Should a Northern Virginia Short Sale Buyer Go to Settlement Without Seeing the Approval Letter?

Should a Northern Virginia Short Sale Buyer Go to Settlement Without Seeing the Approval Letter?

This was a question I received in my email today. The answer to this question is simple.

NO WAY!

As a Buyer in a Northern Virginia Short Sale transaction, the Short Sale contingency in the contract is not removed until you see the Short Sale approval letters. And that means that the Seller could still back out with that contingency in place.

Furthermore, even when you do see the approval letters, you need to make sure they meet the definition of approval per the contract. In Northern Virginia, if the Seller is required to bring any cash to enhance the net proceeds to the Short Sale Bank, or the Short Sale Bank is reserving the right to pursue a deficiency judgment against the Seller, then the Seller can walk at the settlement table and you are left without a home.

Any Buyer that is getting a loan on the purchase of the Short Sale will need to provide that Short Sale approval letter to the lender to get the loan approved. And the title company issuing the title policy will also need to see the approval.

Finally, there may be terms and conditions of the approval that affect the Buyer, particularly if they are an investor. For instance, if an investor was purchasing a Short Sale with the intention to sell it to another Buyer in the short term, the approval letter may prohibit a resale within a certain time frame. An investor needs to know that before they get to the settlement table.

Any Short Sale Listing Agent that is NOT providing the Short Sale approval letter to the Buyer prior to settlement is either blissfully ignorant of the fact that they haven't, or should, provide it OR they may be hiding something. Whatever the case, as a Northern Virginia Short Sale Agent, I would advise any Buyer to see the Short Sale approval letters as soon as they are available.