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Family Of 5, Home Buyer in Denver, CO

Wells Fargo short sale, buyer needing more expert advice. Please help

Asked by Family Of 5, Denver, CO Wed May 12, 2010

I have a real estate agent that is telling me that the title company is our contact for Wells Fargo. I don't think that is right! I know the seller's agent has turned over her tasked to the title company after telling us that we should have an answer sooner rather than later. I have also learned that the seller's agent has put in at least 2 more contracts on the house. My lender is Wells Fargo and Wells Fargo owns the seller's mortgage and is the only lender. What am I to believe?

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Dear family of 5-
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-
Good Luck!
Carole Higgins
2 votes Thank Flag Link Thu May 13, 2010
I agree with Brian Burke. I recently had clients who sold their previous home, lived a spare bedroom of his parents while they waited for their short sale offer to be accepted....for 5 long months these professionals lived in that small room, getting good news one day and bad news the next. The stress level I saw on that placed on that marriage was not worth it. In the end, the offer was accepted and then the lender holding the mortgages went out of business and they were bought up by two other lenders. Back to sqaure one. They gave up and found a much better property. Interest rates are still low. You can cash in on these rates today, but 6 months from now you might be paying an extra $200 or more month while you wait for that short sale.
Shawn Janusheske
1 vote Thank Flag Link Thu May 13, 2010
Like I tell ALL short sale buyers, Dont count on the home and keep looking. Odds are you will NOT get this home. If the other agent is collecting offers how many will the listing agent have in a few more months? A lot. All the buyers with the other offers want the home also. Title Companies now have People that deal with the bank on the short sales so the title company may be the contact. Believe that you need to let go and find a different home that you can buy. If you dont find a better home by the time this gets approved then you can go with the short sale. Only 12% of short sales close with first offer.
Brian
1 vote Thank Flag Link Thu May 13, 2010
unfortunately your stuck. You are prevy to all the discussion and inside dealings of the banks and the selling broker. You will just have to wait and be patient. Nice thing is that you haven't had to put down any money yet, so your not out of anything but time. Suggestion would be to Keep looking and if you want to go the Short Sale route then right all kinds of offers. When one comes through, then you can just drop the rest and you haven't spent anything. Reality is you should have lots of money, not get emotionally invested in the property and have lots and lots of patience if you want to go after short sales. Regular sellers and Foreclosures are way way better.
0 votes Thank Flag Link Tue Oct 26, 2010
It's frustrating to sit on the sidelines with a big unknown and all of your hopes wrapped around it. My colleagues give good advice to tell you, "hedge your bets and keep looking". That being said - here are a few more nuggets from my experience: It's true that many escrow and/or title companies are now offering short sale services. Some are exceptional. Most are average at best. Everything depends on the person who makes the phone calls, the level of proficiency and ingenuity and perserverance that they possess. Personally, I'm a control freak - I hire a 3rd party negotiator, but it's done strategically, and I remain informed on precisely the very latest, up to the minute status at all times. We then trouble shoot and brainstorm about each file at least 2-3 times a week to assess how to move the file forward more efficiently. I don't see that happening in your average, "hey, we'll do your short sales for free" offers with the title/escrow companies. Mostly you have half hearted phone calls being made so someone can check that file off the list of "I tried to get an answer", so they can feel justified in moving on. This is why some files sit for months while others move through in 4-6 weeks. Getting a YES is an aggressive, proactive business.

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.
0 votes Thank Flag Link Thu May 13, 2010
The worst short sale transactions I've been involved with are the ones where the listing agent has someone else (title company or '3rd party negotiator') handling the negotiations with the lien holders. I don't know who this title company is, so I don't intent to 'slam' them, but I just don't believe anyone cares as much about a short sale working out as the buyer does. So, the farther it gets away from the buyer, the less pressure is brought into play. I also continue to show my client homes if they make an offer on a short sale.
0 votes Thank Flag Link Thu May 13, 2010
I appreciate you posting this question as it offers others a buyer's perspective on short sales.

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.
0 votes Thank Flag Link Thu May 13, 2010
Hello Family of 5,

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!
Victoria
0 votes Thank Flag Link Wed May 12, 2010
'Family',

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
Realtor/Consultant
Your Castle Real Estate
http://www.rmcguire.yourcastle.org
Direct: 303-669-1246
0 votes Thank Flag Link Wed May 12, 2010
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