The Seller is not harmed if the buyer walks because at least the seller will find out if he qualifies for a short sale and what the "required price" will be.
I always recommend to a Short Seller NOT to require a deposit until/if we ever get short sale approval.
All the best,
There are several points that have been made here, but I have to say that while much of it is possible, that thankfully has not been my experience. While the decision to sell a home as a short sale is not an easy one for a homeowner, once they have made the decision they more often than not look to resolve the matter soon rather than later. If a homeowner is looking to drag out a foreclosure, they will not complicate their lives by listing the home for sale, the foreclosure can be forestalled in many ways without placing the home for sale, much less going through the paper work needed to keep the short sale going. I concede that obviously there are those that do it, but that truly is not the norm.
While I do realize that short sales can add to the home search time, it is also important that a buyer be as commited to the sale as a seller. If a buyer does not have an escrow deposit on hand, even if it is just a small deposit of $2000, then there truly is no contract. No consideration, no contact. A contract can be written with an initial small escrow deposit, with then the balance of the deposit being places once the short sale is approved. Baring that, then what holds a buyer to a contract? What keeps a buyer from going all over town signing contracts and then leaving sellers holding the bag once a short sale is approved.
1) Who is the actual owner of the 1st mortgage and 2nd mortgage and is there a PMI company involved and does the HOA/Condo Association also have to have their liens satisfied. Most likely SunTrust is a mere "middleman" servicer collecting the payments for the investor that owns the mortgage.
2) If the property is owner-occupied, is the owner going under the HAFA Short Sale program that will give them $3,000 cash at closing?
3) Is there a law firm respresenting the seller and who will pay the legal fees? Oftentimes this $3k charge will be passed on to a buyer.
4) If this is a rental property with tenants living there, some sellers may intentionally drag out the short sale to collect "free money" and likewise if they are occupying to stay living "rent free" for as long as possible. Also a rental property does not get the exemption from Federal Income Taxes for the "forgiveness" so a seller may change his mind once he consults with his tax advisor and decide to keep the property if he'll end up with a $30k tax liability.
Lastly, you may not want to put up an escrow deposit until/if the seller is approved for the short sale at a price you are willing to pay. The lender will do their own independent appraisal and you cannot get a "steal" on a short sale so don't let the asking price fool you!
Bottom line is you MUST continue to shop for a home until the day you receive the short sale approval. It could be as soon as a week or as long as 2 years. I actually have a closing next week and it has been over 2 years because the Seller would not agree to sign a promissory note for a $60k to repay the PMI company!
All the best,
Alma Rose Kee PA
Future Home Realty
There are several factors that go into answering your question, and the time frames, are not always driven by the lender, but also by the responsiveness of the seller and seller's agent. As an agent that works for buyers and sellers, I have found that delays can be caused by the banks, realtors, buyer and even sellers. When all involved parties are working together to get the needed documentation to the bank, the process can be shortened a great deal. The seller's agent also have to be maintaining constant contact with the lender(s) to ensure that there is nothing that falls through the cracks. Once initiated, I have found my turn around time to obtain short sale approval well within 45 days, so long as the bank gets the requested documentation. Now when it comes to 2nd lien holders, that may be a different story, and yet again that is just a matter of providing the needed items in a time manner. Yes, of course there are many horror stories, but overall my experience in the past 2 years has been more positive than before. Good luck with your home purchase.
RE/MAX Advance Realty
The seller must approve the purchase offer before it gets submitted to the bank. The bank may come back with a counteroffer or reject your offer completely. In some instances you may not even hear back from the bank at all. The bank typically is willing to work with the seller and buyer on short sales to help avoid foreclosure. The bank can ask the buyer to pay some of the liens or HOA fees. Some lenders will only pay up to a certain dollar amount and ask the buyer to pay the remainder or there is no deal.
Tammy Hayes, Realtor
Green Lion Realty, Port Charlotte, FL