Don'tcha just love the English language and all the colorful ways folks use it? Boy, I sure do, and I am especially enamored of the way that some folks truly believe that by merely speaking the words they can "wish" things into being. I always knew "Abracadabra" was a magic word that could make things happen merely by uttering it, but I had no idea that "Approval" was similarly endowed. I know that where Short Sales are concerned, this is a powerful word and one everyone involved in the transaction longs to hear. Once "Approval" is uttered a whole lot of things should start happening unless...
They don't mean "Approval" as in "We have, in writing, authorization from the lender and the owner of the property to proceed with the Short Sale at the amount offered for purchase."
They mean "Approval" as in "We got someone on the phone once at the bank and they said that the bank has been known to do Short Sales, but didn't actually commit to anything, still we are pretty sure that they will, so we are going to advertise that they did, and then hope that they do."
I just ran into this situation and was sardonically amused to find that the second scenario was what was occurring. Silly me, I really thought that these folks understood what "Approval" meant, especially because they advertised their listing as having "Full Approval - No Need To Wait For The Bank". (And when I spoke with them, they reiterated this.) No need indeed!
Turns out that all this agent had was a "Verbal Approval" to proceed but there was nothing on paper, save what they had written in the MLS, that in any way was going to make this so. The funny thing is that these folks bill themselves as "Short Sale Experts".
I should have been tipped off that something was amiss when I received a form letter response to an offer touting their success and experience in handling these transactions accompanied by a xerox of a xerox of an unsigned and undated counter asking for things we had already provided.
That was it, two lonely little pages... and nothing else. No initialed RPA, no nothing. (Actually, I was tipped off and I shared my reservations with my client.) I am left to surmise that their "Short Sale Expert" status was worth as much as the "Verbal Approval" they have to proceed. As for the response we received to our offer, I must say that I was further amused, when I queried about the unsigned paperwork and lack of response from the seller, to be told that they "Always just send the offer straight to the bank and only have their client sign it if the bank accepts." Well, just because you "always" do it, doesn't make it right.
And what happens if the bank says "yes" but the owner says "no"? You can't cut the owner out of the deal, after all it is still their property and they have the right to do, or not do, as the case may be, with it what they will.
Folks, just because you say it don't make it so. And no amount of magical thinking will ever replace a nice, solid payoff statement written on good old paper. And if you don't have a solid understanding of what constitutes a binding offer (and an unsigned counter sure ain't it) or how a transaction of any type works, perhaps some time spent reviewing basic Real Estate Principles might be in order.
When it comes right down to it, I have decided that some folks really want to live in a Fool's Paradise. As for me and my client's, we prefer a real home in the real world. So, our search for the perfect home continues*.
Take care all, help lots of people and have a wonderful day!
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*My client is preapproved FHA and AmeriDream and we are looking for something under $310,000, built in 2000 or later, 3+ beds, SFR, Townhouse, Condo or PUD with a pool. He's open to anything that is within easy commute distance to a Metrolink Station from Los Angeles to Riverside. If you have anything that fits, please get in touch.