What happens after a short sale is approved?
After the seller accepts the offer, the listing agent will send the listing agreement, the executed purchase offer, the buyer’s pre-approval letter, a copy of the earnest money check, and proof of funds to the bank.
What does an approved short sale mean?
DEFINITION. A short sale approval letter is a letter that a lender issues to the seller if a short sale offer is approved for less than the amount the borrower owes on a mortgage. It’s issued by the lender at the end of a short sale to demand the “short” loan payoff in return for releasing the lien on the property.
How long does it take to close a short sale after approval?
Closing Time Frames Mortgage lenders prefer to close short sales within 30 days or less after approving buyer offers. In fact, lenders often push for closing short sales within two to three weeks of sale approval.
Can short sales take place at closing?
In short sales, sellers and buyers might learn at closing that sellers’ lenders have disapproved a previously agreed-to closing cost contribution, for example.
What form is sent when a short sale is completed?
A completed and signed IRS Form 4506, “Request for Copy of Tax Form”. A completed and signed personal financial worksheet. This will include assets such as other real estate, stocks, bonds, 401Ks, etc.
What percentage of short sales are approved?
In some cases, banks have been known to approve short sales priced between five and 10 percent under market, but that depends on the property and area. Another aspect of due diligence is calling the listing agent.
Why do short sales take so long to close?
With a short sale, the seller is asking the bank to take less than the amount owed. Even if you’ve made an offer and the seller has accepted it, it’s not a done deal. The seller’s bank must approve the sale, and this is where the big delays can happen. Banks are losing money in a short sale and aren’t too keen on it.
What is the first step sellers should take in the short sales process after reaching out to their lenders?
Get a Property Valuation Analysis This makes the first step critical—the value of the home must be established right at the start. It’s easier to come to a price agreement with the lender when the home’s value is close to the outstanding mortgage balance.
What are the consequences of a short sale?
But a short sales results in a loss on the loan, and the end of interest payments and servicing charges that represented the lender’s profit.
Why do short sales fall through?
Lenders may reject a short sale for various reasons, including a belief the seller has the ability to pay the loan, it has the chance to reduce losses by foreclosing, or because the offer is too low. Other liens on the home, such as creditor judgments, may make it impossible to transfer clear title to a buyer.