Home Selling in Dana Point>Question Details

John Adler, Home Seller in Dana Point, CA

I am really confused. If I short sale my home, I am told that once I accept an offer we open escrow. Then the bank responds.

Asked by John Adler, Dana Point, CA Sun Dec 13, 2009

While we are waiting for the bank to respond, lets say additional offers come in.
Do we send those to the bank as well?
This seems unfair to the original offer!

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Answers

17
Steven Abraham - BROKER’s answer
Hi John!
In the state of CA, all offers have to be presented to the Seller!
You are the seller!
Yes, you will open Escrow with an offer you and your Broker feel the bank will accept.
In CA your Broker will use a Short Sale Addendum to explain the process the terms.
Your Broker will have you acknowledge receipt of the other offers, refuse them, etc.
The bank will hopefully respond and determine if the offer is acceptable.
They have the option!

Steven Abraham
Broker
Prudential CA Realty
lagunacastles@cox.net
949.378.4005 Cell
1 vote Thank Flag Link Sun Dec 13, 2009
Bob - "Thumbs Up" for your answer !
0 votes Thank Flag Link Tue Apr 17, 2012
I'm not sure why I didn't respond to this question, 2.5 years ago, when it was posted.

There sure is a variety of answers. I wonder if Mr. Adler was ever able to short sell his property, and how that transaction played out.

It would be nice if people came back to give us their progress story, once in a while, to make the time we spend answering such questions, seem worth the bother.
0 votes Thank Flag Link Tue Apr 17, 2012
Hello John,

In the end the bank will go with the highest and best offer submitted to them prior to their acceptance of any offer so you may accept a lower offer but the bank will ask your agent to submit the highest and best offer.

I would be happy to pesronally go over the short sale process in detail with you

Thank you

OCJOHN

John Mussen
949 218-0280
0 votes Thank Flag Link Mon Apr 16, 2012
John,
I was reading a few of the answers below.
It does matter to you which offer you accept.
As Emily stated, you want a qualified buyer and one who is willing to stick it out!
You definitely need to open Escrow and use the Short form addendum!
No money is paid or deposited by the potential buyer until the bank approves the offer.
All offers are required to be presented to you the Seller unless you specify that you are not interested in further offers!
Your agent will have you sign the proper page as an acknowledgment that you are refusing the other offers and this acknowledgment will be sent to the other agent & Broker.
This is critical as any good agent or Broker knows!
An offer has a better chance of performing with the bank when you’re Agent or Broker does his or her homework to verify the validity of the potential buyer in first position!
As a Broker, I nor any other agent or Broker can interfere with a contract you may have with a current Broker.
This and my other comments are simply free advice.
Good Luck!
0 votes Thank Flag Link Mon Dec 14, 2009
If you get multiple offers up front, choose one highest & best. Highest is not always best. Look for the person who is qualified & can close & who is buying because they REALLY like the place. Chances are that person will stick with you throughout the short sale process.

Once you choose that offer, you Accept as the seller on title & it is ONLY Subject to 3rd party approval.

This means your listing agent should put the condo in a "BACK UP OFFER STATUS" in the MLS.

When other offers come in say "We have an offer that has been submitted to the bank, thank you for your interest, we will hold onto your offer and if the 1st buyer backs out, then we will submit yours". You should also let this buyer know WHICH back position he's in. "you're back up buyer #1 or #2" etc.

Do NOT work with an agent who keeps the listing in ACTIVE status while submitting multiple offers to the bank! This will only make your approval process longer.

Please let me know if you have any more questions, email me directly and I can point you in the right direction
emilyknell1@yahoo.com
562-430-3053 cell
0 votes Thank Flag Link Sun Dec 13, 2009
Short sales are handled in many different ways. Unfortunately, each agent does them differently. There is nothing fair in a short sale. The first and foremost issue you need to understand is that you as the home owner will get zero amount of the proceeds in a short sale. Therefore, what difference to you does it make on which offer is actually sent to the lenders? In my opinion, the way a short sale should be conducted is to list the home with a very competitive price to start with. The goal would be to accept an offer as quickly as possible to send into the lenders and start that process which could easily be 2-4 months. At this point, I don't see the need to open escrow. Some agents feel that by opening escrow it shows your lenders good faith. Personally, I don't believe this and I feel it is a waste of time. You don't have an acceptance from the lenders at this point let alone even a negotiator to talk with so what smart buyer would put up a earnest money deposit without lender approval. Chances are that the first offer you accept and send to the lenders to start the short sale process has a 75% chance of finding another home before the lenders approve any short sale and so they walk away. So, all the while you are accepting other offers in case that first buyer walks away. The unfair thing in a short sale is that many agents allow their greed to get in the way so they try to handle both sides of the transaction and "double end" the deal. By doing this it many times results in longer time frames for lender acceptance and also a lower price for the lenders then a higher price This happens because many agents will only submit to their sellers the offers they want them to see. Yes, in California all offers must be submitted but many agents don't submit them because they are trying to double end the deal. If you have decided to do a short sale, your only goal should be to complete the process as fast as you can.
0 votes Thank Flag Link Sun Dec 13, 2009
John,

There are many ways a short sale can be handled. You are the owner of the home and the way it is handled is up to you and the agent that you choose. I believe that it is not only unfair to the original offer but when you don't show some type of commitment you have an excellent chance of loosing the buyer you have. Because short sales are a time consuming process in some instances the buyer gets tired of waiting and may walk. When evauating which offer to take one of the criteria should be the buyer that is not in a hurry and is willing to wait out the process. It's not a bad idea to take back up offers and hang on to them just in case.
0 votes Thank Flag Link Sun Dec 13, 2009
John -

Let me add to what ohers have said - There is no reason for the Listing Broker to send multiple offers to the bank as they will not look at them. The bank will not do the work of the Real Estate Broker which is to determine with the seller which offer is; not only the best offer, but the offer most likely to close. For example a cash offer at a lower price likely will not close as that cash buyer can move onto another property much quicker. When a buyer cancels after their offer has been submitted to the bank, that short sale is cancelled and starts over again. So you don't want someone cancelling 3 months into a short sale - you'll have to start over.....

