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#456311 - 01/14/17 12:42 PM Do lenders approve short sales prior to an offer?
Z06Fanatic Offline
Member

Registered: 08/06/16
Posts: 254
Loc: US
Hey guys - basic short sale question.....say a home is listed for 200k on the MLS as a short sale requiring 3rd party approval - isn't this just a shot in the dark as to the true price the bank wants? From my understanding the bank won't do any of its due diligence prior to getting an offer...essentially you could bid 200k, the bank could get an appraisal done, and then decide they want 220k......just wanted to get this right as I'm brand new to the short sale process and have a lot to learn smile

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#456312 - 01/14/17 12:57 PM Re: Do lenders approve short sales prior to an offer? [Re: Z06Fanatic]
Vermont Offline
Major Contributor

Registered: 04/12/08
Posts: 7717
Loc: Vermont's North-East Kingdom
The Owner of Record probably participated in setting the initial Asking (Listing) Price, with that amount being enough to pay off the Mortgage Balance AND give him a little "walking away money". The Lender WON'T dictate what they have to ask (certainly NOT in writing); only that they must bring this bleeding to an end soon.

After no Offers appear, and reality sinks in, the asking price will probably be reduced until it begins to cut into the quick, and then there will be an absolute need for the Mortgagee to approve any Offer that is shy of the Loan's PayOff. Price reductions that are "short" of being sufficient to discharge the current debt will (or should) also be approved by the Lender, but that isn't always done.

You have to know where they are in the process in order to predict what the response will be to any Offer; or to even estimate how much time might be required to even get a Bank Officer to consider the details of the Offer and then reply. Most Buyers aren't prepared for events to move in "slow motion"; that's why these are not for everyone.
_________________________
Dale C. Hittle of GOLDEN RULE PROPERTIES in Glover, Vermont
Where We're Always Striving To Put Together "THE FAIR DEAL"

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#456490 - 01/28/17 06:14 PM Re: Do lenders approve short sales prior to an offer? [Re: Z06Fanatic]
Big Kahuna Offline
Junior Member

Registered: 01/22/17
Posts: 1
Loc: Hawaii
It's possible the listing price was actually already approved by the lender as what they would take. I had a short sale listing once where we started out high enough to pay off the loan, with a plan to systematically reduce the price to market value. The lender beat us to the punch and contacted me requesting we lower the asking price to the BPO value another broker had given them. The lender just wanted to get the non-performing asset off of their books. Sure enough, market value asking price equaled market value offer and approved short sale!

:dancingguy:

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#459140 - 09/19/17 01:47 PM Re: Do lenders approve short sales prior to an offer? [Re: Big Kahuna]
mreid77 Offline
Junior Member

Registered: 09/19/17
Posts: 2
Loc: CT
Once there is an offer the lender will order an appraisal of the property- this number will determine whether they approve the sale or not(with some wiggle room). Assuming the property is being sold for market value or close to it- the lender is highly likely to approve.

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