Property Q&A in Lake Forest>Question Details

Margie, Other/Just Looking in Lake Forest, CA

This home didn't seem to be on the short sale list for very long like maybe only about a week or so.

Asked by Margie, Lake Forest, CA Thu Jan 15, 2009

Could someone have snatched it up that quickly? Are properties selling better as short sales now that banks find themselves holding more paper? Anyway, what is the current status of this property in Lake Forest?

http://www.trulia.com/property/1072256877-25252-Clemens-Ln-L…

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It's amazing how many different answers you can get - some of which are highly speculative. As Cynthia stated, when a property first goes into escrow, it is usually plugged into the MLS as a B status - considering backup offers. Once all contingencies are removed - typically a 17 day period in a CAR Realtor's contract, but frequently different on a lender's forms - then the listing will usually go into a P status, indicating a pending sale - pretty sure of closing.
If the agent was prepared, with the paperwork, as an agent who does a lot of short sales should be, much of the work with a lender can be done either before listing the property, or soon thereafter. If everything has lined up properly, this property could indeed have jumped through most of the short sale lender hoops, and could conceivably be getting close to closing. Faster than most, but definitely possible.
Whether this house would actually be open to not only receiving a backup offer, but even accepting a higher bid, is questionable. One problem with short sales - for a buyer - is you don't usually know how deep the process has gone, so you sometimes can lose out to a higher bidder, late in the process. I have personally been on both sides of that coin. That's a good reason to focus on properties that are already owned by the bank, rather than "hope" yours is the eventual "winner" out of multiple "buyers" in a short sale scenario.
That's just my preference. Sorry if this adds to the confusion, rather than clarifying.
Web Reference: http://BobPhillips.net
1 vote Thank Flag Link Thu Jan 15, 2009
Hi Margie -

The property you asked about is "Pending" (see below) but the Agent Remarks state "Back-up Offers".


To help clarify some of the confusion about "status" in the MLS, the definitions below are taken directly from the MLS Rules and Regulations by which all Realtors, Agents and Brokers must adhere as subscribers to the MLS. Also, statuses must be changed to Back-up or Pending within 48 hours of a contract signed by both parties (buyer and seller).

On-Market Statuses

Active (A): A valid listing contract exists and no offer (with or without contingencies) has been accepted. This is an On-Market status.

Back-Up (B): Offer accepted and either 1) Seller requests that property remain in an On-Market status and is looking for back-up offers, or 2) the sale is subject to court or other third party approval. This is an On-Market status.

Hold (H): A valid listing contract is in effect, however, because of various reasons such as repairs, illness, guests, etc., the Seller has requested that temporarily there be no showings. This is an On-Market status.

Off-Market Statuses

Withdrawn (W): A valid listing contract is in effect, however the property is no longer being marketed.

Pending (P): The Seller has accepted an offer and is not soliciting offers through the MLS. This is an Off-Market status.

Canceled (C): The listing agreement has been canceled. This is an Off-Market status.

Expired (X): The listing agreement has expired. The time frame of the existing listing contract has run out. This is an Off-Market status.

Sold (S): Escrow has closed. This is an Off-Market status.

Leased (L): The property has been leased. This is an Off-Market status.

I hope this helps to understand how the different statuses are defined.

Best,

Thom Colby
Broker & Realtor
Orange County CA
2008 Chair MLS Committee - PWR
2008 SoCal MLS Board of Directors
2009 PWR Board of Directors
2009 SoCal MLS Board of Directors
Web Reference: http://www.thomcolby.com
2 votes Thank Flag Link Thu Jan 15, 2009
Hello Margie ...

That home at 25252 Clemens, Lake Forest, is now listed as PENDING, which means it is being purchased, and now under contract, and possibly in escrow waiting for funding.

Harrison K. Long, Explore Group Properties, Coldwell Banker Previews, Irvine, CA.

