Home Buying in Costa Mesa>Question Details

Marco Nortel, Home Buyer in Santa Ana, CA

Should a buyer go talk to a seller?

Asked by Marco Nortel, Santa Ana, CA Thu Aug 25, 2011

I'm about 90 days into a short sale with little progress to show. The seller has not wanted to fill out the disclosure papers or allow for an appraisal until they get the approval from their bank. I feel that the sellers are just dragging their feet to stay in the home as long as possible without paying rent. I feel like I can't get an honest answer from the sellers agent in regards to updates so I was thinking of just going over to the sellers house and talk to them. Is there anything unethical about this? What if any are the cons? I'm sure my agent and their agent will hate it but this is my time and money. Any advice would be appreciated.

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17
Marco -

Others have given you great advice but I want to add a couple of things to consider.

1) Always elect to have your REALTOR speak with the Listing Agent / Broker and get the updates. The Listing Agent / Broker is actually the person speaking and negotiating with the lender, not typically the Seller.

2) Don't spend any money on an appraisal or inspections unless the full approval letter has been issued by the lender(s) AND SIGNED BY THE SELLER(S). The approval can be issued, but if the Seller does not sign the letter, they can walk at any time.

3) The Seller is likely in financial distress in multiple ways and they do not need or eant any more pressure especially from an aggressive / active Buyer. This will just place more pressure on them and they will push back even more.

4) Is there anything FACTUAL that indicates the seller is not cooperating with the short sale? Is there anything FACTUAL that suggests the Seller is trying to stay in the property as long as possible?

5) Is there any indication the Seller may file Bankruptcy? If so, EVERYTHING STOPS IMMEDIATELY upon the filing and your deposit could be tied up in escrow until the BK Executor releases it. That deposit could be considered an "asset of the BK".

6) If there is ANY FACTUAL INDICATION the seller will attempt to forestall the Short Sale..... You need to GET OUT of this transaction ASAP !

At the end of the day, talk to YOUR Agent / REALTOR and make a contingency plan in the event the seller stops coopperating. On the other hand, if the Seller IS cooperating, you shouldn't be that far away from an approval if it's already been 90 days and the lender(s) have EVERYTHING they need from the Seller.

Best of luck,

Thom Colby
Broker / Owner
Thom Colby Properties
Newport Beach, CA
Moving Lives Forward (TM)
We NEVER DOUBLE-END Transactions in our Brokerage. IN MY OPINION, there is NO benefit to the Seller or Buyer and only benefits the Agent.
888-391-5245 Direct
THOM@THOMCOLBY.COM
DRE# 01398570
2 votes Thank Flag Link Thu Aug 25, 2011
It is a problem that the sellers will not allow access to the property for a basic REO appraisal (this needs to be completed for bank approval). The sellers should commit to a single buyer and do anything possible to aid in the sales process. My advice is don't deal with sellers that are stalling any transaction. Have your broker communicate your concerns and expect a fair and honest reply or move on to the next potential home. Brian Shaver http://www.homerealestatedenver.com
1 vote Thank Flag Link Sat Aug 27, 2011
Hi Marco,

Dealing with a short sale is a real challenge for everyone. It can be extremely frustrating to wait long periods of time and hear nothing. Unfortunately what you are dealing with happens often with a short sale. If the seller is not cooperating it may be a good idea to keep looking and see if something else comes on the market that you like. You should not pay for an appraisal until the short sale is approved and inspections and disclosures are often not done until the short sale is approved. Why spend any money until it is approved ? It is certainly understandable that you would want to do something pro active to attempt to move forward. If the seller is actually doing things that will stop the short sale from proceeding you may want to move on. You can do as you wish but the seller is most likely not responsible for the delay in the short sale being approve. If you like and trust your realtor let him/her know how you are feeling so they can try to get any information for you so you can have some concept on what is going on to help with frustrations. Many short sales take 3-6 months to get approved. There are many questions your agent can ask to help determine the probability of the short sale being approved.
1 vote Thank Flag Link Thu Aug 25, 2011
Although I don't think it'll do any good--the answers below are on target--there's nothing unethical about talking to the seller. After all, the transaction (if there is one) is between you and the seller. Your agents are only that--agents. You're the principals.

If the seller is dragging his heels, then you'd probably be better off finding another property. The short sale will never go through unless the seller is cooperative . . . and even then, a lot don't go through.

