Home Buying in 20176>Question Details

Mark, Home Buyer in 20176

I'm looking at a short sale listing. My realtor tells me that the 3rd party may not approve even a full

Asked by Mark, 20176 Sun Mar 16, 2008

price offer. Aren't they required to at least sell a home for the listing price? If not, everyone would list their home for $1.

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The listing should have included the words, "subject to a short sale" or "subject to lender's approval" because in these situations, the Seller CAN list for whatever they want to, but the lender always has to approve the terms of sale. Alerting the Buyers upfront that it is a short sale is only fair (and ethical). (Legal?, I am not sure about that). With this disclosure, Buyers then know that all bets are off until the lender says OK to the terms. Getting an answers from a lender can take weeks,even monthson a short sale. Buyer need to be aware of that too.

Any decent real estate agent will not list a property so low that a lender will never agree to a full price offer. That is just a waste of everyone's time, and the agent's money. We never know, though. Every short sale is different and can depend on the lenders current inventory of repossessed properties or even where they are in their accounting cycles.

Short sales canbe a great bargain, but you have to be patient.
1 vote Thank Flag Link Sun Mar 16, 2008
An offer includes more than just price. It includes settlement date and closing company a well as home inspection, appraisal and radon contingencies. Any of those could be a reason for a seller not to accept your offer, even at full price.
In regards to the short sale aspect, the list price is determined by the seller. A short sale must be approved by the bank. If the numbers don't work for the bank, they'll reject your contract.

Selling a home short or with 3rd party approval is often frustrating for the buyer and the seller and more often than not does not close.
If you have any other questions, please feel free to contact me.
1 vote Thank Flag Link Sun Mar 16, 2008
Why short sale ? Most cases its take long time and you won't get great deal . I can provide you other alternatives

0 votes Thank Flag Link Sun Jan 18, 2015
Wow! A lot of good answers on this one! A short sale can only occur with with the Bank (mortgage holder)
approval. A seller has to apply for a short sale "package" from their lender. (at least in Ohio) The problem arises when there is more than one mortgage on the property and by different lenders. The second mortgage "holder " does not have to agree (sign off) on an accepted short sale offer for the property even if the 1st mortgage holder agrees to the short sale price. That is where "things" can get tied up for weeks or longer. I have one myself in process (or lack of) that is going on 4 months now and it is currently in court sitting on a Judge's lap.
0 votes Thank Flag Link Thu Mar 27, 2008
Sellers are not required to sell for even the full price. The terms and conditions may not be acceptible to them. However, short sales are often a good buy and, in my experience, the banks are willing to negotiate some. Short sales are usually in good condition and recently listed. Short sales is a real speciality and both the listing and buyer's agent needs to know what they're doing.
The buyer's agents needs to make sure that the seller has been accepted as a short sale by the bank or mortgage company.

