Home Buying in Littleton>Question Details

Kristin, Home Buyer in Littleton, CO

Possible short sale issue (lender is Wells Fargo). We have contract on short sale and now shady things are happening.

Asked by Kristin, Littleton, CO Thu Oct 25, 2012

We put an offer in on a short sale and the seller accepted our offer. We executed the contract, however, never asked to sign the short sale addendum. Now I was told by my agent that the seller received 6 offers higher than ours. The short sale is thru Wells Fargo - is there going to be a problem with us not having a signed short sale addendum? The short sale addendum states that the seller and withdrawl from the deal for any reason and we certainly dont want this to happen so that the seller and submit a higher offer than ours. It has been 2 months now we have been waiting and we were told yesterday that the BPO has been requested. I have 2 questions:

1. Since we have a signed contract with the seller can they force us to sign the short sale affidavit?

2. Can the seller submit all of the offers to the bank or only ours since we are the only ones under contract?

Help the community by answering this question:

Answers

10
David Landman’s answer
When your agent showed you the property, at that point he or she became aware that it was a property on a short sale status. Since your agent has a duty to disclose to you everything in regards to the property, he should let you know how a short sale works. A short sale listing requires all offers to have a short sale addendum attached, this means that all offers are contingent to lien holder's final approval. The seller is not obligated to move forward with any sale that is not approved by the lien holder and has no resposability whatsoever, thanks to the short sale addendum that is part of the contract. If a short sale addendum was not submitted attached to the offer is only your agents fault, not seller's or seller's agent. There is nothing you can do if this home doesnt go to you. Just keep looking for other houses, and good luck!
0 votes Thank Flag Link Tue Nov 13, 2012
Short sale addendums are required on listings and sales in Colorado. Your agent should know the necessary forms or should confer with his/her broker. More offers than yours can be signed by the seller under certain circumstances, but banks will only process one at a time. If a higher offer has been signed by the seller and the listing agent has told the bank, the bank will usually stop the process on the lower offer and then submit the higher one. BPOs can take months to get ordered. A lot depends on what forms were signed and how the contract was written. For these kind of answers, I would recommend you consult a Real Estate Attorney.

It sounds like you are not getting the answers or information you want and need to proceed. At this point, start looking at other properties. It is alway unwise to get too emotionally involved in a short sale as the success rate is not always that good. It is the responsibility of the listing agent to get the highest price for the property - so the listing agent may be soliciting higher offers. First in, first signed has little relevence on a short sale. As one other agent said, you are getting too emotionally involved and may have let some other good properties slip by while you were involved in this one. Please talk to an attorney to see what your next move should be in this circumstance. Just be certain it is an attorney who specializes in real estate and knows what is involved in a short sale. Good luck
0 votes Thank Flag Link Sun Oct 28, 2012
Short sale addendums are common but the terms within them can vary somewhat. As the buyer, it's not your fault that you have not signed this document as it should have been provided to you when you signed your purchase contract. This is standard.....

The fact that you are being asked to sign a document "after the fact" that allows the seller to back out of the transaction for any reason is suspicious. You do have the right to no agree with these terms and modify the document to your liking.

The reality here is that even if your contract is honored, you will still have to negotiate with the lender. They will expect to receive a price that is an accurate reflection of the present real estate market activity. If other buyers are willing to pay more....it's very likely that your number could be too low for present conditions.

This does not mean, the seller has the right to kick you aside based on the new interest...you still have a valid contract they need to honor regardless of what the actual final value of the property.

Our recommendation is to seek the advice of an attorney. Their review of your purchase contract and the addendum would be advisable.

Good luck,

Bill
0 votes Thank Flag Link Sun Oct 28, 2012
It doesn't sound like your agent has clearly explained the difference between a short sale and a foreclosure. With a short sale, the owners are still the residents or owners of the house, not the bank. Your contract is with the owners, and you need the bank to agree to accept less than the sellers owe the bank. The selling price was set by the agent, and the bank is having a "BPO" done to confirm whether that is market price. If that is the case, then they will accept the short sale presuming you have loan approval. The short sale addendum sets the time line for the bank to agree to respond by and can add other conditions, so it up to your agent to go over it as it is for your benefit. Since the seller is in contract with you, they cannot submit other offers to the bank for approval unless they have notified you that they are canceling your contract or notifying you of some other terms, such as multiple bidding.
0 votes Thank Flag Link Sat Oct 27, 2012
Kristin,

Short sales are a headache. Normally the Short Sale Addendum is signed at the time of the contract. Your agent should have submitted it at the time the offer was submitted with language in it that protects your interests. You may be able to do that now to protect yourself. I would confer with your agent's managing broker to get more clarification on your particular transaction.

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
Direct - 303-669-1246
http://about.me/robertmcguire33
0 votes Thank Flag Link Sat Oct 27, 2012
Hello,
Nobody can make you sign anything, however, I don't think you fully understand the short sale addendum. It has 2 different options:

1. Either the sellers or the buyers can terminate at any time.

2. Neither can terminate outside of the parameters set forth in the addendum.
The addendum itself has you put a deadline for bank response (the bank is in no way bound to this deadline) and if that lapses than you either need to to amend the contract or terminate.

