What About Short Sale Properties?
Because the lender (in some cases two lenders are involved) is taking a loss on the loan, the lender needs to approve the price and terms of the sale, effectively making the lender the controlling third party to the transaction.
Short sale properties are easily identified because the Multiple Listing Service requires the public remarks to have specific phrases, for example “subject to lender approval” or “subject to 3rd party approval”, as a disclosure to any potential buyer.
offer. The property is always purchased “as-is”. The Seller is already in financial distress and won’t have the money for any repairs.
The lender is losing money on the sale and will not offer or allow any concessions to the Buyer.
After the Buyer signs the contract and any requisite disclosures, the contract package is sent to the listing agent for presentation to the Sellers.
Generally, the Sellers will sign with little or no negotiation as their primary interest is to get out of the property.
Once the contract is fully executed, the listing agent forwards it to the lender’s Loss Mitigation Department and there, the file is assigned to a negotiator. The negotiator will
accept it, reject it or make a counter-offer.
Most often, there is a counter-offer and it’s not unusual for the counter-offer price to be higher than the listed price. Seems a little odd so let’s look at why.
The lender has a different point of view. The price evaluation used by the lender is based on an appraisal conducted by an appraiser hired by the lender. The lender is focused on minimization of loss so the price they will settle for could be a little higher or substantially higher than the listed price for the property.
One of the listing agent’s responsibilities to the process is to supply the lender with comparable sales to support the listing price and, hopefully, avoid a pricing conflict.
The entire process should take 45 to 60 days and, aside from the wait, it’s fairly painless for the Buyer.
However, keep in mind that a short sale can come apart at any time prior to lender approval so be prepared for that possibility.
Use my knowledge and experience with short sales to your advantage and have a successful closing.