost. The bank can dictate terms (including commission), and can also request that the terms and conditions for marketing the property (including the number of open houses required).
- Another challenge of the pre-approved short sale is that the bank(s) may not approve of certain types of buyers (such as corporate entities or limited partnerships). Of course, this is wildly ironic since it is the seller who owns the property and accepts the purchase agreement, while the bank merely ratifies the sale.
- When I hear agents at caravan pitch their homes as approved short sales, I know that there is more to the equation. Yes, there was a time when you could substitute a short sale buyer at the same terms and conditions and get a new short sale approval letter in a day or two, but these times are getting fewer and further between. With Equator (and Bank of America), you can request a soft decline and the next buyer’s offer is processed more quickly—but the same terms and conditions may not be accepted by the bank.
- The HAFA program (Home Affordable Foreclosure Alternatives) does offer two different mechanisms—one of which includes submitting a package without an offer and waiting for a pre-approved purchase price. Many short sale aficionados do not care for this kind of pre-approved short sale. These agents have noted that the process (and the processing) is exceedingly slow and the approved prices are often not in line with existing market values.
- Bank of America also has a Cooperative Short Sale Program, which offers a pre-approved short sale. Coming up on its first anniversary, this program was said to offer approvals and pre-approvals in record time. Yet, the program seems plagued by the very same problems as the HAFA program (slow processing times, dictated and inflexible terms, an exceedingly high list price).
While 2012 is definitely the year of the short sale, pre-approved short sales whereby a short sale is approved in a week or so (and you just have to find a buyer) are still just a pipe dream for short sale agents.
Short Sale Expeditor
{ 10 comments… read them below or add one }
I completely agree that ” pre-approved ” short sales do NOT work. They give exceedingly high lists prices and lock them in for 90 days…. it is beeter to stay the traditional short sale process, meet the BPO agent at the home and provide comps and point out every thing negative with the property, and give them the offer price on the table and let them know you really need their help. It is still not guaranteed you will be successful, but it is better than a 90 days price defeat !! Much success
I was checking my email before I went to bed and there pops up an email “selling” the opportunity to list “pre-approved” short sales. Smh! I was interested of course because like you mentioned there has been so much “buzz” about this topic. I wanted to know if you ever heard of Russ Fitzpatrick. He claims that for $299/yr their company disseminate listings through one national franchise brand in the US and they are lacking coverage in my zip code. They also claim that they can show you how to list 30-50 properties in 2012 with no short sale negotiation & no waiting. It sounds too good to be true. I just want to make sure that I’m not missing out on an untapped or upcoming market. “I must be up too late… I almost already know the answer… But humor me, lol!”
The name is familiar to me, and so I Googled it and also saw the offer for $299. Besides that, I am really unfamiliar with the program. Sorry, I wish I could be more helpful. We have a few good ‘free’ webinars coming up, if you would like to join us. You can sign up here: http://www.shortsaleexpeditor.com/events
I currently am a listing agent in Chicago listing Bank of America pre approved short sales. The program does work and is legitimate. It’s not as easy as it should be and there are some lessons learned the hard way. However, I closed my first pre-approved short sale last week, will close another one next week, and am scheduled to close another the week after.
List prices given to me were reasonable, and response time was reasonable (2 weeks).
Thanks for stopping by. I think you hit it on the head when you said, “It’s not as easy as it should be…”
I always laugh when I hear about Pre-approved short sales. I usually refer to it as the “Buyer Swap” program. BofA is the king of new programs that just make the process longer. Enjoy your blog
Brian
Thanks for stopping by. I love your term, ‘buyer swap’. The word ‘swap’ does imply something that happens quickly. Ironic!
Great post as always Melissa.
One nice ‘pre-approval’ is FHA backed loans in the short sale process. You can (and are supposed to) submit the package prior to obtaining an offer. They are supposed to (w/i 7 days per HUD guidelines) order an appraisal (not BPO) and ‘accept’ the seller into the program. FHA will issue a form 90045 which will tell you the appraisal amount, net lender requirement, and an expiration date.
I wish all short sales ran this way as it eliminates so much guess work and really could streamline the process. But then again, that would require the banks to act rationally.
You are correct that some are quick. But I’ve had a few stinky FHA ones as well. Not that this quote will ever make it into Bartlett’s Familiar Quotations, but I have been known to say that in some cases “you are only as good as your negotiator”.
Did anyone find out about Russ Fitzpatrick and if his program is legit?