On Acceptance and Approval

The most important thing that I find myself repeating to sellers, buyers, and agents is that the acceptance of an offer is not the approval of an offer.  Granted, different banks can use the terms interchangeably, but the following applies to the majority of scenarios.

Acceptance of an offer means that the bank accepts the terms of the offer as it is.  The opposite event is a counter, which is when the bank challenges one or more aspects of the offer (sales price, payoffs, fees, etc.)   Counters can happen at several points during a short sale and there can easily be more than one counter.  Likewise, your short sale negotiator can counter a counter with one of their own.  In the event that the bank won't counter (or is done countering) the offer can be said to be accepted.

Approval is a very different, and very specific, event.  While some banks sometimes refer to acceptance as "bank approval," there is officially no approval until your short sale negotiator has an approval letter in hand that matches the terms of the contract and the specifics of the HUD1.  Most commonly, an accepted or "bank approved" offer will be forwarded to the investor who actually holds the loan.  The investor then can accept or counter.  When they accept, they authorize the bank to issue a short sale approval letter.

Some confusion and false hopes can arise upon getting a verbal approval.  This is when the bank communicates to your negotiator that the file is in fact completely approved but nobody has seen the letter.  While everything may seem like a done deal, some banks can take days or even weeks between "approving" and issuing the letter.

So remember, a file is not approved until there is an approval letter in hand.