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Who does the short sale approval letter belong to?

Buyers and buyer's agents sometimes ask to see the demand/release/approval letters but I am not convinced they should be allowed to.

Approval letters belong to the sellers, they are addressed to the sellers, mailed to the sellers, and contain the very private consequences of the short sale to the seller.

On the occasion when a lender is buyer specific, like Wells or BoA, the buyer's name will appear on the letter just so they deal CANNOT close with a different buyer.. A short sale has no bearing on the buyer whatsoever.

The title/settlement company must have a copy of the demand letter, of course, that is how they know they are allowed to release the lien.. and I can see why the buyer's lender would want to see the letter as a closing condition, but the buyers and buyer's agents? I don't think so....

What are your thoughts?

Help lots of people and have a great day!

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS
BROKER - Owner REALTOR® - Green Realty Properties

Visit www.pattydasilva.com for SouthEast Florida's best properties.

Posted by Patty DaSilva, CDPE©- Certified Short Sale Expert- e-PRO®- Ft Lauderdale on 09/01/2009 06:37 PM

Comments (8)

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short sale approval, demand letters, buyer and approval letters

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8 Comments on Who does the short sale approval letter belong to?

SEP

I agree with you. Sometimes, in CA, we just submit them to escrow and then the buyer's agent can verify the actual authenticity of the letter thru escrow. Other times, we black out all extraneous information, and send it that way. Since I suppose it is just requested in order to verify authenticity, those methods have worked pretty well for me.

Just closed on a short sale representing the seller last Friday. I never asked to see the approval letter. I just waited to hear we had been given the green light so my client could schedule inspections. Just curious Patty...why did they ask to see the letter?? Were they somewhat demanding??

Hi Melissa,

I think that is the best way... The escrow company is impartial and can verify to anyone that the short sale has been approved without exposing the sellers.

I try to explain that to some buyer's agent and if I am unable to change their minds and they insist to the point of causing trouble, (thankfully, only happened a couple of times), I will black out the important info and get my sellers authorization in writing.

We have to protect our sellers and ourselves. :)

Sonja,

"Curious" is the word.. that is what they are, curious...

There is nothing on the letters that is related to the buyers so curiosity is probably a good explanation.

I also have to say, that I have heard horror stories, so I think sometimes, the Realtors were burned in the past.

Sonja, you represented the seller or the buyer on the transaction you just closed?

I only list homes and it is a requirement (non-negotiable) on all my short sale listing that inspections be done within 5 days from when buyers and sellers execute the contract.

I (we all) work too hard on the short sales to have the sale fall apart, after approval, because of inspections.

You're correct, there shouldn't be any reason they need to see the letter (they are not a party to the contract that the letter refers to), all the buyer needs to know is that the transaction can move forward.

Hi Joseph,

I agree with you. Thank you for your comment. :)

SEP

It does belong to the seller. However, as a buyer's agent, I ask to see the approval letter to verify the information that the listing agent gave me is correct (such as approved closing cost, etc.). I also want to make sure we are approved.

As the listing agent, I once gave the approval letter to the buyer's broker when he asked for it because he said we were jerking his buyer around. I then learned he tried to contact the negotiator directly to get a higher commission approval. After that, I blacked out Everything that does not pertain to the buyer when the buyer's agent requests it. Once bitten, twice shy...

Hi Amiri,

That is a horrible thing to do! That agent should be ashamed of himself!

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