Home Buying in 30096>Question Details

Aparna, Home Buyer in 30097

I have put an offer on a house that is listed in the MLS as a 'short sale opportunity'.

Asked by Aparna, 30097 Sun Feb 22, 2009

I have put an offer on a house that is listed in the MLS as a 'short sale opportunity'. The sellers agent wants us to sign special stipulations document and give earnest money of $1000 (the house is around 500k). Apparently we are told that the Bank/Lien holders can take anywhere from 30-60 days to approve. The listing will not be taken off the MLS and continue to receive backup offers (and $1000). Is this some sort of a scam? Please advise.

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I agree with the rest of these posts. It comes down to how experienced your realtor is and how patient you are. The rules that apply to normal listings don’t apply to a short sale. There is no guaranty that your offer will be accepted. If you plan on making an offer on a short sale please don’t get your heart set on that home you may find yourself discouraged. You have to have a realtor that understands the way a short sale works. If your realtor does not have the experiences then get another realtor.
0 votes Thank Flag Link Sat Feb 5, 2011
Really?? Did you make this offer without the help of a real estate broker? If the answer is yes, please go out and find one that understands the business!! If not, fire the one you have now!! Seriously, buying a short sale property is a completely different world, and not for those with a weak heart. Short sales can take MUCh longer than 30-60 days to approve -- more like six to eight months -- and even then, there are no guarantees it will close. If the listing broker has a clue, he should advertise "offers have been submitted" in the MLS, but, yes, backup offers can be taken up until the day of closing ... if that day ever comes. Julie Montgomery, RE/MAX Masters, Inc., Littleton, CO, http://www.littletonhomesrealty.com.
0 votes Thank Flag Link Sat Feb 5, 2011
No, this is how it works - in foreclosures and short sales, you play their game by their rules or you don't play. It's the ole risk/reward scenario. You can decline to sign stips and put up earnest money but your offer will simply be round filed. Yes, short sale is not for someone on a time line - like having sold your home and need to move straight into your next one - don't even go there. Short sales can take months and you still may not get the house.
0 votes Thank Flag Link Wed Jun 24, 2009
This is standard for a short Sale. Earnest money is placed in escrow so no one can touch it but it binds your contract. banks have always taken 30-60 days to get an answer because each case officer is overwhelmed, once the case is reviewd they then issue a BPO this then has to be resubmitted to the Ratio officers who decide if they will accept or counter.
The first offer has to be considered and given the chance to counter the counter. This is the frustration you have to go through to get the deal. Buyers agency is Free! So your agent should be handling this for you and following up with the case officer. If your agent is on the ball they should have communicated or presented an indepth market analysis that backs up your offer and gives the case officer something to help him/her get the offer approved. If you are just placing an offer without the homework you are at the mercy of the banks slow system.
Web Reference: http://www.TeamRenton.com
0 votes Thank Flag Link Mon Mar 16, 2009
Aparna -

I'm late to the dance but I echo what is being said - short sales are a nightmare and the agents handling them......I trust that you had an experienced buyer's agent...

They will keep it active, they will drag their feet, they will say one thing and do another and they will have no heartburn about it. You need to have the right mindset for chasing these homes, that's something the Obama administration could really improve! I blogged on this: http://www.trulia.com/blog/hank_miller_-_associate_broker/20…

Let me know if I can help -

Hank Miller, SRA, ABR
Associate Broker & Certified Appraiser
Prudential GA Realty
678-428-8276
0 votes Thank Flag Link Mon Mar 16, 2009
Aparna,

This sounds like a typical short sale.

Be prepared to wait more than 30-60 days. I would ask the listing agent if there is more than one mortgage on the property. If there are two mortgages then buckle up for a long ride. You may not get a response for 3-6 months.

I have been advising my buyers not to consider short sale properties unless they are being managed by smaller banks and only have one mortgage. This way the agent has a direct contact with the bank for quick answers, and you only have to deal with one resource. Most buyers back out of short sale deals because it's too difficult to keep waiting for confirmation when there are so many other properties available.
0 votes Thank Flag Link Mon Feb 23, 2009
Aparna,

Your question is a good one and one and one we have seen prviously on Trulia.

The sinerio you have desrcibed outlines a normal situation associated with "short sales." Since there may be contingencies related to the sale that need to be satisfied both the seller and the bank are reluctant to remove the property from the market until all contingencies have been satisfied.
0 votes Thank Flag Link Mon Feb 23, 2009
It is O.K. for the listing agent to ask for earnest money. In any real estate transaction all elements are negotiable. Since there will most likely be multiple offers, what I normally do regarding earnest money if I'm representing the buyer is make a special stipulation that earnest money would be presented at time of accepted offer, or that Selling Agent holds earnest money. Earnest money is used to show the seller you are a serious buyer so it's a good thing to show that you want to purchase. However, asking for earnest money (which is basically asking for a serious commitment to buy) without committing to any one buyer doesn't seem fair does it? Welcome to the world of short sales. If I'm the listing agent, I really don't want to hold earnest money from several buyers so I just ask for it due upon approved offer and the bank's acceptance contingency can be removed. Again, I hope you see the value in having an experienced agent represent you in a complicated transaction like a short sale. Let me know if i can help you in any other way.

