Short Sales: When to be litigous, and when NOT.......
We all strive to be as technically sound as possible when it comes to sticking to the contract on a transaction. In most cases, it's probably to your advantage to just "stick to the contract"
But in the case of short sales, sometimes it is the case where you have to use your best judgement, specifically when it comes to timeframes.
The agents on both ends of a short sale transaction can pride themselves on just how squeaky clean their transaction is technically per contract, but it really doesn't mean a hill of beans because the underlying factor is the bank(s), and THEIR approval timeframes and terms.
Subject in question: I have a short sale where the purchase contract was signed off by buyer and seller in November of last year. We received the first lender's approval on January 25th.
The second lender took a while longer to issue their approval, as we did not receive that until April. Of course we needed to get an extension from the first, which we also did in mid April.
Once we received that and thought "full steam ahead", the buyer's agent expresses to me that they can't close on time due to the FHA approval process needing more time due to an HOA discovery issue.
Then they put me on the phone with the buyers lender because I wanted to know what the problem was, and he informs me that "technically, you don't really have a deal until we have both lender's approvals"
Then why, Mr. Lender, did you have absolutely no problem collecting an appraisal fee from your client and have the appraisal done 2 months ago when you did not have both lender's written short sale approvals in your hand?
My point is, someone on the buyer's side DROPPED THE BALL and put either a halt or forgot about the loan approval process, which caused the delay.
And then their expectation is for me to have to scramble to try and get a SECOND extension in order for them to have more time to close.
POINT OF THIS BLOG BEING: With short sales, the buyer and buyer's lender are going to have to make a judgement call to keep moving forward with the loan approval process, based on the information and communication being supplied by the listing agent on the short sale progress.
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