www.themlshub.com - Greater Sacramento Area

Hello Rubby. The price is for the whole duplex and the property is a short sale that has an accepted offer that is contingent upon lender approval. There was a second duplex on the same street that came on the market the same day and is owned by the same person. It's also in active contingent status and my guess is the same buyer made offers on these two duplex properties. There is no guarantee that both short sales will be approved as they involve different lenders. The units are tenant occupied and can only be seen by appointment with the listing agent, which makes it a little bit more difficut to assess the condition. These duplex properties usually get multiple offers and don't stay on the market for long. While many of the units are sold individually as halfplexes, you usually can get a better deal if you can buy them as a duplex as the per unit cost will be lower than if you buy them individually as halfplexes. - Sat Jun 20 2009, 12:23

Hello Jg. While you can use the $8,000 tax credit to pay closing cost, buy down the interest rate or pay more than the minimum 3.5% down, it cannot be used to pay a portion of the minimum 3.5% down. If the buyer wishes to use the tax credit at the close of escrow, it has to be properly disclosed in the purchase agreement and it should be stated as a contingency making it clear that the offer is contingent upon the buyer qualifying for the first time buyer tax credit and being able to get a bridge loan. Lastly, you'll also have to remember that you can't get cash back at the closing. Thus, if the cost that can be covered by tax credit bridge loan is less than the tax credit, you can't get the excess at the close of escrow. In other words, the bridge loan cannot exceed the amount needed to cover the cost that can be covered by the tax credit bridge loan.

I can refer you to a loan agent who knows how to use the tax credit to pay for closing cost.

Best regards,
Ute Ferdig
916-751-1267
DRE License # 01326917 - Sat Jun 20 2009, 12:08

As far as I know the seasoning requirement is for FHA loans only and even that can be overcome with proper documentation, which you as the investor/seller may or may not want to provide. Not that I know everything, but I have not encountered a title seasoning requirement with conventional loans. It would be helpful if you could describe your experience with that. I am always interested to learn new thing as the financial market seems to be a moving target and they constantly seem to change their requirements. . - Wed Jun 17 2009, 02:32

Hi Matacook. I don't have any personal experience with Sun Trust. The thing about reporting experience with a particular company is that the experience someone had a few months ago with a particular company may no longer apply because companies seem to change ownership constantly and what may have been the case yesterday, will not apply tomorrow. Countrywide and National City are just two of the most recent examples.

Obviously, if you have more than one offer and the short sale approval happens to state the buyer's name, you'll work with that buyer, provided that buyer is still in the running. Each bank is a little bit different and no matter how hard we try to figure out a one size fits all formula, we won't find it. I have seen a lot of short sale approval letters from other agents as those are always exciting news and I always like to see them to see how they are written and we like to discuss them and learn from each other. You don't necessarily have to be the short sale listing agent to have seen short sale approval letters.

There are a lot of theoretical discussions and different interpretations of the short sale addendum and I have had discussions with a C.A.R, attorney about it as I got tired of hearing different interpretations that simply did not make any sense. In the end, all we have are opinions by some legal scholars. Until there is legal precedence, we don't know for sure how the courts might interpret different parts of the short sale addendum. I think most of us try very hard to stay out of court. If you are in doubt about something, I'd highly recommend you talk to your broker and/or the C.A.R. legal hotline. The opinion of other agents may be entertaining, but I'd rather discuss legal issues with another attorney. - Mon Jun 15 2009, 11:19

Hello Matacook. Theoretically, your sellers are in a legally binding contract with the buyers. However, the contract is contingent upon bank approval by a certain date and there is of course no guarantee that the bank will approve the short sale without the need to amend the this contract. Many times, the bank will approve a short sale, but the approval will require modification of at least one or more terms of the contract to close escrow. Since your seller has already entered into a contract with this buyer, any subsequent offers can only be backup offers at this time.

Since your client already accepted the offer and you presumably delivered acceptance to the buyer (through the agent), you probably will have to change the MLS status to reflect that there is now an accepted offer that's awaiting bank approval. Unless this property is super unique and desirable, the showing activity will probably decrease as agents usually are not showing properties that are in active contigent status unless there's some compelling reason.

Let's assume, for the sake of argument, you do get a higher offer and your seller accepts the offer as a backup offer and you do send the backup offer to the bank. Let's further assume, the bank approves a short sale that essentially amounts to an approval of the back up offer. The bank approval does not automatically mean that the first buyer is out of the running. Please keep in mind, banks do not accept offers in short sales as they are not the owners. They only approve short sales, which is different from accepting an offer. If the first buyer who submitted the lower offer that was accepted by the seller is still interested and would like improve the offer, there is nothing that stops you from allowing the first buyer to write up an addendum to match the terms that are dictated by the short sale approval letter.

Short sale approval letters do not contain buyer names and they are really not offer specific. They will state the minimum amount of money the bank will accept and an expiration date of the short sale approval as well as the maximum commission to be paid. Many times, it takes some number crunching to determine what the bank actually approved. For instance, if the buyer asked for a buyer credit, the short sale approval letter will many times not specify if a buyer credit was approved. You'll most likely have to look at the approval letter and the HUD 1 to determine whether there's is any money left for a buyer credit.

What the bank approves may or may not match the terms of one of the offers that were submitted to the bank. It should also be noted that, while the bank dictates what it is willing to approve, the bank usually does not require the seller to accept a later offer without giving the first buyer an opportunity to match the bank's approval terms. Due to some unpleasant experience in the past, I now write up my short sale offers differently to protect my buyers and I always ask how the short sale listing agent handles subsequent offers. Not all agents handle short sale offers the same way and I don't really care how they handle them as long as they don't mislead me. In the end, I think you'll have to educate your seller about the options and let your seller make the decision and many times your seller's decision will depend on how the bank wants subsequent offers handled. Good luck with this short sale. - Sun Jun 14 2009, 23:01

While it was common in the past that the banks paid closing costs because they usually pick the title company, in multiple offer situations, it is more likely than not these days that the buyer will have to pay some closing costs. In the big scheme of things, an extra $2,000 is not worth walking away from a transaction. Don't get hung up on who pays for the closing cost. It's really funny these days as I see buyers who get their offers accepted wonder if they bid too high. They wonder why nobody else bid higher. It's the not knowing what the offering prices of the other offers were that seems to make buyers worry about having overpaid. Unless there is another reason why you have second thoughts, I would not cancel the contract over $2,000. - Sun Jun 14 2009, 21:30