Buyers shopping for a home in the Reno-Sparks area are likely to encounter a large number of short sale properties for sale. Some of these short sales are advertised as “pre-approved” meaning that the seller’s lien holder has already approved the short sale. Buyers should be careful here as the term “pre-approved” is often used loosely and many listings actually should be advertised as “previously approved.” Ask specific questions….
FHA Preforeclosure Sales if listed correctly will be “pre-approved”. FHA requires homeowners to get approval into their system prior to listing thier property. FHA sets the price and the net proceeds. Once an offer is received the seller’s lien holder is supposed to respond to the offer within 5 business days. If the offer meets the FHA requirements as set forth in the “Approval to Participate” that the seller is given when approved into the system then this is truly a “pre-approved” short sale.
HAFA Short Sales – This is a newer short sale program that is set up in a similar fashion to FHA short sales. Sellers can be approved for a HAFA short sale prior to listing the property, given a sales price and net amount. In this case the short sale is truly “pre-approved”. The seller is provided with a Short Sale Agreement (SSA) which outlines the terms required for the short sale.
Previously approved short sales are just that – previously approved under another buyer’s name. Most lien holders provide short sale approval letters with the specifics of the buyer who made the offer. If the property is being advertised as “pre-approved” but the approval letter has another buyer’s name on it, it won’t do you much good. At that point if you make an offer, your offer and all the pertinent documents will need to be re-submitted to the lien holder in order to issue a new approval letter in your name. This process may be shorter than the timeline the previous buyer waited, but there are no guarantees.
Key is to work with a buyer’s agent that knows the short sale process and can inquire about the specifics of the property you are interested in.