For a great home and property search check out
0 votes Thank Flag Link Mon Jan 19, 2009
Margie -

In answer to your most recent question regarding unpaid taxes and / or HOA those items will get paid through escrow at closing from the sellers funds by way of a reduction in the payoff to the lender. Remember the seller is "broke" when doing a short sale or the bank would not allow it. Sometimes the HOA fees may be a little higher than what was originally estimated and eventually approved by the lenders but a good Short Sale Listing Agent will know to go to the HOA and request a short payoff of their fees too. "Something is better than Nothing" for the HOA.

I currently have 16 Short Sales in-process and although it can be frustrating to everyone; Buyer & Buyer's Agent / Seller & Seller's Agent, Escrow Officer, HOA and everyone else at the end of the day the buyer gets a GREAT deal. Most importantly, when the two agents work together, the outcome is wonderful.

As Jacqueline said earlier sometimes appliances "go missing" but if the Listing Agent has a good rapport with the Seller they can keep them level-headed and make sure the appliances stay. Sometimes sellers will exclude the appliances but truly want to sell the appliances on their own rather than take them to get more cash in their pocket. The buyer of the property could also be the buyer of the appliances directly with the seller and that has nothing to do with the agents or the Real Estate transaction.

As Bob also said, REO escrows are shorter - that's true, BUT, you may not end up with the house becasue the bank may switch and accept another offer when you think you've gotten the house. The one thing about a short sale that's true, the buyer wants you to stay in the deal and you actually have a signed agreement with the actual seller (the bank is not the seller in a short sale).

Best of luck,

Thom Colby
Broker & Reator
Orange County, CA
http://www.1800sellnow.com
1-800-SELL NOW
949-887-5500 Cell-OC
Web Reference: http://www.thomcolby.com
0 votes Thank Flag Link Sat Jan 17, 2009
Hi Margie, Yes, it does seems as though there are a lot of answers. Most of the stumbling blocks that create delays in a short-sale transaction are actually the fault of the lender, or lenders - if there is more than one mortgage on the property. They usually all have to be negotiated with, in spite of the fact that, in most cases these days, the value of the house is lower than the amount of just the first, or primary loan.

When there are additional loans on the property, most of these - not all - are going to be "wiped out" as a result of the short sale. Even so, the holders of said loans need to be part of the process, to acknowledge that their loan is either being substantially reduced, or wiped out completely.

In addition, most of the primary loan holders are still ill equipped to effectively process the Tsunami of loans that they are being forced to deal with. In many cases, the right hand ( the people your agent is negotiating with to accept a lower payoff.) doesn't know what the left hand ( the people in a separate department, who are processing the actual foreclosure.) is doing. In at least 50% of cases a property that was TRYING to get a short sale, actually eventually becomes foreclosed, instead.

The property then usually becomes an REO - a lender repossession, except in rare cases where it was actually bought by a third party - either a secondary lien holder, or an actual cash buyer - at the court house auction. An REO is much simpler to buy and usually has a considerably shorter escrow than a short sale listing.

I hope this hasn't confused you even further. Call me or email me if you have further questions. Thanks for your time.
Web Reference: http://BobPhillips.net
0 votes Thank Flag Link Sat Jan 17, 2009
There are many challenges with a short sales so it is crucial that you work with an agent who knows how to navigate you through the process. Finding the home is usually the easiest part:-) I have seen appliances removed right before closing....all appliances, including the dishwasher and the built in microwave. Keys are taken from the key box and the Seller has no spare keys. In one home I was working on, we discovered a government lien had been filed on the property....a large, student loan lien of $125k. Government liens often take first position, so we had to renegotiate the sale with the primary lender. Short sales are definitely not the easiest of sales to finalize, but you can great a deal if you are willing to stick with it and work through the issues that come up.
0 votes Thank Flag Link Sat Jan 17, 2009
It's amazing how there could be so many outcome options to such simple phrasing as "pending sale." I appreciate all the answers I received. I wonder if there are other factors involved such as unpaid HOA and tax bills to consider in the equation. Could these be stumbling blocks in short sales? I would think the seller would be responsible to cover these obligations at closing, right?
0 votes Thank Flag Link Sat Jan 17, 2009
The best deals are always snatched up quickly. I don't know if this is a good deal or not but I know I had to bid on about 7 different properties before I got my last offer accepted recently.

It is unusual for a bank to respond this quickly however. Probably multiple offers is my guess.
0 votes Thank Flag Link Thu Jan 15, 2009
This property has tenants and was being shown by appointment only so what most likely happened is that the agent noted it as "Pending" as soon as the first offer came in. Currently, the banks will not review a short sale application until an offer is presented along with the Sellers finanancial information. That standard may or may not change depending upon the outcome of the FNMA tests which may allow the banks to pre-approve a Seller's short sale status before an offer is presented.

The home was being offered for sale at $397k and, according to the pricing history, dropped to $205k the same day the property went into escrow. Again, what most likely happened is the Seller received a lowball offer and is using that offer to determine qualification for the short sale.

Finally, the property is incorrectly coded as "Pending" because the agent remarks (only viewable by mls members) state that the Seller is accepting back up offers, so status should be noted as "Backup Offers".

Hope that helps!
0 votes Thank Flag Link Thu Jan 15, 2009
They don't always use "back up' for status unless they feel they don't have a good solid offer...or they just want to be sure if anything happens to the deal, that they have a ready, willing and able buyer lined up to purchase the property. With any sale, if you have a cash offer, there's not much that can go wrong, because there isn't any financing involved and it's usually a quick escrow. These contracts are generally put right into pending status. We have an agent in our office who strictly works REO's and as soon as the bank signs an offer, she immediately put's it into 'pending'. If the deal falls apart, she just changes the status back to 'active'. Most of her listings are in 'pending' status within 3-4 days. The bank owned properties don't stay on the market long at all. If you're interested in purchasing a bank owned property and would like to receive the listings as soon as they hit the market, send me an email to: cfleming@coldwellbanker.com; and I'll set you up to get the listings.
0 votes Thank Flag Link Thu Jan 15, 2009
Hi Bob

How come it doesn't say back up offers accepted? I thought even when a sale was pending, they left it in some status like back up offers accepted rather than just removing it from the MLS?
0 votes Thank Flag Link Thu Jan 15, 2009
The house shows as a Pending sale in the MLS. It was priced at $205k. The sellers bought it in 9/05 for $459k.
To answer your question about selling quickly, houses under $500k are selling quickly, whether as a short sale, or as a lender REO. In addition to selling quickly, there are usually multiple offers, and it is not unusual - in South Orange County, anyway, for such a property to close escrow at a higher than list price.
This house was listed on 12/3 and went into escrow on 12/30. It will probably close escrow by March 1st, and for a price higher than $205k. ( Short sales typically take a lot longer to guide through escrow.) In addition, the majority of short sales have 5 to 10 prospective buyers "thinking" they are the successful bidder, only to be surprised 2 weeks, or 2 months later, that someone else either outbid them, or out-qualified them.
Lender repossessions ( REO's.) are a much better way to go, in that decisions are usually made in hours or a few days, at most, rather than weeks - or months, like most short sales. If you would like some Realtor assistance to help you look for, locate, and make a successful offer on a lender repo, my 32+ years of local experience will likely serve you well. I can be reached at 949-643-2100. Good luck in your search.
Web Reference: http://BobPhillips.net
0 votes Thank Flag Link Thu Jan 15, 2009
I don't think it sold. It was just taken off the market. I'm wondering if we might see more short sales come off the market and the owner's filing bankruptcy. It's pretty likely that judges will be able to modify primary residence loans in bankruptcy court. I'm pretty sure that we'd be doing the bk file right now if we were in that position.
0 votes Thank Flag Link Thu Jan 15, 2009
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