Home Buying in 85203>Question Details

Robert, Home Buyer in Mesa, AZ

Do I have any protected rights as a buyer of a short-sale property? No is not an answer anymore.

Asked by Robert, Mesa, AZ Fri Oct 3, 2008

My wife and I found a house and put a bid on it immediately before anyone else. We have a conventional loan, put down 20%,said we would cover the closing costs, and wrote a good faith check for $2000. The house is $145000 and we made an offer of $141000 so we could have room to negotiate,and set the contract to expire three days after we sent it in. Now its the third day and we didnt hear from the sellers realtor and our realtor had to press to get a response with the realtor; the sellers realtor wouldnt have even responded to our offer if my realtor didnt keep trying to get in touch with her. She says they (the sellers) are waiting until this Monday to make a decision and I can't help but feel like Im getting jerked around. My question is do I have any rights as a buyer or even as one that made the first offer? Shouldn't the sellers realtor have at least been polite and responded? Im really tired of not being respected when I've done everything to show im a good and responsible buyer.

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Robert,

YES you do have rights regarding short sales.

You have the right to stay away from short sales. Most short sale properties are not handled/managed properly, which allows for situations like yours.

Also, you were the one that gave the seller's the expiration date. If the seller's don't respond in time, then you have your answer and you can either move on to another property or have patience and try to work with the sellers. Short sales require an extended amount of time, and unlimited amount of patience and understanding -- it's not your normal real estate purchase. So, stop trying to treat it as such.

And, once again, YES you do have rights regarding short sales. You have the right to stay away from short sales. Most short sale properties are not handled/managed properly, which allows for situations like yours.

---
PAUL WELDEN, PLLC
Exclusive Buyer's Agent Realtor®
HomeSmart Realty
480.241.0081
2 votes Thank Flag Link Thu Apr 28, 2011
Robert, There is much to learn about Short Sales and I'm sorry it sounds like your agent hasn't explained much about the process. Have them first pull a tax record to see if the home is scheduled for foreclosure. Next have them find out if there are more than one lien against the property. Third and most important have them give you a competitive analysis on the list price of the property. Is it even in the ballpark or is the listing agent just trying to stop a looming foreclosure by presenting an offer to the Servicing Bank? Remember it is not a Bank or Lender you are dealing with as the final decision maker, it is an Investor who may take several months. It is generally in their interest to close on a short sale rather than have a property go into foreclosure. Make sure the listing agent knows what they are doing and if not, I think you should move on to another property. Good luck!
1 vote Thank Flag Link Thu Apr 28, 2011
Dear Robert,

You made and offer to the seller but the contract should be approved by the lender. You don't have any advantage as a one that made the first offer, the bank will pick the best one. Nothing depends on the seller's agent, he is waiting for the lender’s respond too. Sometimes seller's agent calls 10 times per day to the lender and there is not response. Your agent should have told you that some times could take a year to close a short sale or sometimes it does not close at all. The bureaucrat in the bank does not care that you are responsible buyer, sometimes they have like 100 short sales on their desk, so be patient and don't blame the seller's agent, 95% of the time it is not theirs fault.

Good luck!

Viktor Taushanov
Realtor
Coldwell Banker Residantial Brokerage
972-758-2045 Direct Line
214-697-6797 Cell
http://www.planorealty.blogspot.com
viktor.taushanov@cbdfw.com
1 vote Thank Flag Link Sat Oct 4, 2008
Robert,

MAking offers on Short sales are very frustrating! As an agent we do our best to communicate to buyers that it can be months before the bank gives an answer on an offer. Hopefully the agent will submit the strongest offer to the bank not necessaryily the highest.

The bank gives us nothing in writing in most cases and lets us know if they will accept an offer or if we need to increase the offer several weeks down the road.
The good thing is you will probably get a great deal if you can wait several days or months! Many buyers drop off and look for other homes. I would say keep looking and make other offers on homes you like and cancel the other offers once one is accepted.

Difficult I understand but true! Feel free to contact me if you have any questions!
1 vote Thank Flag Link Sat Oct 4, 2008
Hi Robert,

The only rights you have when submitting an offer is to either withdraw the offer or to extend your offer's expiration date. Other than that, you have no rights until an offer has been accepted. If your offer was not accepted, then you have the right to move on to another property. Usually there are multiple offers on short sales, because they are priced so cheaply ... so cheaply in fact that most lenders won't approve offers at or below the list price, or the price get's bid up b/c of multiple offers.

Short sales are very difficult. In fact about 90% of short sales never end up with a closed transaction. Even if your offer gets accepted by the sellers on a short sale, it's still contingent upon the sellers lenders to accept it. Most short sales that do end up closing, they usually have a final sales price of 90%-100% of the market value. So, don't expect to get a "steal of a deal" on most short sales.

Unless you have found your perfect home and it's a short sale, you are better off buying directly from a bank or from a private seller who is not in foreclosure. I welcome you to visit my site for more information on short sales & how to find the foreclosures that are actually for sale.

---
PAUL WELDEN
Buyer's Agent REALTOR
HomeSmart Real Estate
1 vote Thank Flag Link Sat Oct 4, 2008
Robert,

We are sorry about this most difficult experience.

First, regarding your rights as a buyer until you have an accepted offer there aren't many BUT when you assign a deadline to you written offer(3 days to respond),........this is a right. If they do not respond, your right is to move on, with no consequences and explore other opportunities. At this point your deal is DONE.

