I received a call a week ago from a client that found a property on Realtor.com which had language in it stating “Approved Short Sale”. The client first wanted to know what that meant because in general short sales are not approved until an offer has been submitted to the bank.
When a listing agent lists this information in the remarks for a listing, they do so because at some point in the recent past, an offer was submitted that was accepted by the seller, and sent on to the bank for approval of the shortage the bank would receive. This process sometimes takes an extended period of time… in some instances after the lengthy approval process the buyer decides to not move forward, or the approval from the bank came back at a higher price than what was submitted. When this happens the agent will put the property back on the market knowing that the previous offer was approved at a certain amount, this becomes the pre-approved figure.
Unfortunately, we sometimes are experiencing agents playing games by offering a property at a list price that they know is well below what the bank would accept…. Someone might ask what good does that do, the answer is not much except maybe for the listing agent. In fact this practice of misrepresenting a list price can do a lot of harm.
Back to my example above… I decided to contact the listing agent and I asked this question: “Listing Agents Name, Address of the property, Is the short sale approved for $159,000? I have someone interested in writing an offer.” The answer I received was “Property Address, Is an approved short sale, but the price is not yet approved. We have an offer on it that we have sent to the bank.” A little confused, my reply was “If the price isn’t approved, what is approved about it?” The agent answered “The bank will accept a short sale. They sent us an approval for that only so far.” Ladies and Gentlemen, that is not an approved short sale and should not be represented as such in marketing materials. As a general rule of thumb, it is a given that a lender will accept less than what is owed on a property in today’s real estate market. Agents representing that they have an approved short sale when they don’t is a blatant mis-representation that can cause a great deal of problems.
My client chose not to pursue this property after the information was revealed to them. Had we chosen to move forward, we would have requested a copy of the “Short Sale Approval” to see in fact under what terms the sale had been approved. I guess in this case all it would have said is “yes, we will take less?”
Call me if I can help you navigate the complicated world of real estate. I can be reached at the office at 909.336.7995, or via email at firstname.lastname@example.org I would be happy to help you get the best deal and avoid the challenges.