Home Buying in Milwaukee>Question Details

Linda S. Cef…, Real Estate Pro in Franklin, WI

Has anyone had any experience in the following situation?

Asked by Linda S. Cefalu, Franklin, WI Tue Jun 2, 2009

Seller has accepted offer in short sale. Buyer would like to rent from seller until it is accepted by the bank due to needing to vacate current residence upon lease end. Appreciate your thoughts on this.

Linda

Help the community by answering this question:

Answers

16
BEST ANSWER
I would not have buyer rent the property. If the bank does not approve the deal the prospective could be evicted from the property and that eviction would be on their credit report. I would spend more time making sure the listing agent is following up with lender to get short sale completed.

How often has the listing agent been following up and does the lender have all the required docuementation? Has the cases been assigned to a negotiator? How long has in been reviewed?

When a buyer purchaser makes a offer on these transaction they need to understand the potential delays.

The other thing can the buyer extend the lease at there current apartment?


Wish you luck!


Keith Manson
First Weber Group
Certified Distressed Property Expert
Greenfield,Wisconsin
1 vote Thank Flag Link Wed Jun 3, 2009
While the seller still owns the property, I would consult a lawyer before inviting a tenant in to this situation. We do not even suggest or allow an addendum O even after bank acceptance but before closing. Know what you don't know and go to the highest source for information. Agents who have not been successful or do not even live here are probably not the best or highest source for an answer to this question. Best of luck !
0 votes Thank Flag Link Thu Jun 4, 2009
Micki,

I'm not sure about whether or not the sellers are paying. I believe that they are and I believe that they would continue to do so. This was just a thought that I had to help my buyers. I don't believe anyone is intentionally or unintentionally trying to commit fraud. I'm simply trying to hold this deal together in the best interest of all parties. In addition, I would only draft an amendment to the original offer regarding occupancy. I wouldn't think of getting involved in the actual rental agreement, although I would ask that one be drafted and reviewed by attorneys on behalf of both parties. I appreciate the feedback.
Linda
0 votes Thank Flag Link Wed Jun 3, 2009
Linda,
I'll go out on a limb here and ask you if the seller's are still paying their mortgage and are just trying to get out from under a bad situation. If they are NOT paying their mortgage and are thinking of accepting rental income on the property and just pocketing the cash, that could be considered mortgage fraud.

I would speak to an attorney who specializes in real estate law before you considered this route.

And Peter, I'm not trying to be mean or anything here but be careful what you post on public boards as it may come back to haunt you...Especially if you knowingly helped to commit fraud..
0 votes Thank Flag Link Wed Jun 3, 2009
Thank you, Peter.

Linda
0 votes Thank Flag Link Wed Jun 3, 2009
As long as buyer knows that he may have to move out upon foreclosure, seller can only gain from the rental. After all it it the bank's fault for not doing the deal or not doing it fast enough. Like I said before it worked for us and seller gained 4 mos of rent.
Web Reference: http://homeownersmke.com
0 votes Thank Flag Link Wed Jun 3, 2009
Boy oh boy Debbie,

Not what I wanted to hear, but thanks for the heads up.

Linda
0 votes Thank Flag Link Wed Jun 3, 2009
Be very careful with Wells Fargo. We had a short sale offer for almost full price, (we were the listing agents on the short sale). I worked diligently on trying to speak to someone at Wells Fargo for almost 7 months. I ALWAYS got a voice mail, and never once actually spoke to a person! Needless to say, we lost the buyer, and the home was foreclosed on.

The bank has all the power with short sales. I would think twice about putting my client in that situation. You have no guarantee that this deal will ever come together.

Debbie
0 votes Thank Flag Link Wed Jun 3, 2009
Not sure. Too many of these going on right now. I think Wells Fargo, but not sure. And, yes, I know I have a problem. Hence my question.
0 votes Thank Flag Link Wed Jun 3, 2009
Who is the lender? If it has not got assigned after 6 weeks you have a problem.
0 votes Thank Flag Link Wed Jun 3, 2009
Thanks Keith,
I hadn't thought about the eviction. That is why I'm asking the questions here. And yes, the listing agent is very diligent in pursuing all avenues including using a CDPE packet in order to make sure that everything needed was, in fact, included. We correspond regularly and no, it has not been assigned yet and have had it for six weeks. I have found in past short sales I have done that the problem always begins with the intake person who never seems to know what they're doing. That is where this stalled. And although the listing agent is, I believe, is doing everything possible on their end, I'm afraid we're not going to get closed on time.

Buyer cannot extend lease. Already tried that. Their only option is to move, which is what made me think of this. If they have to move anyway, I thought perhaps this might be a viable option.

Linda
0 votes Thank Flag Link Wed Jun 3, 2009
Peter,

The seller has accepted the offer, but we're not accepted by the bank yet. Wouldn't this give them an edge and what if they counter or reject and my clients are living in the home?

Linda
0 votes Thank Flag Link Tue Jun 2, 2009
Thank you Deborah and Keller for your prompt response. I have a number of concerns, but I am trying to look out for the best interest of my client. I'm concerned about several things but haven't actually tried this before. I have had other agents offer it to me in the past, but declined. I'm just wondering if there are any legal ramifications that I'm not considering. I know for sure that anytime you move into a new home, you start to notice and see things that you are not too happy with and that is one of my concerns, but really the least of it. More importantly is, what the reaction of the mortgage holder would be and if that would create any problems that I am not foreseeing.

Linda
0 votes Thank Flag Link Tue Jun 2, 2009
sure, we've done this already. Short sale took 4 months and was close to foreclosure prior to closing. Buyer was aware of the risk and he paid less rent than comparable home. Both parties benefited.
0 votes Thank Flag Link Tue Jun 2, 2009
As long as buyer was willing to put a non-refundable deposit upon rental, I would consider.
0 votes Thank Flag Link Tue Jun 2, 2009
I actually have---
And decided that I would only suggest this after there is short sale approval for the offer on the table. If for some reason it goes wrong it could be a problem to evict the person---and you would not want necessarily want the person in the home if it came back on market.
They should have a clause in their lease that says they can go month to month--or perhaps could find a month to month solution. Yikes! Good luck!
0 votes Thank Flag Link Tue Jun 2, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer