Foreclosure in Chicago>Question Details

Vera Banks, Home Seller in Chicago, IL

can a buyer buy property in a short sale without the seller's signature and would the seller be responsible?

Asked by Vera Banks, Chicago, IL Fri Jan 25, 2008

Help the community by answering this question:


I disagree. If he property is already in foreclosure status, Seller has nothing to do with sale. If in pre-foreclosure then letter is written to lender that home will go up for sale thru Realtor and they must agree upon price and commission in writing and Lender approves or disappoves any offers & terms.

Ultimately bank decides how to move forward when in default.

When you are dealing with a short sale you negotiate ONLY with the Lender. Their approval depends on offer you make and they do not take "low ball" offers. They want to collect at or "near" what is owed on the property to avoid more of a loss in court and will accept "highest and best" only. Meaning that the offer must be close to what they are asking and collateral must be credit ready or cash. Also, you need an attorney that specializes on REO's, as they know exactly how to handle these types of purchases and what to do.

To learn more about making an offer on bank owned reo's, read more on my website "Placing a Bid on Short Sale/REO Property"
3 votes Thank Flag Link Sat Mar 15, 2008
My apologies, I was referring to REO!
2 votes Thank Flag Link Tue Mar 18, 2008
Hi Christine.
That makes sense..... Yes, once the bank is the legal owner, the prior owner has nothing to do w/ it.
1 vote Thank Flag Link Tue Mar 18, 2008
Deborah Madey, Real Estate Pro in Brick, NJ
Hello Vera,

I agree completely w/ Gary and concur w/ him that Christine is entirely and completely incorrect.

For as long as the seller is the legal title holder, only the seller, or his/her appointed Power of Attorney or Guardian can sell his/her property. In a short sale, a lender must approve the sale, since the lender will be accepting an amount less than the full amount.

A lender can sell an REO which the bank owns after a foreclosure action is completed.

In a short sale, the seller is still liable for the loan and still has rights to the property.
1 vote Thank Flag Link Tue Mar 18, 2008
Deborah Madey, Real Estate Pro in Brick, NJ

What about the "Right of Redemption"? A property is owned by the "OWNER" until the gavel swings. How can you say that the "Seller has nothing to do with sale" (which is wrong on multiple levels)

The fact is that the Bank could agree to the sale and every one could be moving forward and the seller can, for no good reason, change his/her mind and the deal is done.

I am also NOT an attorney, and I didn't even sleep at a Holliday Inn Express last night, but I can read the law and I do use common sense and your statements are blissfully incorrect.

The Answer to the actual question posed is NO, a house cannot be sold without the sellers consent/signature. That is why he is called the “SELLER”. It can be taken in a foreclosure action which means it is surrendered to the lender, but not sold without the sellers consent. Some of the answers here astound me.

Good luck and let us know how it turns out.

Gary De Pury
Bay Vista Realty & Investments, Inc.
Director, Florida Association of REALTORS®
Chairman, Communications Committee
1 vote Thank Flag Link Tue Mar 18, 2008
While short sales do involve the Golden Rule (he who has the gold, makes the rules). The bank in a short sale may have the gold and for certain makes the rules (at least they are the ones who decide how short they will allow the property to sell for) they still do not own the home (yet). Most of the time the foreclosure process has begun but that is a long way from the banking having ownership. The home is still owned by the Seller and the contract still needs to be between the Buyer and the Seller. Without the Seller's signature, you do not have a contract, regardless if the bank will allow it to be sold short or not.
1 vote Thank Flag Link Fri Jan 25, 2008
Seller is responsible to sign however the financial institution must give the OK.
0 votes Thank Flag Link Tue Mar 18, 2008
You are welcome everyone!!! ;-)
0 votes Thank Flag Link Tue Mar 18, 2008
I'm not a lawyer, so this isn't legal advice. However....

A short sale occurs while the "original" buyer is still the owner, prior to the bank taking ownership. As such, a short sale is a transaction between a buyer and the homeowner who is in default. The lender's involvement is the same as a contingency is when purchasing. That is, a purchase may be contingent on an acceptable home inspection...upon approval of investing partners (a common contingency among real estate investors...upon obtaining financing...OR upon approval of a third part (the lender).

Only after the lender becomes the owner of the property--after the foreclosure--does the buyer purchase the house from the bank.

In all cases, the owner (whether it's the person in financial difficulty in a short sale or the lender when the property is REO) must consent to selling the property.

And in real estate transactions, for a transaction to be binding it must be in writing. (Technically, and again I'm not a lawyer, a real estate transaction can be "legal" but not binding.)

Further, in short sales, one of the documents presented to the lender is a sales contract between seller and buyer. (It is possible for the lender to agree to an amount prior to the sale, but a short SALE can't be transacted without a sales contract.)

So, to answer your specific question, a buyer cannnot buy a property in a short sale without the seller's signature.

Not legal advice; for legal advice, consult a good real estate attorney.

Hope that helps.
0 votes Thank Flag Link Tue Mar 18, 2008
Don Tepper, Real Estate Pro in Burke, VA
Vera, no one can force you to sell your home in a short sale.
That said, IF the bank sues you to foreclose on the mortgage, AND the judge gives them an order of foreclosure, a buyer can purchase the property from the bank with or without your consent, AND if you owe more than the bank sells the property, yes the seller (you) could still be responsible for the balance (a/k/a the defficiency)
0 votes Thank Flag Link Tue Mar 18, 2008
I could be wrong, but I believe that the seller has to sign the purchase contract as long as the property is still owned by them. Even though they are in default, and the lender has the final say if they will or will not accept a short sale, the homeowner still has to sign the contract.

In Arizona, when doing a short sale, even if the homeowner has multiple offers, they must choose the best one and sign it to send in with the short sale packet. Without the homowners cooperation, I cannot see how you could make an offer to the bank because you would need their financials, a hardship letter, paycheck stubs, tax returns build the short sale packet. Plus, the homeowner has to accept the fact that they might have a deficiency judgement against them, as well as a tax concequence for the discounted amount. Lastly, they have to sign at closing which I am sure they would not if you tried to go around them!!!

Maybe you are getting an REO (Real Estate Owned) confused with a short sale? With an REO, you could just go make offers to the bank, because the bank is the actual owner of the property. I hope this answer helps!

In Arizona, buys dozens of foreclosures and short sales every month. We are Arizona's #1 Cash For Houses websites specializing in creating custom solutions to Arizona's housing problem.

0 votes Thank Flag Link Mon Mar 17, 2008
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