Help! I’m Making an Offer on a Short Sale Listing!! #6
Help! I’m Making an Offer on a Short Sale Listing!! #6
How can the bank ruin our sale?
If the bank has to forbear any money, then the bank is defacto in charge of the sale.
If your offer on the property is for an amount that does not fully pay off the underlying mortgage or mortgages, then the bank is involved in the sale.
The seller still owns the property, so your offer is to the seller.
However, the seller has no equity. No money in the game. The seller will sign your offer, then it has to be presented to the bank (or banks) to determine if the bank is willing to lose the amount of money required to close.
1. The bank has to determine the price it will accept. It is almost always higher than the asking price.
2. The bank sets the time line. Although there is a new promise of short sales from start to finish in 60 days, the normal time to do a short sale has been 90 days or more.
3. The bank works over the seller to make sure they do not have money to contribute to the sale.
4. The bank can add a deficiency judgement against the seller as a condition of sale.
5. The bank can deny your request for seller paid closing costs to help you with the purchase.
6. Ultimately, the bank can foreclose on the house before the sale is consummated.
So, although your offer on a short sale listing is to the seller, the bank is the ultimate determiner of price, timing and conditions of sale.
Insurance Solutions Unlimited, LLC - Winter Haven, FL
Insurance Solutions Unlimited,LLC
Phil, Excellent information on the Short sales and Banks. The Bank is calling all the shots
Mar 19, 2012 08:32 PM
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired
Fllows the old theory of "legal title" that the defaulting party holds and the "equitable title" the bank has. You have the front man and the decision maker. One has skin in the game, the other has to determine what kind of skinning it is willing to take!! Enjoy your day!
Mar 19, 2012 09:10 PM
Christie's International - Mahwah, NJ
ABR, SFR
Sellers are dependant on the bank accepting the offer on a short sale. But the same holds true for a buyer applying for a mortgage. Deals have busted when buyers cannot get a loan even though they were pre-approved a month ago by the lender.
It sounds like the BPO came in high and you need the bank to do another one.
Good luck with your deal.
Mar 19, 2012 09:54 PM
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA
Very good points. . a short sale does not have to be a nightmare if negotiated skillfully and prepared ahead of time.
Mar 19, 2012 10:05 PM
Harborview Properties - Portland, ME
(207) 712-4796
Phil, Be aware that the Private Mortgage Insurance company can, and often does, rear it's ugly head after the deal is approved by the lender. It is not uncommon for the PMI carrier to require an unsecured promissory note from the seller under the threat of stopping the deal. The lender knows they are out there and are reluctant to inform borrowers of this fact until the 11th hour.
Mar 19, 2012 10:22 PM
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA
Phil, he who controls the money rules the world. At best the seller can hope to get out from under it free and clear.
Mar 19, 2012 10:25 PM
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA
Many buyers do not understand how short sales work, as well as agents. Seller has to agree, but the decision is up to the lender.
Mar 19, 2012 10:51 PM
206 909-7536 AdrianWillanger-broker.com - Seattle, WA
Profit from my two decades of experience
Phil, very good information for both agents and buyers who haven't had short sales experience(s).
Mar 19, 2012 10:53 PM
people first...then business Ran Right Realty - Riverside, CA
agent & author
SS are not for everyone but it appears to affect quite a few. When a short sale needs to get done...get an agent involved and then be prepared to hurry up and wait. I for one will be glad when they go their final way
Mar 19, 2012 11:26 PM
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County
As for #4, this does not apply in the state of California. We have a Senate Bill that protects from deficiency in short sale.
Mar 19, 2012 11:41 PM
Coldwell Banker Realty - Monterey, CA
Broker-Associate 831/206-8070*Call today*
I am sure that most consumets trying to buy short-sales do not completely understand this process. Thanks for the good information.
Mar 20, 2012 06:19 AM
Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK
So well said.. any buyer or seller thinking of being involved in a shortsale needs to read this post.
Mar 20, 2012 10:52 AM
Retired - Kirkland, WA
Phil Leng - Retired
Thank you so much for your comments.
It is written for three buyers I have right now who are looking at short sales and making offers.
Phil
Mar 20, 2012 07:56 PM
Century 21 Sherlock Homes - Rockville Centre, NY
Broker C21 Sherlock Homes, Rockville Centre, LI, N
Would you mind if I shared this with my Agents. I'll check back to see if it's OK.
Mar 20, 2012 11:54 PM
Rainmaker
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Phil Leng
Phil Leng - Retired
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