You got lots of good information from all of the agents that previously answered. There are several things I might add, having successfully completed many short sales. The most important of which is that a short sale sale is never guaranteed, neither to the seller nor to the buyer. It is a long and arduous process. If there is only one lien on the property that can be a plus but still plan on 3-6 months to complete the sale. If Wells Fargo is the lien holder it can usually move quicker but if they are the servicer for say Freddie Mac-you will be in for the long haul. The bank/underwriter of the loan will be looking for a few things.
Why did the seller stop making payments and is there truly a hardship? What is the retail value of the property and the as-is value? The bank must to net more from a short sale than they would if the property went through full foreclosure and then sold the property as an REO (Real Estate Owned). Notice I said net- there are expenses to a foreclosure that the bank doesn't incur if they short sale. A very general rule of thumb is approximately 80% of retail value is usually acceptable to the bank- but not always. Rarely does a bank accept a short sale or set a short sale amount without having an offer on the table as each offer is evaluated on its individual merits. The stronger the offer the more likely the seller's agent is to encourage the seller to work with the offer and to work the offer at the bank. Nobody can afford for an offer to fall out after it the bank approves it as everybody has to start over and again there is no guarantee the bank will continue to work with the seller and not foreclose. A strong offer is characterized by the buyer having a substantial down payment, a well known lender and of course being at or over the 80% of retail figure.
When you see a property advertised as "short sale approved at "x" amount," it usually means that there was an accepted offer and the buyer fell out of contract for one reason or another-typically they got tired of waiting. As for the issue of submitting multiple offers: People tend to forget that a property being short saled still belongs to the seller, the bank has not yet foreclosed and therefore does not have ownership of the asset. The seller must first accept the contract and then ask the bank to accept a deficiency on their loan.
The seller's agent has a fiduciary duty to protect the interests of the seller(s) and in the case of a short sale that is best done by getting them the highest and best offer that they possibly can thus reducing the deficiency that they ask the bank to take. Depending on the size of the deficiency and the financial situation of the seller I have seen banks ask the seller to sign a promissory note for a portion of the deficiency, something you want to avoid as a seller's agent if possible.
I fear I may have confused you more than helped you. So here is the best advise- keep your offer in place . Have your agent contact the other agent and ask them if there is anything you can do to strengthen you offer- to move it ahead of the pack. Based on that conversation, you may want to re-evaluate it and make changes. And then keep looking- not put all of your eggs in the short sale basket- keep your options open. Feel free to have you agent call me if I can help-
So how do you know? Ask direct questions, and insist upon speaking with the person who makes the calls if you've been stalled unreasonably. Understand that if you're the buyer, they can't share any private information with you about the sellers loan - However - they should be able to tell you which level at the bank they are speaking with (customer service, or an assigned negotiatior), how long it's been at that level, what their plans are for the next step, and a reasonable expectation of a time line from here. If they can't or won't answer these questions, you may be well advised to move on - at least emotionally, and cast your nets elsewhere. Last, know that more offers will be taken. They won't usually be submitted to the bank, however, if yours already has been, unless or until the bank turns down your offer. So if your offer isn't your "highest and best" you might want to think about what that figure is, so you'll be ready to respond if you're about to be "bumped". It's counter productive to keep giving new offers to a bank. It tends to start the process over. Smart agents will hold back up offers to the side, and focus on the offer selected for submission.
Your sentiment is shared often by agents and home buyers. You are not alone! I don't know of any agent that hasn't voice the same concern and frustration. It is difficult to assess from your question if the bank had accepted the offer or if the bank had agreed to the offered price in advance. All too often, homes are listed with a lower price that attracts multiple offers, all the while, the banks have never agreed to the short sale or the listed price. The sellers accept an offer and then submit their short sale packet for review as part of the offer. Your offer is provided to validate the request for a short sale, but does not require the bank to accept it or the short sale application
Banks then look at minimizing the loss and higher offers trump even the first in line. While it is little consolation as you wrestle through this, it is not unique to your agent or to Wells Fargo. If the listing agent simply attempted to help their client by getting offers, it leaves the buyers disillusioned if expectations were the process would be responsive and the listing price was likely to be accepted
If you are an existing client with Wells Fargo for your other banking, there is no harm in working through their internal chain to see if you can get the attention and responses you need. If the offer is merely pending and others are submitted which could be more attractive to Wells Fargo, you may need to develop a back up plan with your agent. Leave this in place but start looking at other options.
I agree with the previous response: yes, there are a few title companies that have short sale departments and they coordinate with the lenders on behalf of the listing agent and sellers. They usually call on a file once a week (so it can go a little bit slower than someone calling 2-3 times a week for follow up). If you know what title company will be closing on the property, you should be able to call and verify that they really are handling the transaction for the listing agent.
Also, your agent should be able to verify if your offer is in '1st' position and the other offers in back-up. Sometimes agents will get several offers on a property to protect their seller in case the first offer falls through. Those additional offers should generally not be presented to the lender, since the banks don't usually want to see lots of offers - they just want one good offer to work with. Lastly, Wells Fargo has gotten a little better with short sales, but can still be a 2-3 month wait. You know the lender is making good progress once the BPO (broker price opinion) or appraisal has been done. If it's a good home, at a good price, it'll be worth the wait.
Best of luck!
There are some title companies now that are handling the short sale transactions for agents. The bank does not want a lot of people calling them since they are so busy. The buyer's agent has no contact with them at all and is at the mercy of the listing agent or his 'title company' rep or other rep to get information and updates. One thing to consider is that most short sale answers and ultimate approvals are 'later, rather than sooner'. Without knowing the details of your particular transaction I really can't say more. If the seller signed your offer and sent it in the other offers should be 'back up' offers in case you for some reason are not able to perform and close on this transaction. If you need more information, you may need to check with your agent's Managing Broker to get a better understanding as to what you are getting into. Good luck and succes on your purchase.
Robert McGuire ASR
Your Castle Real Estate