Home Buying in 30041>Question Details

Chikiada, Home Buyer in 30041

short sale approved by seller. No second approval from bank yet. Listing agent wants to cancel. Appraisal came in higher. is this legal?

Asked by Chikiada, 30041 Mon Apr 30, 2012

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Carolyn Fountaine’s answer
Unfortunately, Chikiada, this is the problem with short sales and foreclosures; you are rarely protected as a Buyer like you would be in a traditional sale situation. why not try new construction? You can get your home as you want with new and innovative building materials which will save your family on energy and maintenance!
0 votes Thank Flag Link Tue May 1, 2012
There are too many unknowns in this situation. And when you use the word "legal" you should know that we are NOT attorneys and we can't give legal advice. You need to talk to your REALTOR and/or your ATTORNEY. We don't know enough about the situation.

But I'm curious....When you say the short sale approved by seller, who do you mean? The homeowner or the bank?? It's all up to the bank (lienholder). And if the appraisal came in high, then the contract will need to be renegotiated. Not sure why the listing agent wants to cancel. Again... what does your REALTOR say???
1 vote Thank Flag Link Mon Apr 30, 2012
The listing agent does not have authority to cancel. The listing belongs to the broker. It would be up to the seller to cancel lising with the listing broker. If appraisal is higher than offer , then it is still up to the bank and seller to accept or negotiate the offer.
Dianne Whitmire
Promotion Realty, Inc.
770-475-7744
0 votes Thank Flag Link Tue May 1, 2012
All depends on the wording of the contract. In a Short Sale the buyer and seller have to both sign the contract (so I guess this is what you are referring to by "approved by seller'. However, the contract should state that it is a short sale and contingent on approval by lender(s). One thing to note on timing and note about Ken's comments below, unless you are dealing with HAFA or other pre-foreclosure program, the lender will not order the appraisal or for that matter even set up the short sale file until you have an offer to present. GAR has a Short Sale form and my team (all CDPEs and SFRs with over 70+ successful short sales completed) uses a special short sale amendment that we put together with our attorney spelling out the terms of what can happen with mutliple offers, etc.. The goal being to give us the best chance of saving our listing clients from foreclosure and getting the deal done for our buyer clients if at all possible. The key thing to remember that while seller and buyer's have to sign the contracts nothing happens without the lender(s) approval and as Ken pointed out that will be primarily based off the appraisal.
0 votes Thank Flag Link Tue May 1, 2012
John 90%of my short sales were pre-approved by the lender prior to listing, this cuts down on response time from the lender. The other 10% were before I was a CDPE. It makes the most sense and more buyers will Come out. It does not neccessarily need to fall under HAFA. Most short sales fall under some type of pre-foreclosure program, the short sale itself is a pre-foreclosure option.
Flag Tue May 1, 2012
Chikiada,
The seller can accept or reject your offer but then the lender/bank holding the note makes the final decision as to whether or not they are going to accept your offer. If all parties agree then all parties must sign the Purchase & Sale Agreement along with the Real Estate Addendum. If all have accepted your offer you then pay your lender to have the home appraised. If you had an accepted offer and the appraisal came in higher I do not see how the listing agent can cancel the contract. Are you represented by a realtor? If not, I would seek legal counsel.

Kathleen Rastetter
Keller Williams
770-298-8659
0 votes Thank Flag Link Tue May 1, 2012
In short a listing agent cannot make a decision on any contract or negotiate without his/her client. I am a CDPE(Certified Distressed Property Expert) which means short sale and foreclosure properties. A normal transaction a.k.a. The arms length sale needs two signatures to make the contract, buyer and seller agreement on terms, price etc. The short sale transaction requires a third party approval or signature before it becomes a contract.
The process for a short sale if done properly is:
1. The agent determines fair market value range using comparables. If the market value is less than what is owed the agent should advise his/client to hire a real estate attorney.
2. The owner, attorney and agent mert to discuss the plan of action to talk to the lender about doing a short sale.
3. Most times the attorney and the agent will meet with the lender and explain the situation and get the ball rolling to get the lender to allow a short sale, by putting together a package to present facts and figures.
4. The ball is now in the lenders court and they will do their due diligence to have the property appraised and analyze the risk. This step could take a while to get done.
5. Best case scenario is the lender agrees with the data and allows a short sale.
6. Once this is done, the property is listed for fair market value, agreed to by the lender, however this does not neccessarily mean this is the bottom number they will accept, and it is up to the agent to bring in all offers to present to the seller.
7. This is the tricky part, once the seller accepts an offer, it still needs to be presented to the lender. It is vital to present one offer to the lender, and make sure all the "I"'s are dotted and the "t"'s crossed BEFORE sending in for approval. ( this reduces response time from the lender. Anything not done properly, the lender sends it back and the file goes to the bottom of the pile. The could even reject it and the process has to start all over.)
8. Once the lenders decision is made the transaction moves forward as normal. The lender could also reject it, and the sellers attorney will deal with that scenario and keep everyone updated.
From what you have posted it seems that the sale was not pre-approved but without the lenders approval you really don't have a contract and that you need to discuss with your attorney.

Lenders have gotten a lot faster in their response time, what used to take 90-120 days is down to a couple of weeks to a month tops, on non-pre-approved short sales. A pre-approved short sale usually has a point of contact at the lender that are assigned the case and the approval process takes 7-15 business days.
By what you have posted your agent or your attorney should be able to let you know what's going on.
I've posted a link that goes into the process in more detail. What is posted here is should not be considered legal counsel and you should discuss this matter in detail with your attororg regarding your legal rights and your agent for an updated status. Keep us posted on the developments.
Anyone looking to do a shortsale shpuld be represented by an REALTOR who had been trained and specializes in distressed properties.
0 votes Thank Flag Link Mon Apr 30, 2012
Short sales are a risk. Are you dealing with the Seller or the bank? The banks are not willing oi take less if the appraisal came in higher....a risk you take when deaking with a short sale. What does your agent say?
0 votes Thank Flag Link Mon Apr 30, 2012
Who has the short sale Bank or Owner? If the home has been turned over to the bank, you are dealing with the bank and not the owner. However, if it is a short sale, before foreclosure, you are dealing with the owner. There is a lot of difference.

The listing agent cannot cancel. Only, the seller can cancel. Do you have a signed contract by ALL parties?

If it is with a bank, the bank would be the one to cancel. Check with your agent ( buyer's agent)
BD

Check with your attorney, also.
Contracts state that the appraisal has to be at least the sales price.
0 votes Thank Flag Link Mon Apr 30, 2012
Well put Sally.

Sounds like the seller said yes but the lender hasn't replied? If the appraisal came in higher, you should expect the lender to look to that as a benchmark. You might have been in a situation where the home was listed low to attract a bid - then the short sale idea would be presented to the lender; in a sense to test the waters. Not certain why the listing agent would want to cancel.

Nonsense with short sales isn't new, there's a reason many avoid them as there is zero compulsion by the parties involved to hold to convention. I avoid them like the plague.

Hank
0 votes Thank Flag Link Mon Apr 30, 2012
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