If you are a self-motivated person, it might seem like a good idea to get started on your short sale process by finding a willing buyer before you go to your bank to start the approval process. But with Bank of America, this might actually limit the benefits you receive. This major lender prefers that you get preapproval through one of their short sale programs first. For example, if you are counting on relocation assistance from BofA, you need to participate in either a HAFA short sale (a government program) or a “cooperative” short sale.
According to the BofA website, “If you have received an offer on your house, and you are not already participating in one of our short sale programs, you will follow the traditional short sale process.” That option does not provide you any protection against foreclosure or a guarantee of relocation assistance. Since an assistance payment can go as high as $30,000 (depending on the appraised value of your home), it makes a lot of sense to get preapproved. Otherwise, you may not have the funds you need to clear liens against your home and present clear title at closing. That could end up sinking your traditional short sale so you end up in foreclosure anyway. In addition, failing to get preapproval could lengthen the wait time for an eager buyer to actually close on your home. They may lose interest during that time and move on to other prospects.
Why does Bank of America want you to get their permission before you start looking for buyers? Preapproval allows the bank to determine an appropriate selling price for the home up front, making it more likely that your real estate specialist can work out a deal that won’t fall through. Remember, the bank always has final say over what they deem an acceptable sales price. They are under no obligation to take an offer that you think is reasonable. Don’t be alarmed if the initial listing price demanded by the bank seems high. If the house doesn’t sell, the bank may well drop the price to a more reasonable price point, making it easier for your real estate specialist to attract buyers. The bank is just trying to get as much money as possible for your house so they don’t have to take as big a loss in the sale.
BofA does recommend that you find an experienced realtor to assist you in the preapproval process. Don’t wait on this step! Find a short sales specialist in your area today.