Bank Accepts Short Sale, Then Counters Higher Price a Month Later
Copyright (c) 2010 Deanna & Jim's GOLD Team at RE/MAX Olympic Realty
In the Northern Virginia area buyers pursuing short sale home purchases requiring approval by a very well known national lender (one of the 4 largest) have encountered very distressing sequences of events. In outline form here is what happened in each case:
- Homeowner lists home for short sale
- Buyer makes offer to purchase
- Seller ratifies the offer contingent on approval of the seller's lender
- Listing agent submits the offer and hardship information to the lender for review via the lender's short sale Internet portal
- Listing agent is informed that the offer has been "Accepted" via the portal
- Listing agent informs selling agent and selling agent informs buyers that the offer is accepted
- About a month passes during which time selling agent asks listing agent approximately 3 or 4 times for confirmation that the offer is accepted
- The lender informs the Listing Agent via the portal that the offer is no longer accepted unless the Buyers wish to pay a significant amount more (e.g. $20-30K).
- At this point the Buyers have had their fill of the perceived dishonesty of the selling agent, listing agent and lender.
This unfortunate tale underscores the importance of working with a highly trained, contract-oriented, Certified Distressed Property Expert listing agent and/or Selling Agent! In Virginia no contract involving real estate (other than a lease for less than 13 months) is enforceable unless it is written and signed by all parties. Updating the status posted to a web portal does not constitute ratification of a contract.
Short sale buyers and their agents need to understand that until the listing agent delivers them a copy of a short payoff letter approved by an officer of the seller's lender that the short sale is not really accepted, approved, or otherwise blessed by the lender!
Approval of short sales by seller's lenders often requires review for conformance with guidelines by the lender's negotiator, then perhaps a mortgage insurer, then the note holding investor, then the lender's management. Until all these hurdles are passed no short payoff letter will be issued.
No buyer, nor seller, nor agent, should celebrate approval of a short sale until short payoff authorization letters for all lien holders of the seller's property have been received.
Properties listed as short sales present buyers unique opportunities to capture good properties at the lower edge of fair market value. They also present unique challenges that can lead to much wasted time and great frustration. When pursuing purchase of short sale properties it is best to work an experienced agent with hundreds of distressed property transactions, training in advanced negotiation techniques and the Certified Distressed Property Expert rating.
(Deanna & Jim's GOLD Team has handled 485+ transactions, 150+ bank-owned sales, and dozens of short sales. We have an MBA, an MSE and an MA in Counseling. We have had advanced negotiation training at Lockheed Corporate HQ, Northrup-Grumman, and Weichert. We have also completed training in mediation of civil disputes in Virginia to the standards established by the Virginia Supreme Court.)
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