Home Selling in Queens>Question Details

K6tutor, Home Buyer in Jersey City, NJ

How can a seller do his own short sale?

Asked by K6tutor, Jersey City, NJ Wed May 11, 2011

I am interested in some short sales but when I asked the seller how was the pricing set here is what he said. I do the short sales. I set the price. And I pick who buys.

This seller is a real estate broker who's company also does mortgages. I don't think this is shady. I just want someone to explain to me how this is possible.

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RPN New York Realty’s answer
The seller remains the title holder and owner of the property until the property is actually legally foreclosed upon or sold. Thus, the seller can indeed set and agree upon a sale price and the buyer itself. However, ultimately, if the bank will be asked to accept an amount lesser than what the homeowner owes it (asked to accept a short sale)- the bank will have the final say on the selling price and even the buyer. A lender can, and is likely to, accept a stronger buyer over a weaker buyer, even if the selling price is less.

Basically seller has to find agree on a price and a buyer and then propose the terms (and qualifications of buyer) to the lender for its approval. Technically a seller can certainly do his own short sale, but based on the complexity of the transaction and the need for strong negotiation skills, it is highly advisable to use both a short sale familiar broker as well as seller's attorney.
0 votes Thank Flag Link Fri May 13, 2011

Perhaps a better approach here would be to get a buyer’s agent with extensive short sale experience who will show you all the local short sales and deal with the agent/seller on the other side. You pay nothing for having professional representation and you can come out way ahead – I’m always leery of dual agency in a short sale. Banks don’t like it very much either. A professional realtor will be able to discuss this question with you in person and probably give you a far better answer than you will get here because you will be able to discuss it with them at length.
1 vote Thank Flag Link Thu May 12, 2011
He can do all those things, but the bank would still need to approve the payoff amount.

Eli Givoni, Director
Short Sale Department, LLC
Serving all 50 states

MARS Disclosure for General Commercial Communications
Short Sale Department, LLC is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit.
1 vote Thank Flag Link Wed May 11, 2011
No, a short sale is a regular sale, the seller is still on title and therefore protected by the same agency laws as any other arms-length transaction. There is nothing new about them, they have been around for as long as there have been banks, maybe even before that with private lenders.

The only difference is the seller is asking the lender(s) to accept less than they are owed under the outstanding mortgages and or liens. The seller still has the right to see any and all offers presented to the Realtor, at least in my state. You Realtors, is this different in other areas? I can not fathom a Realtor receiving an offer and not presenting it to a seller.

That is why I asked below if the Realtor owns the property. If he actually owns the home he has a little more latitude in what he does or doesn’t do but not much different if it is listed for sale.
0 votes Thank Flag Link Thu May 12, 2011
After reading your responses...which I appreciate your input and time...I am wondering if you guys recall these are short sales. Some of the answers below seem to address regular sales. Correct me if I am wrong but wouldn't it make a difference in the responses.
0 votes Thank Flag Link Wed May 11, 2011
Does the real estate broker own the home or is he representing the seller? If he is an agent I think he is required to present all offers to the seller. Is that right you all? Kenneth touches on a subject I wonder about, how do you lock in an interest rate for long enough to get one of these puppies closed? I would need money upfront to lock in a rate that long.

My Banana Index has me concerned about the long term outlook for interest rates, the dollar slid 11.54% against bananas this week.
0 votes Thank Flag Link Wed May 11, 2011
The seller/agent can set a price on the contract, but as stated below the final price is going to be set by the bank holding the mortgage. I'm guessing that the agent/seller has sold some other short sales and has a handle on the process which can take 60-120 days or longer depending on the bank. Since he works with a mortgage co he trying to make sure everything is going to move at the same pace. But, you are the buyer and should feel free to contact another lender just to compare rates and fees. I've found it a little easier to get the approval from the Bank if you present the contract along with a mortgage commitment at the same time. I'm guessing that is what the seller/agent wants to do, also. If you are happy with the term of the mortgage being offered there is no problem doing everything in one shop. If you are concerned just call for another no cost quote to put you at ease. Good luck with the deal
Kenneth Lazowski | Mortgage Loan Originator | NMLS #34064
Real Estate Mortgage Network, Inc.
425 Amwell Rd
Hillsborough, NJ 08844
O: 800.999.2489 ext. 7976 | F: 908.450.1419 | C: 908.512.1436
E: Klazowski@remn.com | http://www.remn.com W: http://www.kennethlazowski.remn.com
0 votes Thank Flag Link Wed May 11, 2011
The answer may be that Mortgage companies arrange loans but don't tend to hold them. I would ask who the actual lender is? I don't your seller/agent is first lien holder on his own mortgage. It is likely a primary lender...B of A, Chase, Well Fargo.

I hope this helps.
0 votes Thank Flag Link Wed May 11, 2011
Ok I hear what you guys are saying. BUT I am wondering how it works... It confuses me that the seller is also an agent whose company is handling the mortgage.

He has tried explaining it to me but I am still confused.
0 votes Thank Flag Link Wed May 11, 2011
Every seller has the right to accept or reject any offer presented to them. There is no obligation to sign an offer when it is presented even if the terms are acceptable to the seller. The seller is also the one who sets the price not the agent but in this case you stated that the seller is the agent so he is correct when he says he sets price and picks who buy but only because he is the seller/agent. If this agent were representing someone other than himself he would only be advising who to pick rather than picking. As for pricing short sales, many sellers underprice them to get an offer to submit to the bank and it is up to the bank to accept the short sale price. Many times the offer price is not acceptable to the bank and will tell the agent and seller what price is an acceptable price. This is why sometimes you see listings go pending then comeback at a higher price months later when the first buyer walks or rejects the banks higher price.
0 votes Thank Flag Link Wed May 11, 2011
Yes, it's possible, however the lender is the one that decides to accept, reject or counter offer...
0 votes Thank Flag Link Wed May 11, 2011
Again, the seller might know how to walk the process, but still is a SALE, where the lender have to approve and/or accept your offer (remember the lender will get a hit). In other words, in an "arm length" transaction, the lender will pick the higher offer, Since the seller is in default, he loose the power to make that decision.
0 votes Thank Flag Link Wed May 11, 2011
It's posibble, because as you said, the seller may have the knowledge to surf on the paperwork and the negotiation with the lender. A short sale is an extreme resouce for underwater properties and, if the price makes sense to you, You should hire someone who can guide you in the process.
0 votes Thank Flag Link Wed May 11, 2011
The bank will not let him get a commission but they may allow this type of sale.

Check the commission instructions carefully. If he/she gets a commission, it is certainly shady.
0 votes Thank Flag Link Wed May 11, 2011
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