Jimmy, thanks for clarifying this. Even though I am very considerate of my agent, I wasn't sure if there was anything in my hand in this matter. Your clarification has iced the cake, thank you;)

I think I was misunderstood - your agent should not have any say in the compensation. He/she knew what she was getting into when she agreed to represent you on a short sale. I am talking about the listing agent/broker who balks at any change in commission. The most important part of the equation is helping the homeowner in trouble. Are they really working in their clients best interest if they reject a deal based on a couple dollars? That was my point. Your agent is at their mercy since compensation is set by the listing broker and I am sure is not the cause of any problem.

Jimmy Mulhern

The agent is in good hands, trust me on this ;))

Jimmy has made a good point. Your agent does deserve to be compensated so if the bank does cut commissions at the last minute - you can offer to pay your agent the difference if it will still be worth it for you to have the house and pay some of your agent's commission.

Thanks,
Sonal

Shams - I know your responses have been to another agent and she has done a good job answering your questions. I do want to add one thing...be prepared for a counter from the bank. Investors on these loans like to push the limits so just be prepared. Also...if something seems like it is going through then all of a sudden it seems like it all falls apart...make sure you ask questions about the compensation. Many times the deal falls apart because the listing agent/broker involved balks at any compensation adjustments. This is not necessarily your agents fault so have patience and stay active in your home search.

Jimmy

Thank you Sonal for your assessment of this scenario as well as professional opinion.

I did have the comps and I offered better than the market value. I hear you about the gap between appraisal and assignment of the negotiator. I will double check that with the agent.

Regarding Mortgage Loan, most lenders don't even offer locking-in until I have a final approval letter received by the lender bank (selling). And those very few who do, would not offer more than 30 days lock-in. I know mortgage may not be your expertise but just sharing my personal experience as a client.

Thank you very much.

Hi Shams - it normally moves very quickly after the negotiator is assigned. I find it a little strange that you said they did the appraisal and assigned a negotiator - I would just confirm about the negotiator. There is often a one month gap between doing the appraisal and assigning a negotiator.

Once you get the approval letter, the bank usually wants you to close more quickly than a regular sale - sometimes they close in one week, two weeks, three weeks.

There are still many things that could go wrong at the last minute - I was just giving one example. The seller may have to sign a promissory note for the deficiency or they may want him to bring cash to closing or a combination of the two, etc. These are just examples.

Also - when you are saying you offered above market value - I want to make sure you are talking about market value and not list price. List price on short sales may often be far below market value. Did your agent send you the sold comps? Those sold comps and the appraisal would constitute market value.

But, if you don't run into any problems, this is a good time to talk to your lender and make sure they have your final loan approval done, ask them whether rates are predicted to go up or down before locking (60 day lock would be best considering the uncertainty still possible), and make sure the title company will be ready to close on short notice as well.

BTW - all of us have more than just the city under our name that we serve - in the profiles you can see all the areas ;-)

Thanks,
Sonal

Thank you all for sharing your experiences.

My follow up question is for Sonal since the property is almost within her geographic area.
To respond to some of the specs with dependable factors Sonal briefly touched, well I actually offered a little higher than the market value of the property. More so, the property had one loan and one trust. The seller was an investor of several properties and is just getting rid off all across the board. So quite frankly and logically, I would not expect him to change his mind about the sale. As regards the lender bank, two weeks back the bank completed its appraisal and assigned a negotiator. Here are my queries:-

1. Now does that really hint any timeframe for the final word by the bank in your experience for me to start getting on my toes?
2. Should I lock-in my mortgage interest rates? (keeping in mind that the rates are lower than when I started)

Thanks so much.

To be honest with you, and I think the other answers hinted at this, it depends on the listing agent and how they are involved in the transaction. Here are questions that your agent needs to ask the listing agent -
- Do they have a valid hardship for selling the property?
- How many banks are involved?
- Are they planning on working out a payment plan or asking for total debt forgiveness?
- Is there a professional negotiator involved in the process?

Short Sales are increasingly easier and we have been able to get to closing in 60 days if they are handled the correct way. You also have to evaluate your offer - if it is a below market value contract, get ready for a lengthy delay and a counter from the bank. The reality of our area right now is that there is a ton of buyers out there and the bank will not accept anything less than perceived market value. Now some of the questions I posted will not get answered, but you have to ask them because that impacts the timetable and the likely hood that they will get the deal accepted. We use a law firm to represent our short sales and negotiate the terms, which we pay for, because they do a better job than any agent would - we buy and sell houses, not negotiate loan terms - so it is important to have a listing agent who has a good short sale system in place. Also, and this is the unfortunate thing about short sales, it does not matter if they have had previous success since each situation is different. I have seen agents who have closed short sales lose listings to other agents who then were able to close the transaction. Banks are funny and they make absolutely no sense...but patience is the key. Make sure that your agent is in constant communication with the listing agent. We have two buyers who have contracts on short sales right now and the listing agents have done a good job staying in communication with us, which has allowed our clients to stay focused on the home instead of looking at other properties. When we list a short sale, we communicate with the other agent almost two times a week to update them on what is taking place, and communicate with the bank almost daily.

Jimmy Mulhern

Hi Shams,
Sonal is right. A short sale can be a very lengthly process. In our area of SW Florida, the short sale addendum to the contract reads that the lender can take up to 90 to consider the offer while at the same time accepting other offers that may compete with you. You are actually just at the beginning of the process.

Hi Shams - if there is only one bank and one trust, it can be two to four months. If there is more than one bank or more than one trust it can be three to six months. During this time - there are only two really important updates - the Appraisal was performed, and a negotiator was assigned.

The success rate of getting to the answer (counter offer or acceptance) is heavily dependent on the quality of the listing agent and how good they are at getting everything to the bank. Sometimes the case is closed if the listing agent did not reply to something in a timely manner, for example.

And keep in mind that all kinds of other things can happen after that long wait as well. I recently had one where we got the approval letters after five months and the seller refused to sign because he got advice from his attorney not to do the short sale.

It is a very difficult process - very frustrating unless if you are an investor.

Thanks,
Sonal