Home Buying in San Diego>Question Details

swat, Home Buyer in San Diego, CA

Short Sale Process - Adding a Price Reduction Addendum - Will it cancel the original Approval notice if new purchase offer is denied?

Asked by swat, San Diego, CA Fri Oct 18, 2013

We have an approved short sale agreement from Chase bank to close by Oct 25th. After the home inspection we found out serious problems - there
was a flood just 2 weeks ago and severe water damage and the owner did not resolve it as he is selling it anyway. We requested some credit and the bank asked for two estimates from licensed contractors and submit an addendum for price reduction and we submitted the same to the Short Sale Negotiator.
Now the listing agent says (my agent as well) that the original approval letter may be cancelled if denied and we have to restart the whole process with new BPO ,seller's hardsip documents and new negotiator and the seller might risk foreclosure due to lack of time. Hence the addendum is not submitted to the credit department and waiting for my decision .

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6
Kevin Sanderlin’s answer
Hello Swat,

Everything you said seems accurate. With this new information, the seller could very well end up losing the home to foreclosure. Make sure to run the situation by your lender if you are getting a loan. That could be a bigger issue than the approval letter.

Kevin Sanderlin
Keller Williams Realty
Cell 714-588-7881
1 vote Thank Flag Link Fri Oct 18, 2013
BEST ANSWER
Hi there,

My partner and I have negotiatied about 300 short sales and have come across this issue many times. Luckily, Chase is one of the better banks when it comes to negotiating short sales. By submitting the addendum to reduce the purchase price, along with the repair bids will not completely shut down the short sale. Depending on your negotiator, what would happen is they would re-review the file with the new purchase price and repair bids, then come back with either a counter price, a new approval, or just let you know that they will not accept the new price and you will need to purchase it at the original approval price. The only way that the file would be shut down is if they did not approve a postponement for the foreclosure date (which normally they do when they are working on a short sale and have a buyer in place).

If you have any other questions just let me know!

Thanks,
Camille Shute
Canter Brokerage
(858) 213-1972
Camille@CanterBrokerage.com
1 vote Thank Flag Link Fri Oct 18, 2013
There's two parts to this:
Yes, they are correct that the process "may" start over. But that doesn't mean it "will" start over. Ultimately it sounds like the listing agent and negotiator just doesn't want to do more work than they need.
As for your agent, they should be demanding your best interest in the deal. Your the one paying for the property.
It sounds like the listing agent and negotiator need to do their jobs properly and get an extension on the pending foreclosure sale so that proper terms of the purchase can be worked out.
Have your agent find out if the foreclosure sale has been postponed before and if so how many times. It's not uncommon for sales to get postponed multiple times over the course of a year while a house is in a distressed situation. A good negotiator or short sale listing agent should have a real estate attorney who can simply write a letter that will allow for postponing a foreclosure sale.
1 vote Thank Flag Link Fri Oct 18, 2013
Assuming you are financing the purchase, you have a problem. If the damage is "severe", it is unlikely the property will still qualify for financing. If the lender discovers the problem, it will cancel your loan approval until corrective work is performed. The lender will see any addendum to the purchase contract and if is mentioned "credit for repairs", the lender will want to know what repairs are needed.

You've got a tricky situation here and need the advice of an agent who is working for you. Dual agency (listing broker representing the seller) may not be the best for this scenario.

Robert L. Boerner
Gecko Realty
619-977-2262
1 vote Thank Flag Link Fri Oct 18, 2013
Short sales are always a pain. For mortgage help, call or email for a free pre-approval in less than 10 minutes. We lend our own money and are licensed in 49 states.

We can do: FHA, Conventional, USDA, VA, HARP, Interest Only, Home Equity, Fixed, and Variable. Find out which product is right for you by calling Brad at (855) 415-5626.

Brad Neumann
Sr. Loan Officer
Crosscountry Mortgage Inc.
Toll Free: (855) 415-5626 ext. 5734
Email: bneumann@myccmortgage.com
NMLS# 948036
0 votes Thank Flag Link Sat Nov 9, 2013
Good afternoon,

In our experience, Camille has the bases covered.

Make sure the agents are not deciding the process, that belongs to Chase and hence the need for a skilled negotiator. A good short sale negotiator is so valuable when it comes to this type of situation.

Best of luck,

Mark & Kari Shea
Shea Real Estate
National Association of Realtors
CA BRE License 01713506
0 votes Thank Flag Link Tue Oct 22, 2013
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