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Third Party Approval.....What's The Big Deal?

Hi folks. Today I want to put a different spin on Short Sales and third party approval. I've read a lot of posts and comments about the dreaded 3^rd party approval and how frustrating it is for Buyers and Buyer's agents.

My thought on this is.........it's about time!!! As a listing Broker, my Sellers and I, have spent a lot of time waiting for Buyers to get their mortgage approval. Some took 30 days and some took 90 days. Some didn't close at all.

When negotiating offers we relied on information provided to us from the Buyer's Lender stating they were "pre-approved" or "pre-qualified" only to find out a month later that it was all a lie. They were just writing deals and hoping to get them through.

Doesn't this all sound familiar to Short Sales? Of course it does. The Buyer's Lender approving their financing IS 3^rd party approval. That contingency is NO different than having the Seller's Lender remove the 3rd party approval in a Short Sale transaction.

In fact, as a Listing Broker, I much prefer the Short Sale and the Seller's 3^rd party approval. It keeps me in control of the transaction.

Things have not changed that much. It's just that now the "3^rd party approval" contingency is on the other side of the contract. Deal with it!!

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Posted by Bryant Tutas Broker/REALTOR(R) Tutas Towne Realty, Inc on 04/02/2009 03:03 PM

Comments (20)

Short Sales in the Home Buying Channel

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Originally posted at: Central Florida Short Sales: Third Party Approval.....What's The Big Deal?

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20 Comments on Third Party Approval.....What's The Big Deal?

APR

Reserved Parking For "The Lovely Wife"...TLW...ROAR!

Hun...

Perhaps the big deal is the shoe being on the other foot. Could be cause for much distress and misunderstanding :)

Deal with it? But Baby...It's rocket science :)

TLW...ROAR!

Approval on the banks side seems like a sure way to find out IF they are really qualified... I would presume that only means that they see for sure but the buyer still goes with the lender of their choice? (I still haven't done a short sale....got close though :)

Bryant: Wow! That really makes thing clear when you put it that way. You wouldn't accept multiple ratified contracts and wait and see who gets their loan approved by the lender first. I like this thought. Will have to incoporate this into my short sale class.

Bryant,

So what is your point?

It's time for sellers to get even with buyers!

Turn about is fair play!

What's good for the goose is good for the gander.

It's just reciprocity!

Two wrongs can make it right!

The truth is there is no difference between today's short sale listing and a listing signed by only one spouse! The "sellers" don't have the right to sell!

Until the NAR or at lease the state boards refuse short sale listing with out the banks joining in, there is probably not much the individual office but participate!

The bank is the big winner in short sales, they get the money! Yet, the buyer continues to take the abuse! If the buyer can wait he can probably but the same house for less as an REO.

Things have changed! It use to be the listers were required to have the right to sell.

Bill

I attended a short sale panel seminar yesterday morning and heard a very brilliant comment. One of the panelist said that a 3rd party approval contingency is like a buyer's mortgage contingency except in reverse. The seller is basically trying to prove to their lender how that now the seller and the property do not qualify for the exisiting loan.

BB,

I have one on the listing side that's been approved by the lender 3 times for same the same price and terms...yet all the buyers pre-qualified couldn't close and we were lied to...I even got proof of funds and still they lied! I just got my fourth contract on it hoping that this time it will close.

Most of the time I work with the same lenders. I know these people, and they are honest. Now if the buyer is not honest, then we are in trouble. Of course there is that odd time where the buyer refused to work off the list I gave them. We didn't close.

BB, I attended a CE class on short sales on Monday and posted here about it. He talked about buyers, and what role the agent for the buyer has in a short sale. All very interesting, to say the least.

If I had any $ I would be down in Florida right now, working with one of your buyers agents btw!

I like your spin on things and Robs too. I love short sales except for the time frames. Often times buyers come to me with less then 2-3 months tops to be in a home and it's too risky to try getting them into a short sale. When sometimes I have to wait 5 months for an answer

Thank you for this simple way to think about 3rd Party Approval from the Seller's Bank; it's financing approval, but in reverse. :)

You said it, Bryant. Thanks for speaking up! BTW I completey disagree with Bill A. and Rob A. has a clever perspective.

I am with Heather. For many home buyers, they have a short time frame. Most short sales would be good for investors or handyman.

Ah! Deal with it! The three little words that sum up the strategy for working successfully in this market!

APR

Well, I guess you would say that this is really 4th party approval then, right? Two lenders, a buyer, and a seller. I think it just makes the paperwork all the more challenging to complete. And, that is why people think it is a big deal.

APR

Bryant! I love it! Love it, love it, love it! I am so sick of being lied to by buyers and their agents who either hide their buyers inability to get financing or are too timid to demand their buyer make good on their approvals. I get the most bogus pre approvals that now we are requiring all buyers agents to have their buyers pre approved through Jeff Belonger. He just did one for us today on one of our listings and our buyer agent was able to get her buyers approved and closed with Jeff when all the other mortgage guys lied.

There, I said it all, take a breathe now Katerina!

I stopped showing short sales and won't write an offer on them. The price they show in the MLS is not what the bank will accept. Here in Minnesota when a property is being auctioned it is listed on the MLD for $1 I think the same should be done with short sales. Some agents in my market who specialize in short sales have someone write a dummy offer to start the thrid party pricing process. I don't have nay problem with a thrird party approving my buyers financing. That isn't the issue. What I have a problem with is a listing that says that a home is for sale, submitting a full price offer, waiting 3 months for an answer while th bank gets a BPO and talks to it's investor. I call them liar listings. several of my peers have also stopped showing them.

Broker Bryant-Like the perspective that you give...I think sometimes the reason why buyer's agents get so upset...is because their buyers hound them...or they do not explain to their buyer just how long the process takes...and sometimes the listing agent does not relay the entire info..because they too want to close on a property...if the lender tells me up to 90 days that is what is in the agent remarks... I remind anyone who calls on the listing...and if it is delayed...I find out why or use common sense..like holidays or weekends. But when you spell it out for other agents...and they have a problem with it...just like you I feel deal with it! This is an excellent perspective.

Bryant, you said it, it is always upon third party approval... As a listing agent in Manhattan New York Real Estate, I always think pre-approval and pre-qualification means almost ZERO. If the buyer in our market can't put down 30% or more... It is a weak offer, short sale or not. In our market place, does not matter what they buy, 10% is a must! Although I prefer ALL CASH deals... :-)

APR

Bryant, I so agree ...what's the big deal?...just deal with it. If only we could get the Buyer side to straighten up their acts when it comes to financing approval as it can really be pathetic.

APR

Bryant, this is brilliant! I never thought of it that way, but it's just the bank's bureaucratic process in reverse. Of course! This simple explanation will help buyers understand why it takes so long.

MAY

A great way to put it in perspective. I am tryiing to learn all I can about short sales, thanks for sharing your wisdom!

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