Some buyers in Flagstaff seem to be wary of making offers on short sales for a couple reasons in particular. They don’t know how long the process will take and whether the short sale or price will even be approved.
This is understandable considering that in a conventional short sale, the seller’s lender (who has to approve the short sale) isn’t involved much, if at all, until there is a contract to purchase the home. There are things a knowledgable real estate agent can do to shorten the time frame and increase the chances of success; however, in this situation there’s no way of knowing exactly if and when the short sale will be approved.
Herein lies the benefit of pre-approved short sales. In a pre-approved short sale, the seller’s lender approves the short sale upfront (before an offer is made). They determine a minimum price or net proceeds that they’ll accept and they usually have set time frames for responding to offers. As you can imagine, this makes the listing that much more appealing to buyers, who then have a better idea of their chance of successfully closing on that short sale in a reasonable amount of time. Another benefit is that there’s usually a specific amount of time that the foreclosure process is halted while the seller attempts to sell the home.
The two most common types of pre-approved short sales are HAFA and FHA. In these programs, the short sale is processed through your lender but the guidelines and qualifications are set by the government. Unfortunately, not every loan or borrower is a candidate for these programs and not every lender participates; however, it’s worth finding out. Many major lenders, such as Citibank, Wells Fargo, Chase, and BofA are also beginning to roll out their own “in-house” pre-approval programs. If you’re a homeowner considering a short sale, the first person to talk with is a real estate agent who is knowledgable about short sales and can walk you through some different options.