Home Buying in 95831>Question Details

Freesia, Home Buyer in 95831

We put an offer on a short sale home, offer was accepted by the seller. 2 weeks ago the appraisal was done, but my lender has not yet given us the

Asked by Freesia, 95831 Thu May 13, 2010

report. My lender BOA states we are under contract and escrow has been open, and that all they're waiting for is for the selling bank to approve our offer. Im confused, will I be reimbursed if my deal falls through? Is this process normal for a short sale. The MLS listing has change to "contingency"

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You ask if you will be reimbursed in case the deal falls through, and the answer is no. That's because most buyers do not order appraisals nor conduct any inspections until they receive short sale approval from the short sale bank. The reason buyers don't spend money in advance like this is because the short sale might not get approved. Or, by the time it does get approved, the appraisal will have expired, and you may need to order a new appraisal.

This is not the normal process for a short sale.

There are many things that can go wrong during a short sale. For example, the short sale bank may not agree with your price. It may counter you. The seller might not qualify for a short sale. If there are 2 loans, the second lender could demand more money than the first lender is willing to pay. Heaven forbid, should the loans be hard money, the second lender may not be willing to work with the first lender at all. And even if the loans aren't hard money, both lenders might demand a seller contribution, which the seller may refuse.

On top of all of this, if you signed a short sale addendum, the seller might receive a higher offer and send that new offer to the bank, knocking you out of the transaction all together. There are a lot of reasons not to order an appraisal or start your loan process until you have received the bank's short sale approval letter and the seller has accepted the terms and conditions in that approval letter.
1 vote Thank Flag Link Fri May 14, 2010
Hey Elizabeth, it appears in her question that the short sale was approved first and then the appraisal was done two weeks ago. Then in the body of her comments, she talks of the BOA agent (those guys are something else) telling her he/she is waiting for the bank to approve the offer. So there is a contradiction in Freesia's post. I am not sure what she means. But as you have so succinctly pointed out, the appraisal is toast if the deal falls through.
Flag Sat Apr 21, 2012
I just got rick rolled by myself. I always make fun of people posting here when the original post is like 2 years old. Tonight I rick rolled myself by posting a comment on a topic from 2010.

0 votes Thank Flag Link Sat Apr 21, 2012
Elizabeth is right, most buyers usually will not pay any out of pocket expenses until the bank has approved the short sale, price, and terms of sale. You said your lender stated you were in escrow and under contract. Where is your agent in all of this? Unless this is a approved short sale you and your lender aren't even sure what price the bank will accept. Not to mention the loan officer is working on your loan approval for a price that isn't even secure yet. Another think to keep in mind is appraisals are only good for 90 days. If the sellers lender takes longer than that to approve the short sale you may have to pay for a 2nd appraisal.
0 votes Thank Flag Link Thu Apr 19, 2012
Yes, this process is normal. When you are dealing with a bank, that is selling a property in a short sale, they often take quite a long time, so be patient. If the deal fails through you will be refunded you earnest money? Are you not doing this short sale with a licensed real Estate Agent.?

Anne Nevin
0 votes Thank Flag Link Thu Apr 19, 2012
Hello Freesia,

I won't confuse with Real Estate talk, simply put, what you are going through is VERY common. If your bank is simply waiting for the sellers bank to submit the approval then that's exactly what's going on. Short sale lenders do take their time sometimes. Please don't worry. You'll be in your new home soon enough. Good luck :)

Kamal Randhawa
0 votes Thank Flag Link Fri May 14, 2010
Hi Freesia,

Since some of my Sacramento fellow-agents have already responded with such accuracy, I won't repeat the facts they've already provided. I will add one thing I think is important.

You didn't mention which bank the seller's loan is with. While it is true that short sales can be longer and more complicated, a new ruling went into effect April 5th of 2010 called HAFA. If the bank was previously HAMP-friendly, it will automatically be HAFA-friendly. What all this means to you is this: HAFA short sales are taking much less time and closing is much more likely.

HAFA doesn't apply to FHA loans just yet.

I am hoping that both your agent and the listing agent both have enough short sale skill and experience so that they had enough insight to feel your deal will go through, because otherwise, you won't get your bucks back.

Good luck!
Tamara D.
Web Reference: http://www.buyinsacto.com
0 votes Thank Flag Link Fri May 14, 2010
Dear Freesia: This is a very good question. The listing on the property is marked "Short Sale Contingent" because although the seller has accepted your offer, to be finally "in contract" and "in escrow" the underlying short sale lender(s) must approve the sale to you. I have seen that take anywhere from three weeks to 12 weeks. Once a letter approving the sale to you is sent to your agent, now you are "in escrow" and "in contract" and the listing will be marked "Pending."

As far as being reimbursed your deposit, you need to read your Short Sale Addendum. The first paragraph states how the deposit is to be handled. I can't say here, because I don't know how your transaction was written.

Question: Have you talked with your agent about this??????

Best of luck to you.
Web Reference: http://SoldByErin.net
0 votes Thank Flag Link Fri May 14, 2010
Hello Freesia, I understand that the whole short sale thing is very confusing and requires a lot of patience. If you placed an offer on the short sale property and the seller accepted it, then it should change in the MLS to short sale contingent. Short sale contigent means that the seller accepted the offer and it is being reviewed by the sellers lender subject to approval from them. The approval from the seller's lender is not immediate and depending on how many loans are on the property,and many other factors it could take a while to get an approval from them. Technically escrow has been opened due to the necessity to show the lender the HUD1, or Good Faith Estimate which helps their lender to see the bottom line amount that the lender will receive at close.
From what I can tell, your lender told you escrow was opened and you are under contract because you have the offer that the selling lender is reviewing and looking to approve. Until you have short sale approval from the seller's lender nothing else can move forward. Once you have approval then it will be changed to pending in the MLS, and everything proceeds from there. Your agent should be able to guide you through this process, and give you more information about how long you can expect to wait. As far as your reimbursement is concerned, you should look over your contract and your agent should let you know what everything means.
Hang in there and good luck!
Web Reference: http://sachomesconnect.com
0 votes Thank Flag Link Thu May 13, 2010
It's customary when taking out a mortgage for the lender to send you a copy of the appraisal and your agent to provide you a copy of the executed purchase contact so you know your in contract. Also ask for a copy of the preliminary tile report and contact information for the escrow company. This may all be being completed by BofA which is why your left in the dark. Typically if your offer isn't accepted by the bank you will get your deposit back. Banks do take awhile to respond to short sell offers.
Web Reference: http://www.ccflender.com
0 votes Thank Flag Link Thu May 13, 2010

There's two appraisals that have to be done... I'm not sure which one we are talking about here. Whom ever told you the appraisal was done may have not been clear enough.

But...? One appraisal is done as part of the requirements for the new mortgage you are applying for... and the 2nd appraisal or opinion of value will be done by the existing lender (short sale lender) to make sure that they get as much money out of it as they can.

What they do is order a Broker Price Opinion (BPO)..., sometimes they get a couple of them. The Short Sale Bank will compare the two, the one your appraiser prepares and the BPO's... if there's a conflict that doesn't match...? for example your appraisal comes in lower than the agreed upon price? What happens then is they will then go through another process that will slow down the close date a little. The good news is that in my experience Short Sale Lenders/Banks do come down to accommodate the deal.

I hope this helps....

Make it a great day....
0 votes Thank Flag Link Thu May 13, 2010
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