Work with your Broker / REALTOR, they will be an enormous benefit to you.

Best of luck,

Thom Colby
Broker / REALTOR
Orange County, CA
949-887-5500 Cell-OC
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Sun Dec 13, 2009
Good Morning John,
Think of selling your home and paying your mortgage off as two separate entities. Because they are. The bank cannot sell your home for you as long as you are on title. The contract to sell is between you and the buyer only. Your lender signs nothing for the sale of the property. They only provide what is called a benificiary statement or loan payoff. When you don't sell for as much as you owe your lender must reduce the amount you owe; send the statement to escrow so escrow can pay them off at the reduced amount. The banks don't consider the amount til you have an offer because they just don't have that much time to mess with it. Imagine if every owner sent in their short-sale amount guessing what the buyyer would pay? How many do you think would be off. Lots of wasted time for everyone.
It is Not a good idea to send additional offers to the bank. First of all you are right it is not fair to the first offer; but more importantly it begins the entire process over again! Many agents do not realize this til it happens to them. Also be sure you talk it over with your accountant and an attorney beofre you do a short sale.
Best of luck to you in your sale.
Connie Bramble
714-337-8718
0 votes Thank Flag Link Sun Dec 13, 2009
No you only want to work with one offer. Giving to many offers to the bank will hold up the process, this is why you review all the offers before sending the one to the bank. I would speak with your Realtor handling the transaction but me being certified by CDPE & PSC, sending multiple offers to the bank is not a great idea.

John & Sarena Villaescusa
Owner/Realtor/Broker
Keller Williams Realty
Cell: 562-818-2671
Email: Johnv@kw.com
Website: http://www.VGroupHomes.com
Web Reference: http://www.VGroupHomes.com
0 votes Thank Flag Link Sun Dec 13, 2009
John -

As I said in an earlier post, I have successfully completed more than 40 short sale transcations in the past 18 months as both a Listing Broker and as a Short Sale Negotiator for various other Brokers.

A short sale is an approval from the current lender or lenders to sell the property and release the loan(s) for "less than the amount owed".

The transaction works exectly the same as a standard sale except the bank has to approve the final "net amount" to them and it takes time for that approval. BoA/C-Wide is about 6 - 9 months, Chase/WaMu is about 6 months, Wells Fargo is 37 days. Some of the others are about 3 - 6 months. This will all change in April of next year.

If you are considering selling your property as a short sale, make sure you use a very experienced short sale Listing Broker. Again, take all the emotion of selling your home out of it - this is truly a business transaction. Listen to and take the advice of the Listing Broker you hire. In this market, it can sell quickly if priced appropriately.

Is this property in DP or CDM? Which bank is the lender? Is this an investment property or Primary Residence? Is this the property where you got the Loan Mod?

Thom Colby
Broker / REALTOR
Orange County CA
949-887-5500
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Sun Dec 13, 2009
Why not ask your Realtor--if you don't have one now is the time to interview a few agents and choosing the one you like best--short sales can become very involved and a knowledgeable Realtor will make your life much easier.
0 votes Thank Flag Link Sun Dec 13, 2009
Short sales are a different animal than a regular transaction. You still conduct the transaction as you would any regular sale of a home. The contract is between you and the buyer. You negotiate the terms of the contract and accept an offer just like you would any other offer. The buyer needs to be aware that they are involved in a short sale situation and that their offer is subject to bank approval. It is an accepted offer with a bank approval contingency.

The negotiating of the short sale is between you and the bank. It is not between you, the buyer and the bank. If the bank does not want to accept the offer before them, then they can reject it and the buyer would have the option of upping the ante to the banks approval.

keep in mind that the buyer is going to pay the fair market value of the home, not what you will need to satisfy your debt to the bank. The bank will only get what the home is currently worth.
0 votes Thank Flag Link Sun Dec 13, 2009
But to be fair with the bank shouldn't all offers be presented to the bank and let them chose?
0 votes Thank Flag Link Sun Dec 13, 2009
Why is it unfair to the original offer?

You're selling a home. Someone is buying it. Assume it's not a short sale. You accept an offer. Then another offer comes in. Well, that's life. You received an offer you considered acceptable, so you accepted it.

Shat's the difference in a short sale? You're selling a home. Someone makes an offer. You accept it. Then another offer comes in. The primary difference is that the sale is contingent upon the lender's approval.

The bank will decide what's "fair" from its standpoint--how much it's willing to lose.
0 votes Thank Flag Link Sun Dec 13, 2009
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Keep in mind that your contract is with the buyer. You need to go by the terms of that contract. You could accept another offer as a backup offer to the first offer. You need to make this clear to the second offer that they are a backup offer and that you are waiting for a response on the first offer. Should the bank reject the first offer and no counter offers are made, then the second offer is ready to be submitted to the bank. This could save you some time during this process by having another offer ready to go.

Be honest and open with all involved so that each party knows exactly where they stand. Do not play one against the other though. Good luck.
0 votes Thank Flag Link Sun Dec 13, 2009
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