So, it's a lost cause unless the seller is willing to cooperate. Your talking to him might just get him to be more cooperative. So, give it a try. (Let your agent know first. And you're right; your agent won't be pleased. But, again, you're the boss. You're the buyer.) But be prepared to continue your house hunting.

Hope that helps.
1 vote Thank Flag Link Thu Aug 25, 2011
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Marco,

I have to agree with the opinion below. The problem with a short sale is the waiting! The seller basically is powerless in this transaction. It is the bank that is not communicating with the seller, and basically neither the agent nor the seller likely know anything at this pointl.

If I were your agent or lender I wouldn't allow you to spend money for an appraisal or anything else at this point.....not until you have written approval from the bank as to conditions and most of all price. The bank will do their own appraisal when and if the short sale gets approved.

The process can take 6-9 months depending upon where it is in the negotiation stage. Talking with the seller will accomplish nothing as they most likely know nothing more than you do at this point.

Best of Luck!

Sheri
1 vote Thank Flag Link Thu Aug 25, 2011
It went as expected. I found out the seller had no intention of selling the place. The hold up was $800 on the 2nd mortgage. The 1st lien had already approved the short sale. The 2nd lien wanted $6800, the 1st lien was only going to give them $6000. The seller didn't want to put up any cash at all to close this deal, he said, "what incentive do I have to give them anything". Well isn't the intention of putting your house up for sale that you intent to participate in the sale of the house?

He then went on to say that by not selling he could stay in the house without paying a mortgage or rent. That he was protected from foreclosure as long as he had a buyer. Fantastic!!! I don't think I want to post what happened after that comment. Needless to say a few months later the house went off the market, and I understand it's back on the market now.

I moved on and bought a home in North Santa Ana instead.
0 votes Thank Flag Link Wed Mar 7, 2012
Marco,
Congratulations on the purchase of your new home. Perhaps the best thing you could have done. Most people think that because they are offering on a short sale they are getting this amazing once in a lifetime deal. Often times people don't realize how long it could take and all the undercover politics involved. Consider yourself lucky, you could have finally got the deal and walked in to find out the previous owner took all the copper plumbing, toilets, and even kitchen counters. Just because it glitters does not mean its gold.

Vidi Barker
949.945.4857
Flag Thu Mar 29, 2012
Marco, how did this turn out? Can you give us an update?
0 votes Thank Flag Link Tue Mar 6, 2012
Hi Marco,

I understand the impulse to go talk to them. Your agent.....agents here.....me...none of us are going to think this is a good idea. There can be misunderstandings when the parties meet without their agents. However....your agent might be able to arrange a meeting with all of you. You, the sellers, the agents to talk? I might also suggest that you write a card/note to the sellers, run it by your agent and then see if the seller's agent would give it to them. Understand that the seller's agent must also be frustrated by the sellers refusal to cooperate...so they also want to find resolution or allow everyone to move on.

Just some ideas.

Karen
0 votes Thank Flag Link Sun Aug 28, 2011
Short sales can take a very long time, and some time with very little communication from the bank or lien holder(s). I would speak to your agent, and ask your agent to find out specifically what the status of the short sale is. Some questions you may want to consider: Does the lender(s) have a complete package? Are they waiting on any additional information from the seller? Is there a trustee sale date - or was there was one and was it postponed?

With regards to an appraisal, do you mean the appraisal from the lender who is approving the short sale, or an appraisal from your own lender.

In general, I would recommend communicating through your Real Estate Agent directly as opposed to going to the sellers.
0 votes Thank Flag Link Sun Aug 28, 2011
A word of caution on short sales, Three signatures (bank, seller, buyer) are required for short sales. Bank has no obligation to accept a contract between a buyer and the seller. We advise our clients to stay with bank-owned real estate (REO). Short sales usually go for way more than they list at anyway. We have witnessed banks reject multiple offers over list price and re-list at a higher amount. Meanwhile, your earnest money deposit is at risk and if you get tired of watching properties pass you by and pull-out..your deposit is gone. Stay with REO's, post-foreclosure, not pre-foreclosure.
0 votes Thank Flag Link Sat Aug 27, 2011
You should not speak to them if they are represented. If you don't feel they are giving a good faith effort move on. Incidentally the bank Will Not approve them without their appraiser gaining access to determine if the offered price is fair. Cut your losses... they will likely wait until it's too late to cooperate. Living without paying gets awful comfortable for some.
0 votes Thank Flag Link Sat Aug 27, 2011
You can ask whatever you want, but they don't necessarily have to tell you the truth. Open Houses are a great way to see a house, not a great way to get info on it. Remember that in most states the real estate agent at an open house works for the seller. Usually you have the right to be represented by your own agent, and that's the person you should direct your questions to. It doesn't cost any more. Your agent has a reason to give you accurate information and help you find a good house. * First of all, you need to talk to at least 3 mortgage companies BEFORE you start looking for houses. It's always better to have an idea of what you can afford. While it's fun to go look at million dollar homes, it will do nothing but frustrate you if you can't get a loan for even a quarter million dollar home. Yes, an agent can contact a mortgage company for you. * You should ask the sellers any and all questions that you may have regarding the foundation and any problems with the house. Ask about anything that concerns you but remember that unless you put it in writing as part of your offer the answer is not legally binding upon the seller.
Web Reference: http://www.simmimittal.com/
0 votes Thank Flag Link Thu Aug 25, 2011
Hi Marco,