Lenn Harley, Homefinders.com, 800-711-7988.
Web Reference: http://www.homefinders.com
0 votes Thank Flag Link Thu Mar 27, 2008
Ok, all good points and information, thanks to all!
0 votes Thank Flag Link Mon Mar 17, 2008
Just my humble opinion- the only people writing about short sales are the unhappy ones or with bad experiences; Which are closing and getting good deals don't have time to do this and they are moving from one to another, BTW on sellers and buyers end our team closed about 6 short sales , starting from 230K to 850K. Hope that will help someone after going through so much, Cheers :))
Web Reference: http://www.ReltyGeeks.com
0 votes Thank Flag Link Mon Mar 17, 2008
Frank's answer is interesting to me. We have an agent in our office that carries 20-30 short sale listings and gets almost everyone of them to closing. Feel free to contact me and I will provide the data. The key is to work with the bank in the most proactive manner possible. Before it goes into the MLS a good lisitng agent should already have made contact with the loss mitigation officer and taken steps to get the BPO done. I agree many "short sale" lisitngs out there are a joke and a waste of time, as the lisitng agent simply put it in and waited to see what would happen. I always ask the lister 1. Are you in touch with loss mititgation? 2. Has the BPO been ordered/completed? While this is not a magic bullet, it should let you know whether or not the lister knows what they are doing...
Web Reference: http://www.JPMackey.com
0 votes Thank Flag Link Mon Mar 17, 2008
Short Sales are "Fake Listing." Run from them. See my blog post to learn exactly why.
0 votes Thank Flag Link Sun Mar 16, 2008
Yes, they want to sell home for the list price Most of Times ; If short sale handled properly and proffessionally, in my opinion, they close and are many times better than Bank Owned because instead of dealing with a winterized house w/ no utilities, someone with heart has interest to make the deal work so they won't have foreclosure. Personal experience NOW banks are realizing that it is better to make the short sale work than going REO so they are becoming quicker and smoother if handled by pro. Bottom line - 1.Ask who is handling the short sale - agent or someone who speaks Bank's language 2. How far are you with bank in the process- has the mitigator been assigned - BPO ordered etc. Base your offer on that and it still may take about 45 - 60 days to close but there are more forces who want it to work than sometimes dealing with 5 contracts on a REO with dead silence for a while; says utilities will be on at walthrough only - and close only with X company and let seller hold your escrow and pay per diem , get HOA on day of closing if lucky - I guess Both sides have pluses or minuses and both DISTORT rules in a way and even good contracts may not go through for both of them!!
Web Reference: http://www.realtygeeks.com
0 votes Thank Flag Link Sun Mar 16, 2008
Your question shows that you are thinking way too logically for our current situation with short sales. The question you need to ask is "who is really selling this house?" If the owner's bank is required to sign off on a sale because they are the one losing money, then I'd say the bank is the one really selling the house. The owner is (hopefully in their minds) simply trying to walk away from a house and obligation to pay for that house. There is really very little incentive for them to try to get more money for the house. They simply need to sell fast so they don't experience a foreclosure.

Their bank, on the other hand, has an interest in extending the amount of time that owner pays their mortgage. The bank may or may not be interested in actually selling the house through this process. I would ask the owners, and thier agent if the bank has signed the listing agreement. You need to know if the bank is on board with the whole short sale process, and if so you need to ask why it takes them 2 or 3 months to give buyers an answere when they make an offer. For comparison sake, banks can give an answer on a property they own in 2 or 3 days.

Many agents are starting to think the local MLSs should require that a bank sign a listing agreement on a short sale before it is able to be listed on the MLS. This would force owners and banks to come to some sort of an agreement on a plan to sell the house before buyers get involved. If we did this, many of those homes would never make it on the market, and the ones that did would actually be for sale. Buyers would actually be willing to offer a little higher on houses like that where they expect to get an answer on an offer in a reasonable time period.

As for right now, buyers need to proceed with caution when dealing with short sales.
0 votes Thank Flag Link Sun Mar 16, 2008
Your agent is correct, The bank has no obligation to agree to any offer. That is why it's "contingent upon 3rd party approval."

Follow the link below to find out some of the real truths surrounding short-sales.
0 votes Thank Flag Link Sun Mar 16, 2008
It is a common myth that a seller has to accept a full list offer. A listing is a unilateral offer. In other words the seller has to be induced to action by another party, but they are not required to accept any offer. There is so much more to an offer than price and any seller can find any component not their liking. That being said, short sales are very trying and time consuming from either buying or selling side. The loss mitigation person at the bank(who ultimately makes decisions) may have 80 to 100 files they are working on (normally this was 10-20 files). As a result they can be very slow to react to any offers, counteroffers, and inspections. Be patient and as flexible on timing as you can be. When you get an offer accepted, (my experience I get 3 out 5 accepted) your closing date my get rescheduled several times. Have a back up plan so you are not left homeless while waiting for the bank to get the title ready and stay focused on the money you should be saving on a short sale!
Web Reference: http://www.JPMackey.com
0 votes Thank Flag Link Sun Mar 16, 2008
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