Home Buying in 93021>Question Details

Nik, Home Buyer in Moorpark, CA

On 03/31/09 we received preliminary approval for short-sale and the seller asked us to open escrow on this

Asked by Nik, Moorpark, CA Mon Apr 6, 2009

property without paying anything until the final approval. We received some papers with no words for not paying any fees. Any suggestions regarding that type of escrow? What to be careful of? What to expect?

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Be sure your agent (Buyers agent) stays on top of the Listing agent. The Listing agent needs to be sure the BPO or Appraisal gets done done ASAP. If there is a disparity between your offer and the BPO/Appraisal, you may need to re-think your offer and/or respond to a counter offer. Be sure the Listing agent has given the SSA (Short Sale Addendum) to your agent for you to sign. among ohter things, it discloses your time frames for the offer. Make sure ALL MONIES go through escrow and are included on the HUD.

Have your agent ask the Listing agent if the seller is submitting one offer (yours) or is waiting, and submitting multiple offers to the Bank SS negotiator. Most banks only want to see one offer, but it is not always the highest offer. Many times Banks will accept and lower, ALL CASH offer with a shorter escrow because there is less that could go wrong.
0 votes Thank Flag Link Wed Jun 9, 2010
Nik,

If you have an open escrow then the Listing agent will be forced to change the status of the property to backup offers at minimum. If not the Listing agent will be violating MLS rules and will incur a fine.

As a buyer this is good in that it will cut down the possibility of competing offers that will distract the bank while working on this transaction. If escrow will open with no money, then you have an advantage. Just read through the escrow paperwork to make sure that you can walk with no fees anytime before the bank gives full approval.
Web Reference: http://www.homebuysblog.com
0 votes Thank Flag Link Mon Apr 6, 2009
I am the home-buyer an did not clear that the approval is from the seller's lender. We are waiting for lender's final approval. Sorry.
0 votes Thank Flag Link Mon Apr 6, 2009
This is standard for a short sale. The seller will normally accept any offer as he/she is not making any money in the first place. Your offer is then shown to the seller's lender and waits for approval. This can take a loooooong time. I've seen them last almost a year before they've been accepted by the lender. Supposedly they are getting better at that. Realtor's have a running joke on Short Sales... and that they are actually called Long Sales.

What is concerning me, is why escrow is being opened. Usually escrow will not open until there is an approval. Right now, if this deal falls through, escrow is out some money. Not a lot, but whatever it takes for the paperwork, admin, etc. for it to be opened. Make sure the escrow company is okay with that.

Also, make sure your lender understands that you have made an offer on a short sale. Timing is key here. You need to work out an exact time line with your Realtor (he/she should be updated as to how and when the lender will approve the offer) and Lender (he/she should be keeping a close eye on rates). Locking a rate at a certain time will be beneficial.

Hope all goes well... Let me know if I can be of further assistance.
Web Reference: http://www.themmteam.com
0 votes Thank Flag Link Mon Apr 6, 2009
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