Home Buying in Allen>Question Details

Joshuabaker26, Home Buyer in Allen, TX

Hello, Our realtor called us and told us we will be assigned a negotiator in a few days. We put a offer on a

Asked by Joshuabaker26, Allen, TX Sat Jul 25, 2009

short sale property. Is this a step forward? Does this mean that the bank is dealing with just us? Please help.
-First-time home buyers

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Generally, the process is that an executed offer between you, the Buyer, and the seller is presented to the bank with a Short Sale Addendum provision. The bank then works out from the details of that contract how much they will net after paying the various closing costs. If that net amount is too small, they will then advise the seller of how much is required to raise the price or reduce costs for their net.

The bank can determine whether the net is too small by getting a broker price opinion (BPO) or a formal appraisal on the property after the negotiator is assigned. If the formal or informal appraised price is higher than your offered price, the negotiator will include that fact in his negotiations through the seller. The negotiator can refer an unacceptable shortage up his management chain for approval. This may happen if no other offers are on the table.

If other offers arrive, it is the responsibility of the seller's agent to assure that each executed offer contains both the Short Sale addendum and a Backup Contract addendum. Many listing agents are ignoring this, believing that the bank is somehow deciding the process like an auction. It is not an auction, even though it may seem like one.

If a higher offer (backup) is received while yours is being negotiated, the negotiator will examine the buyer qualifications of both. It is essential that your conditional loan approval is a solid as you can get from your mortgage lender or that you present a solid proof of funds for a cash offer. If it appears the backup offer is better, the negotiator will reject or disapprove the primary offer. The seller will then advise the buyer of the rejection. This then makes the backup offer primary.

The negotiator can, if she feels like it, negotiate through the seller to get the buyer to raise his offer, reduce some concession or assume some portion of the closing costs in order to make the primary offer as good as the backup. There is no requirement for this. Consider for a moment how complicated the negotiator's life would be dealing with multiple offers all at once. It is simpler to do one offer at a time.

Once the net is acceptable, the short sale will be approved, the seller notified, and in turn the buyer notified of approval. This action creates an Amended Effective Date for the executed contract as of that approval. The amended effective date, not the original Effective Date (when both Buyer and Seller signed), starts all the clocks for the Option Period, if any, Financing period, if applicable, and the Closing date (if made relative to the approval). Often contracts are written as if the Closing will occur at some fixed point in time -- pretty unlikely on a short sale.

So, to answer the question of progress: yes, you are making progress. Look for a couple of weeks' wait to get a price opinion or appraisal back, and then either negotiations begin or your offer will be rejected. This couple of weeks may turn out to be 4 to 6 weeks. Appraisers are slow and there are likely several hundred files on other properties that arrived on the negotiator's desk before your offer. A quick answer might arrive within 2 weeks, a slow one in 2 months, although some are taking even longer. If you're not willing to wait for an answer, don't start the process.

And for heaven's sake don't make the mistake of spending money on inspections, paying for an appraisal and similar costs before your offer has been approved. Bide your time.

Is the bank dealing only with you: sort of. The negotiator normally looks at all offers, including the backups, to see which looks best, but deals with them in the legal order of primary and then backups. The Realtors, in particular the listing agent, should be enforcing the processing of offers according to their legal status. A backup contract can't be dealt with until the primary is terminated by expiration or rejection, or withdrawn by the buyer. The buyer's Realtor should assure that the contract is executed (a date filled in), a short sale addendum attached, and a backup addendum if needed. Follow-up is critical.

A buyer's agent is normally not authorized to contact the bank, because the bank is a creditor of the seller. Only the seller can authorize anyone to speak to the negotiator about his debt. Some Realtors feel they can pressure the bank by calling on behalf of the buyer. They can't. Federal law does not allow the bank (a creditor) to discuss the sale with the buyer's agent or the buyer, unless the seller authorizes it. The buyer's Realtor can get into trouble and mess up a deal by trying to influence the creditor without authorization.
2 votes Thank Flag Link Sun Jul 26, 2009
That is certainly good news but don't get your hopes up too much. As Grace explained, there is a lot more waiting to go around. If the bank if Countrywide, you are in for a long haul. They are the most disorganized and messed up company in the industry IMO. One of the short sales I am handling as a listing agent is on it's 3rd negotiator since December and still nothing to report. There is no accountability whatsoever.

Your Realtor should be advising you accordingly. The seller has to prove hardship, provide pay stubs, bank statements, tax returns and if they don't like something, they can reject everything. The listing agent should call DAILY to ask for status.

You need to find out if they had an offer before yours, because may be they already had a negotiator assigned and some of these steps can be avoided this time.

Good luck to you,

Naima
214-289-8555
Naima@Sumner-Realty.com
Web Reference: http://www.SumnerRealty.com
1 vote Thank Flag Link Sat Jul 25, 2009
Hello Josh and thanks for your email.

First, this is certainly a "step forward" in moving toward a successful short sale. Once the documents are submitted, a negotiator of mitigator is assigned to the file. However, there are many other hurdles that must be surmounted in order for the sale to be approved, so, while learning that a negotiator has been assigned is excellent news, it does also mean that there will be additional "wait" times. Plan to be patient while the negotiator reviews the file, orders a BPO, checks the financial records of the seller, verifies liens against the property, and determines if the sales price is adequate to cover the bank's losses. This situation can also be complicated by the presence of an additional lender (second loan) on the property.

Good luck--be patient and stick in there!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
1 vote Thank Flag Link Sat Jul 25, 2009
Joshua,
Is it the Realtor on the home that you put the offer in on? Did you sign a contract called a Buyer Representation Agreement? If so, they have agreed to represent you to help you negotiate, acquire and obtain the property, however, if you have not, then it could be likely that you may not be represented, but you need to ask the person your dealing with if they are your buyer's agent. The process should be thoroughly explained to you by them or their broker.
0 votes Thank Flag Link Sun Jul 26, 2009
Your realtor should be providing what this means. difficult to state have no idea if you have submitted a sales offer? Was it executed by bank? Bank just review terms and conditions of sales offer presented if they like proceed if don't may not ever hear back from listing agent.

All documents usually go thru listing agent.

Confer with your agent for all details.

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911
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0 votes Thank Flag Link Sun Jul 26, 2009
Joshua,

Typically with short sales they will take offers all the way up until the day they actually sign your purchase agreement, if in fact they will ever sign. I often see addendums as well that say they can cancel your purchase agreement at any time up until closing day with maximum liquidated damages to you the return of your earnest money. Very one sided contracts.
Getting assigned a negotiater is a good first step in the right direction, but by no means is the end of the process or perhaps even close to an end in the process. As mentioned below there can be lots of different delays or process stops.
Hang in there if you can, you can often wrestle a good deal on short sales, but it does take patience and the right living situation on your end, where you can close at a moments notice or keep your living arrangements without penalty if the deal goes south.
Web Reference: http://www.dfwSnapshot.com
0 votes Thank Flag Link Sat Jul 25, 2009
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
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