Home Buying in Orange County>Question Details

Tiggeresq, Home Buyer in Orange County, CA

What can I do, as a buyer, to speed up a short sale escrow?

Asked by Tiggeresq, Orange County, CA Wed Jan 27, 2010

I am about to go into Escrow, the buyer accepted my offer on a short sale. There is a first and second on the property and unknown liens. I want to make sure everyone is working as diligently as possible (my agent, listing agent, my lender and escrow co.) If I don't get the 1st home buyers tax credit, I cannot buy this home. What can I do? P.S. I don't mind being a pain.

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If you’re concerned with the first-time homebuyer tax credit, which will expire by April 30th (but you will have until June 30th to close escrow as long as you’re under contract by April 30th), then I would suggest you set your sights on another property that is either a.) not a short sale, or b.) a pre-approved short sale preferably with Wachovia Mortgage.

If you want any chance to close this purchase in a timely manner than have your agent find out the following:
1. Who are the lenders that must approve the sale?
2. How far along is the seller with the short sale approval process?
3. How experienced is the listing agent with short sales?
4. Does the listing agent feel strongly that the bank will grant the seller approval?

And to emphasize again, if the lenders are Bank of America, Chase, WAMU, or IndyMac then I’m afraid you stand little chance of closing within 6 months, or even at all. That’s right, most short sales involving two different lenders will never close because junior lien holders can negotiate their positions and if the seller is unwilling to contribute additional funds to pay them off or carry a personal note, then the sale will most likely fail.

So again, what can you do to speed things up on the buyer's side? Nothing, but wait and hope the sale is approved quickly.

Hope this helps!
1 vote Thank Flag Link Wed Jan 27, 2010
Tigger,

Ok - a little confusing - are you the Buyer or Seller. There's nothing you can do as a buyer to speed it up. As long as the listing agent is experienced in short sales you should be ok EXCEPT, you said "unknown liens" - what sort of liens? They may stay with the property if they are mechanics liens for example. If they are IRS liens, there will not be relief.

100% of my business is short sales and the ones that do not close are those with more than 2 loans / liens and more than one lender / investor.

If you're expecting the tax credit, your offer would have had to be submitted in December '09 to have enough time to get the approval and close by June.

There's no magic bullet to get it done faster. The worst banks to deal with on short sales in order from worst to better are 1) Bank of America (& old Countrywide); 2) Chase (& old WaMu); 3) HSBC; 4) Aurora; 5) CitiBank
and the best is 6) Wells Fargo

Talk to your agent and good luck !

Thom Colby
Broker / REALTOR
Orange County, CA
Web Reference: http://www.thomcolby.com
1 vote Thank Flag Link Wed Jan 27, 2010
Tiggeresq
Also laughing about the don't mind being a pain.

You are already under contract from what I understand so you have till June 30th to close. If it is about to go into escow, chances are you will be done in plenty of time. However... I had some that were suppose to have pre-approval and it still took 2 months to get into escrow.

Did you just get the offer accepted? How long has the short sale been on the market? Who are the banks on the liens? The buyer accepted your offer? I guessing you meant seller?
0 votes Thank Flag Link Tue Feb 2, 2010
All,

And, just as an example of how long these take... I just got one closed last Friday 1-29-10, that went into escrow on March 25, 2009. One Loan, Bank of America. It was a Freddie Mac loan and getting them to do ANYTHING in an expeditious manner - well, it's fighting with the Government and that's always a losing battle.
It's closed, a first time homeowner got it and the sellers have moved on with their lives, finally.

Best of luck,

Thom Colby
Broker & REALTOR
Orange County, CA
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Tue Feb 2, 2010
It is important for the listing agent to submit a very detailed package to the lender with all required forms completed correctly. Most don't do this.

You can't do much about this directly, but you might be able to have your agent discuss the short sale package with the listing agent to either (1) help the listing agent do it right or (2) let you know that the listing agent package is not that good and your chances of a timely agreement from the lender are not so good.

Short sales can take awhile even with a proper submittal and you are clearly running out of time on the home buyers tax credit.

Phil McCollum
BRC Realty Group
562-225-5234
0 votes Thank Flag Link Sat Jan 30, 2010
Hi Tiggeresq,

Sadly....there is nothing you can do to make it go faster or slower. It's just going to have to go through the process. The listing agent can make sure that they get everything put together properly and follow-up that it's been received, but other than that, you just have to wait.

You say that the seller accepted your offer....are you in escrow? or did they simply send your offer off to the bank. In theory, you should have enough time to close before the tax credit expires. You have to close before the end of June 2010. But you have to have an open escrow by the end of April. So that's the first date you need to worry about. If you are the only offer on this home, and still interested in April...make sure you get them to open escrow, so that you don't miss this date. (unless you have already).

I'm hoping that the banks realize that these dates will affect first time home buyers and move those files quicker....but I'm not holding my breath. :(

Good luck with this purchase!!!

Karen
0 votes Thank Flag Link Sat Jan 30, 2010
Hello Tigger and thanks for your post.

Personally, I'd look to Thom's post (the first respondent) for some important cues to how fast (or slow) the short sale may progress. In particular, pay attention to the names of the banks holding the loans. If the first mortgage is with Bank of America or Countrywide, my suggestion would be to move on to another home. Similarly, like Thom, I've found that the short sales that will not close or will only close with financial "assistance" from the buyer or the agents are those homes with two or more loans on the property. Again, if this home has two or more loans, then I would strongly suggest looking for another property to purchase.

