Sharing short sale approval letters with buyer's agent....pros and cons? Does buyer's agent need to see letters?


The buyer's agent says : "We would like to see what the letter is offering, that shouldn't make a difference and really no reason to hold it from us...Right? I have never had an agent hold the letter received from a bank before waiting for the others, is there a reason we can't have it?"

 

Listing agent says "I’ve never had a buyer’s agent ask me for copies of the letters. All they wanted to know is whether or not the short sale is approved. The conditions of the approval is between the lender and the borrower. "

 

The first letter states

1) what they want to net after expenses, and

2) that the basis of this approval is on a sales price stated in the contract.

 

Because second lien holder is not yet received, no one knows what the payoff for the second will be, what expenses will be paid out of the difference between what the first wants to net and the sales contract.

 

Both loans with Chase.

 

Do you share approval letters as they come in? Do you share them at all?

 

 

 

 

 

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Unless I have the permission to release the letter from the seller, I do not.  I refer such requests to the attorney and let them handle it.

You guys that arent passing on these letters wouldn't be able to close a deal here. 

As a purchaser of a couple of short sales, I can tell you my lender won't do *anything* on a deal without approval letters. 

 

It's fallout from listing agents who *say* they have approval when they really don't.

 

Then the buyer pays for appraisal & inspections only to find out the approval wasn't real/final.

 

I'm not sure why you guys think this is a big deal - all of the loan information is public info anyway in most states.  

Mark, it is really simple, the title company gets the letter and relays the information to the buyers lender or if it is a cash deal they can alert the buyer agent that they have the approval letter in hand.  It is the title company that needs the approval letter, not the buyer agent.  The title company needs it in order to issue clear title.   While I agree with you that your lender wont do anything without approval, your lender can simply contact the closer or title company to make sure that the title company will be able to issue clear title and that they are in reciept of the approval letter. 

 

Yes, they will.  Your lender will need the approval letter to get clear to close, but they do not need them to underwrite and get a conditional approval.

I am going to assume that everyone who thinks that the buyers agent needs a copy of the approval letter also asks for a copy of the sellers payoff amount from the sellers lender.  Afterall, how would you know that there are enough funds to cover the closing?  If the seller has to bring money to closing for a sale, equity or short, are you also asking for a copy of the sellers bank statement or for their proof of funds?  Seems to be the same to me.

Agreed. As I previously commented on this topic two years ago, I still stand strong recommending that the listing agents send the short sale approval letter to the buyer's agent. I do this every single time when I receive the approval letter from the short sale lender.

We even have a form here called "Lender Short Sale Approval Addendum" that we use. I provide this form to the buyer's agent along with sending them the approval letter. Basically, the seller signs off on this addendum agreeing to the terms of the approval letter. Then the buyer must sign off on it agreeing to the terms of the approval letter as well as releasing the contingency of "short sale approval" from the transaction. This allows the transaction to move forward without the short sale approval being a contingency any longer.

We found that prior to having this additional addendum, the short sale approval wasn't really looked at as a contingency to the deal, even though it was. Many agents would say that the seller is responsible for selling the home, even without this contingency being met throughout the transaction. So this form just cleared things up for everyone and it also makes the transaction more firm once all parties sign it and agree to move forward with the approval letter terms.

Send the approval letter as proof for the buyer's agent and so the buyer's agent can also see the terms of the sale, especially if the short sale approval is considered a contigency in your area. Just my opinion.

I provide the approval letter.

I also provide the letter. I cant meet the contingency without doing so and I dont really see the big deal. If the approval letter provided enough info that the buyers side could start calling the lender and get information, I may edit that out, but it has not yet been an issue.

 

In the State of New Hampshire, the Title Company is hired by the buyer and their lender. I send the approval letter to the Title Company since that is the entity that actually needs it and direct the Buyer Broker to the Title Company if they want confirmation that the short sale really has been approved. The Title Company would not share the actual short sale payoff or "Demand Letter" with the buyer anymore than they would share a regular payoff or "Demand Letter". As long as the short payoff has been approved in a manner that does not alter the original terms of the contract between the buyer and seller, the rest of it is none of the buyer's business.

In California, it is required to provide the Short Sale Lenders' approval letters to the Buyer within 3 days of receipt.  Andalso , this removes the short sale contingency.  It's clearly spelled out in the Short Sale Addendum.

I provide the approvals however, I redact certain personal information first.

I'm the buyer's agent and almost all of my buyers are investors.  I would like to have the approval letter/letters to read the terms to make sure if my buyer purchases the house, they can rent back to the current owner if the current owner still lives in the house.  I did see one approval letter stated that the max. date the cuurent owner can rent back the house is 90 days.  I don't want to do anything illegal and I don't want my buyer to do anything illegal, so I always request to have the approval letter/letters emailed to me.  Besides, most buyer's lenders request the approval letter/letters anyway.

The one time where my buyer didn't insist on this we went to a closing table and didn't close. The seller's attorney (one of those who say they're short sale processing experts) didn't know the difference between the approval to participate letter and a short sale approval on an FHA short sale. Assuming one redacts the sellers' personal info, what's the big deal?

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