Let's look at this complete sinerio, the seller is caught between someone they want to sell their property to and the bank that holds the loan. Keep in mind that for a "short sale" the seller is requesting the bank to accept less money than it is owed for the property...the bank will probably lose thousands if they agree. They may take weeks to get back to the seller about the status of your request....banks don't care about any deadlind except their own.

Knowing that only 10% of short sale offers are accepted is pretty discouraging and coupled with the kind of experience you are having is the reason why many agents are electing not to work with short sales and why some buyers are electing to pursue "foreclosures" instead, where most of the problems have been worked out and the property ownership is in the hands of the bank.

Short sales are a tough roar but you do have options.

Best wishes,
The "Eckler Team"
1 vote Thank Flag Link Sat Oct 4, 2008
I have a question in regards to your question. Why are you bidding on a short sale? Short sales take months to get a response. Go after a foreclosure.
0 votes Thank Flag Link Tue Jul 19, 2011
Robert .... you answered your own question in your question. Except no is not only an answer, it is THE answer.

Your only protected right is the right to walk away from the offer and find another home. If you give a three-day response period, the seller can take that full amount ... or longer, if they believe you will not walk away from your offer after that timeframe has expired. (Going past the response period makes the offer voidable but not necessarily void, as your agent should have explained.)

Also keep in mind, with a short sale, the bank easily can come back and ask for a higher sales price. The list price on a short sale means nothing - something else of which your agent ought to have advised you.

Good luck.
0 votes Thank Flag Link Fri Apr 29, 2011
Robert, short sales are anything but short. They are frustrating and emotional for the sellers, and often the buyers as well.

Here is one example (all short sales are different).
A seller list their home for market value or below market value.
The listing agent markets that home to get the highest and best offer. Often they may want to wait 7-10 days to prove to the seller's lender that they marketed the house fully.
Buyer(s) submit offers to the seller and the seller accepts an offer contingent upon the banks approval (if you use short sale addendum you may have a better understanding of the details).
Then the listing agent submits the offer along with all the other documentation the seller. This includes the seller proving hardship, bank statements, check stubs, assets and liabilities, from the seller ..etc.
Then the seller's lender order's a BPO (broker price opinion) This independent third party broker will give their opinion of the value of the house.
The seller's lender now reviews the entire package and makes a request of their investors to determine if it makes financial sense to the lender to short sale or to foreclose.
Now if there is a second, third or other liens, they too have to decide how much they want to forgive of the debt and the first decides if they will give them anything.
If the seller's lender determines the offer is too low for the market or the numbers the seller's lender wants they will verbally tell the negotiator we want X$. You will either have the choice to meet that, counter it or walk.
In the meantime if a better offer comes in, or the bank decides to foreclose you're out.
If they do accept your offer they will ask you to close in 30 days or less. If your appraisal comes in lower then there will be a problem with the bank. If you discover repairs, more problems with the bank.
This can take months.
The communication throughout this is very limited, a good listing agent will give a weekly update, usually something like, we haven't heard anything. But most don't. If they don't communicate they don't have any word, they have a huge inventory or perhaps your agent is bugging them and they're ticked off.
So, are you ready to stay in the game? If not, bow out and let another buyer deal with it. Otherwise, be prepared to wait, and wait. And don't get attached to the outcome, no one knows what the seller's bank will do.

Good luck in getting your home.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Thu Apr 28, 2011
SImply no... your agent should have pout a clause in that the buyer requests an answer from the seller within 24 hours or this offer is void. In a short sale the seller doesnt really have a say anyway, it is up to the banks as to what they will accept and what they wont, the seller does not get anymore money, your offer actually sounds very fair. the selling agent could be holding out for an inhouse offer so they dont have to share the commission. have someone call and enquire... you will find out some answers real fast. with a short sale you should note that most banks take 3 to 6 months to make an answer. you need to ask if the seller has received approval to do a short sale finacially and if the bank has done their appraisal yet, this is at least 3 months worth of waiting time. good luck in working it out, i would move on to a non short sale property unless you have the time and the patience that is needed with a short sale.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Sat Oct 4, 2008
Robert,

Unfortunately your only real right is to specify a deadline for a response. If the don't response by then the contract can be canceled. Although I agree with you in the fact that the communication with the seller's Realtor should have been better.

Discuss the timelines with your agent. On a short sale you will have to wait up to 2 or 3 months to get a response from the bank - which is very common for them to counter-offer with a higher price, even if your offer was full price (or over full price).

In most cases dealing with short sales is not worth it, most people are better off dealing with foreclosures or independent sellers.

Good luck!
0 votes Thank Flag Link Sat Oct 4, 2008
Robert
It sounds to me as though you might have an agent that has not had a lot of experience in short sales.
At least in my area, you need to give them 30 days, not three, to respond. Lenders are overwhelmed with work and they simply cannot respond in three days to anything.

If you want this house then your goal is to :
find out from the listing agent how much experience they have had with short sales
find out what the expected timelines are
find out what the lender would like, and anticipate their needs
When you submit an offer it should be complete, get the lender addendum, proof of your deposit funds for down payment, making it clear that you are serious.

Can you close in thirty days?
Did you already inspect the property? They may say "as is" but YOU don't want to buy without knowing what it needs.

Good luck
0 votes Thank Flag Link Sat Oct 4, 2008
Keith Sorem, Real Estate Pro in Glendale, CA
MVP'08
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