As to "unknown liens", the best way to determine what liens exist on the property is to ask the listing agent to provide you with a copy of the Preliminary Title Report for the home. The "prelim" will contain all recorded liens or judgments against the property as of the date of the report. This will help greatly in determining the encumbrances against the home.

Finally, as to your involvement in the sale, while I can appreciate the frustration and your desire to move things forward, as my colleagues have already noted, there is little that you can do--as the buyer--to speed up a short sale. In fact, if the short sale involves some of Thom's "Worst Banks", then I would conjecture that there's little that even the listing agent can do to speed up the process. The bank will move as quickly or as slowly as it pleases, and shouting, calling, harrassing, pushing, emailing and any other action that might be deemed completely warranted under the circumstances will not yield a more favorable outcome.

As with all short sales, look to other homes while waiting for the decision from the bank. Until the bank says "yes" (and, keep in mind, that many many times the banks will "counter" your offer with a higher price or conditions or additional money, etc), you should be actively looking at and possibly buying other homes to ensure that you can find a suitable home to buy before the June 30 closing deadline.

Sincerely,
Grace Morioka, SRES
Area Pro Realty
0 votes Thank Flag Link Wed Jan 27, 2010
LOL about being a pain that's is great however can understand your concern(s)

Truly up to title company have all released of liens, Nothing you can do all professionals are aware of terms of contract however be careful of expiration dates.

We do recommend for any of our clients you may have an executed agreement HOWEVER not all short sales close based on number of reasons, best keep looking and maybe place multi offers on several properties.

You would need close by 6.30.10 HOWEVER executed contract must be no later than 4.30.10

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
Follow me on Twitter: http://twitter.com/Lynn911
Lynn911

http://www.lynn911.com
0 votes Thank Flag Link Wed Jan 27, 2010
I neglected to point out an important fact. You, as the buyer, will have absolutely NO ability to talk to any of the lenders. There are authorization forms that the seller gives to the listing agent that allows him/her to contact the lenders - and NO listing agent worth their salt would pass that authorization on to a buyer who is self-professed to being a potential pain.

This is one situation ( short sales.) where the squeaky wheel will slow things down more than speed things up. It's a sure way to keep your file getting mysteriously moved to the bottom of the pile.

Just my humble opinion.
Web Reference: http://tr.im/FreeMLSSearch
0 votes Thank Flag Link Wed Jan 27, 2010
As others have said it depends on the lender, the other lender, the listing agent, the owner, your agent, you, the escrow company, title company and if they all have everything they need and did they turn it in correctly. Each bank has requirements on how they handle the sellers request for short sale and everyone had better be on the same page. Some banks are faster than others. I sent in an offer and in 1 day they sent the appraiser out for the BPO. They had approval in 3 weeks, WOW was I surprised. We are closing on the house next week.
Hang in there and hope you have everything ready!
0 votes Thank Flag Link Wed Jan 27, 2010
Like all stated already, there is no exact time frame and nothing you, as a buyer, can do. Additionally, there is very little that your Agent can do. There is quite a bit more that the Listing Agent can do like make regular calls to the bank to make sure it's rolling along and is a complete package. But in the end it all boils down to the bank. Escrow won't even get involved yet except to provide the listing agent with a sample HUD to submit with their package to the bank. They may run a prelim but that costs them money and won't expedite your offer getting approved any faster.

Be aware that you'd need to have an approval in approx. next four months in order to get the tax credit. You wont open escrow until you have an approval. Escrows generally take 45 days.

You may want to keep looking. You can back out of your offer at anytime as a buyer on a short sale.

I am a little confused by what this statement meant, 'if i don't get this tax credit, I cannot buy this home'. Does that mean funds are that tight for you or you just prefer getting a tax credit? If funds are that tight, you may want to reconsider buying this home. The last thing you want to do is start out in the hole or close to it when buying a home.

Good luck!
0 votes Thank Flag Link Wed Jan 27, 2010
You can probably speed things up by staying out of the way.

In the meantime, keep your eyes out, for either an REO, ( Who probably won't accept a low down payment transaction, anyway.) or an equity seller - either of which can provide you with an escrow with a stable - and shorter - time frame.

If you find something better, or more likely to meet your schedule, grab it and withdraw your offer from the short sale. That isn't an actual escrow - or shouldn't be, at least - anyway, until the lenders have worked out the ability to either accept, or respond to your offer.
Web Reference: http://tr.im/FreeMLSSearch
0 votes Thank Flag Link Wed Jan 27, 2010
I'm sure you have been warned that the 2 lenders are in the "drivers' seat." Short sales can take a number of months to obtain the approval of one lender, let alone 2 lenders. You should know if there are any other liens, as a tax and lien search can be done now. A short sale can take many months to be approved. Therefore, I hope you & your Realtor put a clause that you can walk away from the purchase if it does not close by April 30, 2010, since you state you cannot buy the home without the 1st time home buyer tax credit. The best thing you can do to keep the short sale process moving along is to stay on top of what your Realtor and the Seller's Realtor is doing on a regular basis.
0 votes Thank Flag Link Wed Jan 27, 2010
Not much anyone can do to speed up the short sale transaction once all the paperwork has been submitted--some banks are faster than others, and with 2 banks involved the process can be longer. Unfortunately, even if your agent, listing agent, lender and escrow company are working diligently there are no guarantees -- no one knows for sure what the time frame will be.
0 votes Thank Flag Link Wed Jan 27, 2010
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