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Do You Tell The Short Sale Lender "Buyer Walked"?

Short Sales Specialist MD

Our colleague Wendy Rulnik has asked an important question that needs addressing. .

When there is a conflict between saving your client and disclosing to the lenders important information. .

Short Sales present challenges. .

Via Wendy Rulnick "Its Wendy!" Destin Short Sales (Rulnick Realty, Inc.):

Karla Leahy started an interesting discussion on www.ShortSaleSuperstars.com. She asked "Do you inform the short sale lender when you no longer have an offer?"

From what I’ve seen the thought process behind not divulging the buyer walked is:

1. The lender will complete an appraisal or BPO that will speed up the next approval

2. The seller’s pre-qualification may be completed and ready for the next attempt

3. With some lenders, you can sneak in a substitute buyer

Bottom line, it “saves time” for the next buyer, the one you hope closes.

BUT--  IS IT RIGHT TO NOT DISCLOSE THE BUYER WALKED? Why should the short sale system be clogged because you are trying to speed up your next offer? Is it right to allow the lender to continue to work on an approval when there is no longer a contract? Sometimes there is another twist on trying to speed up an approval. “Fake” or “starter” offers are sent in to the lenders to get an appraisal ordered, when the “buyer” has no intention of closing. The “buyer” might even be the real estate agent.

Some of the lenders have a few hundred thousand offers in process. HOW MANY ARE LEGITIMATE OFFERS? The “real” buyers (and the sellers) suffer through longer wait times because others have tried to game the system, "dead" deals are being processed or offers with no hope for approval have been submitted.  If lenders were only processing contracts that could actually close, all short sales would be speeded up, right?

So, I ask "Would YOU call the short sale lender and tell them to stop working on the sale if your buyer walked?"

It's Wendy!

Available Short Sale Agent Training:

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www.ShortSaleSuperstars.com FREE

Wendy Rulnick, Broker, CRP, CRS, GRI, ABR     Rulnick Realty, Inc.

Destin FL Real Estate

Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204

Email Wendy: itswendy@rulnickrealty.com

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Posted by Fernando Herboso Real Estate Maryland, DC and Virginia on 10/18/2009 07:33 AM

Comments (8)

Short Sales in the Real Estate Market Channel

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Originally posted at: Maryland-Real Estate Blog : Do You Tell The Short Sale Lender "Buyer Walked"?

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8 Comments on Do You Tell The Short Sale Lender "Buyer Walked"?

OCT

I say I would. The system is truly flawed and I can see why there are those trying to speed the process.

I have called the lender when I thought the buyer was about to walk and it helped. I called a lender when the buyer did walk and it didn't hurt. I even had to tell a lender we have a new buyer and the price has changed and it didn't hurt either.

I have also talked with agents who put in a low ball offer that is not a legitimate offer just to get the ball rolling. I personally think that is unethical and will eventually give all Realtors a bad name with lenders.

Fernando - Thank you for the re-blog. From the responses so far on the original, most won't divulge. The system is truly flawed as Pat says above, and the banks' slowness causes a vicsious cycle of more slowness!

I don't think i would. The process has taken so long most buyer's i've worked with prefer to walk away from the transaction if it takes an exorbitant amount of time.

I just had that happen and am readily admitting I am not letting them know.

PS: Love the Herboso mobile but miss Tigre!

NEVER!! Unless they ask! You just market with the sellers permission as a "lender approved short sale" at the price they just approved!!

OCT

For me the answer is simple. If there is no benefit to the MY client, the seller, then I see no need to volunteer the information. If the lender neve asks for an update it is not our duty to seek them out to disclose. It does not clog the system if they continue moving forward with approval and allow you to use that approval for the next buyer. If it is a good price, then there will be no problem finding a new buyer in our area (Santa Cruz, CA).

OCT

You should never tell the lender that a buyer walked. Not even if they ask. The same goes with other things, like you got a higher offer or that there were other offers.

I would think this is a no-brainer. We should not give information to third parties that might hinder our client's position.