Do All Lenders Require A Short Sale To Be Listed?

Question

Do virtually all lenders require a property to be listed before they will entertain a short sale? Any of the bigger banks NOT require it? How about smaller ones? What if the property is in a warzone?

Daniel Gonzalez · Answer

If they require it to be listed, doesn't mean it has to be placed on MLS unless they require which therefore provides you with "non-mls" listed property and more attractive if you plan on flipping it. :)

Maryann L. · Answer

This isn't a bank requirement.  It's an investor requirement and not all investors require a property to be listed. For example, FHA sales are NOT required to be listed and FHA is an investor and can use several servicers, WF, BOA, Chase etc.  You have to know what the investor guidelines are for the property.  I would say that most portfolio loans, all freddie and fannie do need to be listed, but no, it's not always a requirement per the investor.

Monica Breckenridge · Answer

All big banks for sure will require the home to be listed and will require the realtor to sign documents with their license #.  These are usually realtor certifications and Listing Addendum's.

Wayne Brooks · Answer

Yep, and the old list it with an immediate sales contract makes them look twice at it.  They'll still require a BPO for valuation, whether it's a pre-approved or traditional.

J Scott · Answer

All major banks (including WF) will require the property to be listed before they consider any offers...

Sean F. · Answer

Does anyone know if Wells Fargo requires the prop to be listed?

Debbie Avey · Answer

This is a great question. It really does depend on the bank.

Wayne Brooks · Answer

Brett,
Exactly, but these are PreApproved short sales where, in addition to qualifying the seller, a sales price, or net to lender, is established Before the property is listed.  We do BofA and HAFA preapproveds on a regular basis. Actually, for a Freddie Mac owned loan, a preapproved short sale is the only way to qualify for HAFA.  If you bring them a purchase contract with your short sale package, HAFA is denied Forever.

Brett Swenson · Answer

We actually just did a Blog about this. There are lenders now who have created programs to start a short sale without having it listed yet like BofA. In fact some of these programs are giving homeowners incentives for starting the short sale earlier. These incentives are starting to be larger than what you would receive if you started the process after an offer and after 8 months late.

Bill Gulley · Answer

Maybe more light going deeper, bank regulators require a bank to show that any REO/ORE held is being actively marketed for disposal. It's hard for a bank to meet that requirement without listing it. Short sales are not bank owned but if less than the amount due is accepted the same issue surfaces, show that the offer was reasonably the highest and best in the market, showing that the property was exposed to the open market meets this threshhold much better than a private sale arranged by the seller.

When there are commercial properties say an industrial property, the market is limited and you'll find that the banks may cut a deal in some areas where it has not been listed, in such cases the regulators use judgment as to compliance and meeting the highest and best offer.

Residential properties have (usually) a strong open market, so the bar is higher. Much of it is CYA. :)