Bad idea. The reason people hire Realtors is so the Realtors can work together to get a deal closed. Once buyers and sellers start communicating directly, something inevitably goes wrong. Short Sales take time and the seller can't do anything to speed the procees up. The lender's negotiator controls the speed of the process. All the Listing Agent can do is stay in constant contact with the lender's negotiator and hope that keeps the file on the 'top of the pile' of the many files the negotiator is working on. The seller not wanting to complete the disclosures makes sense since it is alot of work and they don't know if the lender(s) are going to approve the short sale or not. However, since you pay for the appraisal, you might want to remind them of that fact and if you're willing to take the chance of losing your money (in case the short sale doesn't get approved), they shouldn't mind. Have your Realtor check with their Realtor again on the appraisal reminding them you are paying for it, not them.

Shanna Rogers
SR Realty
http://www.RealtyBySr.com
0 votes Thank Flag Link Thu Aug 25, 2011
With all respect to the SELLERS;
They have nothing to do with your delay! They are not slowing it down, and they cannot speed it up!

You are not listening to your Agent:
If you are impatient, you should not enter into a Short Sale:

Please do not tell your Agent that this is YOUR TIME AND MONEY:
You have no control over this and neither does he.

I know you have heard every cliche':
Well, here's another one; I had one ShortSale that took nine months to get a rejection.

Good luck and may God Bless
0 votes Thank Flag Link Thu Aug 25, 2011
Marco,
Keep looking. If what you suspect is correct, you are powerless to do anything short of bribing the seller to cooperate, which would not go over well with the lender and may cause them to decline the approval.
I always advise buyers to keep their eyes open while waiting for a short sale approval. All to often with cooperative sellers and skilled agents they still don't get approved.
By keeping the process in play, but continuing to look you keep your options open. If a great house comes on the market that is not a short sale you may be able to rescind the short sale purchase & buy the other. Discuss this strategy with your agent and review your contracts to be certain of your options.
0 votes Thank Flag Link Thu Aug 25, 2011
Great question...there is nothing short about a short sale. The bank is pretty much in control of the situation. The agents are at the mercy of the bank and there isn't always an update to give. I don't think going to the seller will get you any further than you are now and yes is may be awkward. When you have an uncooperative seller that may be a sign to move on to another home. But if the sellers have already given their financial information to the bank then they are cooperating but doing an appraisal and filling out disclosures now before the bank has issued an approval is probably pre-mature. Good luck with your search and if you hang in there long enough on a short sale it will pay off.
0 votes Thank Flag Link Thu Aug 25, 2011
The problem you have is a seller who is likely in financial trouble and is basically living in the home for free. Normally you would go to your Realtor and they would go through the other Realtor. Since it is a short sale the sellers Realtor is kind of stuck, they can call the bank for an update but may not get a good answer that will satisfy either seller or you.

I don't believe you talking with the seller will do anything other than make you feel like you have done everything you can. Looks like they are planning on dragging it out for as long as possible. Really they have just started, you are in for a long ride if you only focus on this house.

I would suggest finding another house with real sellers, more bluntly, move on. There are some short sales I believe will never actually sell until the bank takes them back and lists them as a foreclosure. That may happen here but if the home is under priced now to get your offer which stalls the auction it will be at a different price.

Good luck,
Brian Wilson, Realtor
DRE# 01321478
0 votes Thank Flag Link Thu Aug 25, 2011
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