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Who Controls the Short Sale?

In this environment of the short sale it seems apparent that the bank controls the sale. Some might say the buyer controls the sale. My opinion is that both statements are primarily incorrect. The seller owns the house. The seller must sign the contract. The seller must sign the deed. Of course, if the seller can't sell and the bank forecloses, then the bank will likely have the REO and the sale is now with them - as the new owner. The issue is that the bank is the "reluctant" owner. The bank has already determined (by working with the seller and buyer in the short sale process) that it is in the bank's best economic interest to sell the house outside of the foreclosure process and prevent an REO occurance. If the bank won't go down low enough and tries to beat up the seller or seller broker - the seller can say NO. What choice does the bank have? It's like playing poker - who is bluffing?

The short sale enterprise is a game. There are usually 3 main players - the bank, the buyer and the seller. Assisting the players are the seller broker and the appraiser, and sometimes the buyer broker (if 2 brokers are involved). Playing the game takes expertise and knowing how the opposing players think.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@FLORIDA-COUNSEL.COM - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers

Posted by Richard Zaretsky, Esq. on 11/11/2007 07:38 PM

Comments (5)

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5 Comments on Who Controls the Short Sale?

Richard, you're right as to who the players are in a short sale and the bank assumes that the ball is always in their court yet the sellers agent can and should have a lot more control if they've done their homework.

11/11/2007 09:56 PM

by Lynn Pineda - Realtor in and around Coral Springs Real Estate (Keller Williams Realty)

In my opinion it's very clear cut... in a short sale the bank may be calling the shots in negotiating an individual deal, but as a listing agent, the seller is my client. Period. Bottom line - it is the seller's interests that I look out for and to whom I have a fiduciary obligation.

My advice to the agents I train in short sales is to negotiate a deal with the loss mitigation representative based on and in accordance with the direction/objectives communicated by your client after you have explained their options and the possible outcomes to them.

11/12/2007 01:12 AM

by Steve Shatsky - Dallas Real Estate & Short Sale Specialist (Keller Williams-Dallas City Center)

Richard, Great Clear Cut Advice. Many people think it is only the bank but you are right 3 people are involved.

11/12/2007 05:51 AM

by My Favorite Mortgage.net - Matthew J Blum

Richard,

Good outline on who's in charge. There are 3 parties but like you said the bank sometimes is the reluctant owner and it makes for a difficult transaction.

Dave

12/07/2007 06:50 PM

by Dave D, Southern California Real Estate ~San Gabriel Valley (LA) & Orange County (Century 21 Excellence)

Great post, Dave do you know Alan Gest Esq. of Miami?

12/07/2007 10:39 PM

by E Jeffrey Dolfinger (24/7 Realty)