What Exactly Is An Approved Short Sale?

If you have been looking to buy a home recently, chances are you have heard the words "Short Sale" floating around quite a bit. In fact, in some markets, as many as 75% or so of homes on the market are advertised as "short sales". The truth is, that short sales, approved short sales, and the like are a bit of a complicated process, but hopefully today we can clear up some of that confusion for you.

A short sale occurs when the value of the property is less than what the owner owes on the loan on the property, and the seller has a financial hardship that will make them unable to make up the difference between the sale price of the house and the mortgage balance. The thing about short sales is that the lender or lenders must agree to the sale.

There are certain things to remember when trying to purchase a short sale home. Just because a home is listed as a short sale doesn't mean that it has been approved by the bank. Until the bank receives an offer from a prospective buyer, they will not begin the process of approving the short sale. Due to this fact, closing time on short sale homes can be a notoriously long wait. The short sale approval process has a ton of steps and can take forever. In a lot of cases, buyers will give up on a short sale home and move on to purchase something else just due to the long wait for approval. So, if you are thinking of buying a short sale home, make sure you have patience, and a good real estate agent.

Sometimes the buyer sticks around until the short sale approval is issued, but then has to cancel for other reasons. Sometimes short sale homes come with a long list of stipulations, including need of repairs that the bank won't pay for, the buyer doesn't end up qualifying for the loan, etc.. Sometimes the bank will not accept the offer the buyer made on the house. On short sale homes, the bank might want to get reasonably close to market value out of the home.

Now, this is where the term "Approved Short Sale" comes into play. In an approved short sale, everyone except the prospective buyer have completed their portions of the work. This is usually what happens when the previous buyer falls through. The good thing is, if you choose an APPROVED short sale home, you have a better chance of going straight to closing and contract, no 2-5 month waits that you are likely to experience with a regular short sale! The important thing to remember is that if you offer less than the approved price, the process will have to start all over again. So, it's only quick and easy if you are willing to pay the approved price.

In short, remember that a short sale and an approved short sale are two VERY different things. By choosing a reputable real estate agent like Hamid Ali, you can navigate through the sometimes confusing home buying processes much more easily!