So far this blog has covered what "short sale" actually means, how they are advertised, and making an offer on one. Today we're going to look what goes on "behind the scenes" when an offer is submitted to the seller's lender for approval.
As mentioned before, it is the seller's lender that will ultimately make the decision on the selling price of a short sale property. They will expect to see all offers made on the property and it is not uncommon for short sales to have bidding wars on them! The lender is being asked to accept less than what the seller owes to release its interest in the property. They do this based on the representation that the property is indeed worth less than the debt the seller owes. Lenders have the right and expectation to know all the terms of all the offers being presented to the seller. It is in the lender's and seller's best interest to submit all offers received to the lender.
If a second, higher offer comes in after an initial offer is submitted the lender will most likely accept the higher offer. This reduces the risk of remaining debt to the seller if the lender demands repayment of the "short" amount. The lender is also more apt to move quickly on an offer that nets them more money. If an offer comes in that is lower than the initial offer submitted, the agent will most likely still submit the offer. The lower offer will work to ensure the lender that the inital offer truly reflects the market value of the property. Part of the service of the listing agent is to persuade the seller's lender that the true value of the property is less than the amount owed. Along with the offer(s) the listing agent will also provide the lender with a comparative market analysis, or CMA. This report further supports that it is in the lender's best interest to take a loss on the debt and sell the home for the amount being offered.
It takes patience and professionalism when working with banks and third party lenders. Remember, they are receiving hundreds of short sale packets every day from throughout the country. Your's is one in that huge stack! As we said before, patience is a virtue when it comes to buying (or selling) short sale properties and it's important to have an agent on your side you can trust to take care of you throughout the process.
OUr next installment in this series will cover the lender's approval of a buyer's purchase agreement. If you have questions in the meantime, please call the JMC Group at 360-609-6775. Or go to the "Contact Us" portion of our website at www.MyRealtorIsJamie.com. We are here to help!
Lesson 1: http://activerain.com/blogsview/765054/Short-Sale-Basics-First-in-a-Series
Lesson 2: http://activerain.com/blogsview/774079/Short-Sale-Basics-Second-in-a-Series
Lesson 3: http://activerain.com/blogsview/788057/Short-Sale-Basics-Third-in-a-Series
Lesson 4: http://activerain.com/blogsview/796213/Short-Sale-Basics-Fourth-in-a-Series
Lesson 5: http://activerain.com/blogsview/827035/Short-Sale-Basics-Fifth-and-Final-in-a-Series
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