Sometimes the short sale may be a complicated process. The waiting period for short sale approval is very long, something that may cause other buyers to change their mind. Another thing to know about the short sale is that they are priced according to their comparable sales. Some agents list the homes with low prices in order to end up attracting many offers. Banks finally choose the highest one. Let us have a look at the overview of the short sale procedure.
Banks approve a short sale only when a buyer makes an offer thus for a short sale to be approved by the bank; a buyer must first make an offer. Below is the process of short sale.
• An agent will list the short sale.
• The seller has to present lender’s document to the agent
• A buyer submits an offer that must be approved by the lender
• The seller will have to sign the offer of the buyer.
• Listing agent will send the HUD; buyer’s accepted offer and seller’s package to the short sale bank
• The buyer has to wait for days or months.
• The agent receives short sale letter.
• Agent will call the buyer’s agent to convey the news
• The agent to the buyer informs the listing agent that the buyer purchased something else.
• Client goes ahead to cancel the transaction
• Finally, the listing agent will place the home on the market to wait and label it an approved short sale.
Reasons that cause buyer to cancel short sale approval
At times, the customer will not just cancel the transaction when he receives the short sale approval letter. Sometimes the buyer still has the interest and may withdraw for other reasons. Most real estate contracts give buyers rights of contract contingencies and inspection which allows the buyer change their mind and leave without any consequences.
A buyer may also cancel the short sale due to the following reasons;
• Maybe the homes need too many repairs which the bank will not take responsibility.
• The appraisal was not satisfactory thus forcing the bank not to sign a lower sales price.
• In case the buyer cannot get the loan, and at the same time he or she is not able to meet the lender’s loan requirements then the buyer can cancel the transaction.
Needs to close on the existing approval letter
In case an approval letter does not mention a particular buyer, then the offer of a new buyer must be the same as the terms stated in the approval letter. However, if the approval letter suggests a particular buyer, then the agent who is dealing with the short sale listing will be forced to request for a new approval letter.
According to the bank that is involved in the transaction, when a new short sale approval letter is required, the whole process of a short sale has to begin from the start. To have the present approval letter closed, the following has to take place.
• New offer terms must be equal to the offer that was initially approved, and the initial approved sales prices should be maintained during submission.
• An approval letter should not be directed to the original buyer.
• It is the duty of the buyer to close by the date given in the short sale approval letter. Otherwise, an extension will be necessary.