Home Buying in 94531>Question Details

Happyendings, Home Buyer in 94531

Our offer has been accepted on a short sale, should we be submitting other offers at this time?

Asked by Happyendings, 94531 Sun Feb 7, 2010

Our offer has just been accepted mid last week, however, it is pending the lender's approval and there are 2 lenders involved. We've heard the horrors of short sales and their record for falling through. We don't want to display "bad faith" though either.

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In a short sale, the homeowners (sellers) can accept your offer...but that does not mean the offer will be accepted, much less approved by the sellers' lenders in a short sale. Yes, the horror stories are there where buyers and sellers wait and wait and wait, only to be told that the lenders will not approve a short sale.

That's why, in the state of California, we have a short sale addendum wherein we specify that the buyer's offer is good through a certain period of time, that the escrow isn't opened until formal acceptance (in writing) by the short sale lenders, and that the buyer's initial deposit will not be cashed until receipt of such approval.

Until the offer is accepted/approved by the short sale lenders, there's no guarantee the sale will move forward. A short sale is made doubly harder and more challenging when there is more than one loan, and when there is more than one lender.

So yes, the buyer should explore other avenues and look at other properties to buy just in case. As such, the buyer may write an offer on another property.

If, however, that short sale is ratified by the short sale lender within the time specified by the buyer, the buyer should do the right thing: if the buyer is no longer interested in the property, or if the buyer has an accepted offer on another property, the buyer should officially withdraw his offer.

Throughout the process, your agent should follow up with the listing agent(s) to find out the status of your offer(s).

Good luck!
2 votes Thank Flag Link Sun Feb 7, 2010
My advice is to write offers on any home that you would truly be happy to have as your own.

I am working with a client who wrote two offers on short sales and one on an REO within days. I asked her to be very clear that she would accept the first home that accepted her offer. In this case the REO quickly had higher offers than she was willing to make, so that left the two short sales, both of which had been accepted by the seller. She had a favorite, but would have been happy with either. Then a higher offer came in for one, leaving her offer still pending on (thankfully) her favorite of those two. That offer was written 12/23. We received verbal acceptance from the bank's negotiator about three weeks later, but are still waiting for acceptance in writing.

Keep looking, and writing offers.
2 votes Thank Flag Link Sun Feb 7, 2010
Happyendings,
This is really a situation that is specific to each individual situation. I would say that a lot depends on how experienced the listing agent is. Most deals fall apart because one or both of the agents don't know what they're doing in short sales. I would talk to your agent directly.
Best,
Erica
Web Reference: http://www.jscarealty.com
1 vote Thank Flag Link Tue Feb 9, 2010
The key to a successful short sale is an experienced agent. The listing agent should be experienced with short sales and shoud have completed a through evaluation of the success of the short sale. If you have an accepted offer and you are not in a hurry to complete the transaction, a short sale may be the best route. You can avoid spending weekends looking at other listings, competing with multiple over-asking offers, and subjecting yourself to disappointment after disappointment. An experienced listing agent will mark the listing pending and keep you and your agent updated regarding the status of the short sale. Once again, the key is experienced agents. Call or email me with additional questions.
1 vote Thank Flag Link Sun Feb 7, 2010
Well there are a TON of questions posted about this with lots of really great insight that you might want to read up on.

The bottom line is the home sellers have accepted your offer but that really doesn't mean squat. It only the first step to get things going. The lender can take anywhere from 30 days to 6 months to approve your offer. So your answer really depends on how much you like the home and how long your willing to wait. If you need to move by a particular time, then it might be wise to put offers in on other homes that ARE NOT short sales.

You can withdraw your offer virtually anytime on a short sale. As long as you don't keep doing it over and over, it really doesn't display 'bad faith', it's you doing what needs to be done for your best interest.

Hope this helps. Good luck!
1 vote Thank Flag Link Sun Feb 7, 2010
Another option for you to consider: a short-paper transaction. This is similar to a short-sale, and often transacts much quicker than a short-sale.
0 votes Thank Flag Link Tue Feb 9, 2010
It sounds like you have heard enough horror stories to scare you and unfortunately there is no pat answer to help comfort you. Many buyers who are putting offers in on short sales continue to place offers on other short sales and take th first one that is "approved by the bank". I'm not advising that you do this I am just letting you know that it is common.

If the Listing Agent is an experienced Short Sale listing agent then you should be somewhat comfortable with the situation. Most of them have two loans anyway so if you start all over with another one you will be in the same situation with a different house.
Web Reference: http://www.soreal.biz
0 votes Thank Flag Link Tue Feb 9, 2010
Hello,

I have worked with several short sales from both the listing and buying side. Having two loans on the property does make it just a tad bit more difficult but the time frame is pretty much the same. You should ask your Realtor to keep in touch with the listing agent to make sure the file is in progress. On the buying end, I've told my clients to hang in there when I know the short sale is being handled correctly and they have been rewarded for their patience with a home they love. Hope it works out well for you too...just hang in there :)

Kamal Randhawa
Broker
510-932-1066
0 votes Thank Flag Link Mon Feb 8, 2010
Happyendings,

The question you pose is one of the confouding issues in today's market. Does a buyer write an offer on a good short sale or wait for a good foreclosure or regular sale? If a short sale is good then do we just sit and wait while the powers that be decide to grace you and the sellers with a transaction or do you undermine your agent and offer and continue to take stabs at other homes, keeping this one in primary/backup insurance? Even the best short sale agents have a 30% change of failure.

Considering all the variables and that I am a licensed agent NOT in your transaction, I think good faith means giving the listing agent a change to get the short sale approved before moving on to plan B. The problem then is how long is reasonable? With B of A taking on average 4-6 months for an approval is THAT reasonable, probably not.

Good faith means just that. Trust your gut and your agetns advice and do what is best for you. That's what the banks and the distressed owners are doing, and I'd say the banks don't care much about...(Fill in the blank, there are many endings to this sentence.)
Web Reference: http://bob2sell.com
0 votes Thank Flag Link Mon Feb 8, 2010
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