Sincerely,
David Brower, Assistant Manager/Realtor
Crye-Leike Realtors
678-982-9600
david@davidwbrower.com



Thanks for your answer, David. Is it okay for the listing agent to ask us to give $1000 as earnest money, WITHOUT signing a binding agreement with a contingency. If they continue to receive backup offers, each paying $1000, at what point will this money be returned to everyone? Is it a common practice in short sales to do this? Shouldn't we be expected to pay the earnest money only after we have had a chance to inspect the house plus don't you think the seller's agent should give us some letter of acknowledgement for the earnest money?
Web Reference: http://www.davidwbrower.com
0 votes Thank Flag Link Mon Feb 23, 2009
Nope!

Not a scam. The bank's force the process to be this way. The agent is simply doing what is in the best interest of the client.
0 votes Thank Flag Link Mon Feb 23, 2009
Joshua Jarvis, Real Estate Pro in Duluth, GA
MVP'08
Contact
This is not a scam.. The bank will accept offers and yes, it may take some time for a reply to your offer. If you place a time limit on your offer, then you will be either be approved or your ernest money will be returned by the specified date.
0 votes Thank Flag Link Sun Feb 22, 2009
No scam, it's part of what makes buying a short sale difficult. Until an offer is accepted by the lender and the lender's "investor", all offers will be entertained - it could be 3 weeks or ????? Yes, until you withdraw your offer in writing, they can keep your earnest money and anyone else's who also makes an offer on the same property. If you are not already doing so I would suggest finding an experienced buyer agent to assist you. Most of the time buyer agents work on a commission split with the listing agent so it won't cost you to be represented but it could cost you ALOT if you try to make a purchase without representation.
0 votes Thank Flag Link Sun Feb 22, 2009
Thanks for your answer, David. Is it okay for the listing agent to ask us to give $1000 as earnest money, WITHOUT signing a binding agreement with a contingency. If they continue to receive backup offers, each paying $1000, at what point will this money be returned to everyone? Is it a common practice in short sales to do this? Shouldn't we be expected to pay the earnest money only after we have had a chance to inspect the house plus don't you think the seller's agent should give us some letter of acknowledgement for the earnest money?
0 votes Thank Flag Link Sun Feb 22, 2009
Short sales can be complicated. I have experience in negotiating short sales from both the listing side and from the buyer's side. At this point, I will assume you do not have an agent representing you since you hadn't mentioned your agent. So I must ask the question, "Why in the world would you enter into such a complicated and serious transaction without representation?" It costs you nothing to have an agent and your agent would be able to negotiate and navigate such a complicated procedure, especially a short sale.

As far as how a short sale works... listing agents are put in a complicated spot since the banks can take at least 30 days to respond but it seems like it's realistically more like 45-90 days to actually work out a short sale. I had one last year that took 9 months. Seriously! There is no rhyme or reason sometimes and it just depends on the individual bank holding the first and/or second mortgages. When a short sale offer is submitted with an agent, your agent would generally give a time frame to respond (which in short sales it could be 30-60 days) and a contingency that the offer is subject to lender approval. The seller would sign it and so would you and then you would technically have a "binding agreement" with a contingency. The status in MLS should then be changed to "pending-contingency". Most listing agents don't want to do that, however, because in reality that first person presenting the offer generally doesn't wait around long enough to get an answer from the bank and then the house has been basically "off market" even though it appears in the MLS as under contract. You probably wouldn't waste your time looking at a home that is pending in MLS and agents know that. Probably what was presented to the bank was an offer that was not signed not "bound" with a "binding agreement date" and just sent on to the bank to get the ball rolling for the short sale. Yes, in the meantime, better offers could come in and those offers would be presented as well. Being how complicated and how your interests are not going to be represented by the listing agent - he/she is working hard to help client avoid a foreclosure and get any deal done, not just yours. You should really really really get an agent to represent you. If you do but yours has no experience in dealing with short sales, you should ask him/her to get some help. If you have 45-90 days to wait, you could end up getting a good deal, but you must be patient. Good luck.

If I can help you in any way and you do not have an agency relationship with a broker, please give me a call.
David Brower
Crye-Leike Realtors, Assistant Manager/Realtor
678-982-9600
Web Reference: http://www.davidwbrower.com
0 votes Thank Flag Link Sun Feb 22, 2009
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