Wells Fargo does not have a great reputation in our industry- just know they can be difficult to work with.

Kelli Gardner
Your Castle Real Estate
3034893397
0 votes Thank Flag Link Thu Oct 25, 2012
Ahh, the beauty of a short sale. You have MEC (mutual execution of contract between buyer and seller) but you do not have SSA (short sale acceptance). I highly doubt the seller signed all the offers... but ya never know. The hard part is you have a non-contractual decision maker (lein holder) either approving or dissaproving the transaction and each bank has a different protocol. This transaction is "pending" on the lein holder approving it. I would get the SS addendum signed and in place and add that the Seller will only work with one buyer at a time. The "bank" does not care about anything else other than the bottom line. A simple call from your agent to the other agent addressing these questions could shed a lot of light for you. Problem is you are behind the ball and submitting additional paperwork could bind up the process. Most of this could have been addressed before submitting the offer. Experienced agents know this and communicate with your agent. Good luck and I hope you get your home.
Web Reference: http://www.housefitz.com
0 votes Thank Flag Link Thu Oct 25, 2012
SHORT SALES - have gotten better than they used to be. Your agent should have completed a short sale addendum and the Listing agent, unless they just LOVE extra paperwork and headaches, should only submit ONE offer to the bank. The Listing agent can gather 2-3-4 other offers as backup and keep them in their own file...but only 1 seller accepted offer should be submitted to the bank.

The addendum protects you in ways and it protects the bank too. If you really want the home...ask your agent to submit a SS Addendum to the Sellers and ask the Listing agent to get it submitted to the bank. If your agent does not have lots of experience in Short Sales...he/she may want to get advise from a more experienced agent within their brokerage firm.

If you decide to walk away from this deal....and you are feeling uneasy with your agent, there are Agents in the Littleton area who have experience working with SS and the big banks in town!!!

I happen to be one of those SS Specialists and would be happy to assist you in find a home, whether it is a SS, foreclosure, HUD, or traditional sale!

Joyce Sedam
CHERRY CREEK PROPERTIES, LLC
720-934-7085
jsedam@gmail.com
http://www.JoyceSedam.com
0 votes Thank Flag Link Thu Oct 25, 2012
I am a Certified Distressed Property Expert and Short Sale Foreclosure Resource:
This whole transaction sounds like a big mess. While it has never taken me 6 months to get a response from any lender , the sellers agent has certainly made some odd choices. Short sales are a great way to purchase homes under market value and while most are in need of some tlc not all are. In my opinion this is a transaction that you should run from, as the paperwork wasn't even done correctly. The bank doesn't really care if you have a short sale addendum, but Colorado Real Estate Commission does. Since we are licensed in this state we must follow the rules of it. If your agent needs any assistance with this very specialized area, please have them contact me.

Regards,
Carlene R. Harris
CDPE SFR CNE BPOR
RE/MAX EDGE
(303)667-2860
Carlene.Harris@remax.net
0 votes Thank Flag Link Thu Oct 25, 2012
Carlene, thank you so much for your response. We LOVE the home - it is one of the rare finds and in excellent condition. Our offer was for $100 OVER the listing price and my agent told me last night that he was made aware of us not signing the short sale addendum and that in essence that was good for us because that means that the seller cannot cancel our contract to go with the higher offer - does this sound at all correct? We are so scared of doing or saying something that will "kill" the deal but we also would like to be able to purchase the house sometime in the near future. I think neither of the brokers (seller/buyer) really have any idea what they are doing. I would hate to wait out this deal to only find out 2 more months from now that we cannot close. When I reviewed the title work I found something strange - a Notice of Election and Demand for sale dated 09/01/11 - how does that effect the sale if at all?
Flag Thu Oct 25, 2012
Seriously ... do yourselves a HUGE favor and terminate your offer. No -- no one can force you to sign anything.

The seller's realtor submits offers to the bank. If he/she knows what theyr'e doing, which is sounds like they are inexperienced, only one offer goes to the bank, which is always the buyer's "highest and best." The seller has to approve and then it goes to the bank.

Next, you will wait at least six months before the bank even looks at the file. Short sales and bank sales look great on paper, but they never translate in reality. You buy these properties in "as is" condition, and 90% the time, they need repairs.

My guess is you are young buyers who need better advice than what you're receiving now. There are plenty of "real sellers" out there, with homes that you can close in 30 days and THEY will fix anything that's broken. Please contact me if I can help further, and please know this: you make money when you BUY, not when you sell. Hire a professional -- we're 100% free to buyers.

Julie Montgomery, RE/MAX Masters, Inc., 303-906-3150, jmontgomery@coloradomasters.com.
0 votes Thank Flag Link Thu Oct 25, 2012
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