Short Sale... Help!

Asked by Gina, Spanaway, WA Wed Feb 6, 2008

4 weeks ago we put an offer on a home that we originally thougth was a REO home. A couple weeks later we were told that it is a Short Sale. Either way we have not heard anything re: our offer. I was told by the listing agent that a Loss Mitigation Officer has been assigned a few weeks ago, what does that mean? How much longer will this take. I don't want to lose out on another home only to find out this one will be sold to someone else? Also, will they tell you if there is more than one offer on a home? As far as I know we are the only offer???

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11
Jeffrey Kropp, Agent, Chicago, IL
Wed Feb 6, 2008
The first question I have is how you did not know it was a short sale? If you don't have a buyer agent helping you out you should seem some local advice. This process will take a while, and you will not know if there are other offers or even if yours was first, unless of course you make friendly with someone in the process and they reveal it. There is no time limit on how long it could take. Basically the bank has regularly scheduled meetings to decide whether to accept offers less than what they are owed. A committee decides along with Loss Mitigation Officer. Hopefully, the listing agent for this home has a strong history of selling distressed homes and a relationship with the bank, otherwise your chances of the bank allowing a short sale are less. Hang in there and you may get a good deal. I hope this helps.
2 votes
Charita King…, , Downey, CA
Wed Feb 25, 2009
Gina,

I suggest you place more offers out there on different properties. For this particular offer, your agent should be able to get some kind of information on what the status of your offer. Don't be surprised if there are multiple offers on the table because it usually does if the property is priced and shows well. Have your agent contact the listing agent to find out. Again, don't be afraid to look for more and place more offers out there.

Charita King
Century 21 My Real Estate Co.
562-276-8681
0 votes
Janet and Mi…, Agent, Collegeville, PA
Wed Feb 25, 2009
short sales can take some time and they do not have to tell you if there is another offer on the table. my experience is that there is usually more then one offer on a short sale. as far as waiting to get an answer it could be as little as 30 day and can take up to 4 months to get an answer, hope this helps.
0 votes
SeattleHome.…, Agent, Seattle, WA
Wed Feb 25, 2009
Unfortunately, the bank can take as long as they need to respond. They own the largest financial interest in the home. You need representation on your side to keep in contact with the correct people at the bank.
0 votes
The Hagley G…, Agent, Pleasanton, CA
Sat Feb 7, 2009
The site below is a good resource for short sales and foreclosures...and it's free.
0 votes
Kevin, , Seattle, WA
Sat Feb 7, 2009
Gina,

Do you have a buying agent? If so, your buying agent needs to be capable of answering these questions. How long your short sale takes primarily depends on the lender, their BPO amount, your offer and the competence of the listing agent or their negotiator.

Also, you shouldn't assume that you are the only offer. You need to make sure that you are the only offer. There is a short sale addendum in Washington for such a provision. It is called "form 22ss." The listing agent should NOT be sending multiple offers to the bank. Doing so leads to a multitude of problems.
0 votes
Mike Mcfarla…, , Kirkland, WA
Fri Feb 6, 2009
Gina

Call the listing agent right away and find out an idea of what is left to do with the lender. This should narrow the timeframe down. Most lenders will tell you it takes 8 weeks to complete a short sale. Find out if the bank has order their appraisal, if that has not happened I would be very concerned.

Mike McFarland, Realtor - Coldwell Banker Bain
http://www.cbbain.net/mikemcfarland
0 votes
Joyce Shipley, Agent, Tacoma, WA
Tue Mar 4, 2008
Once your home has gone to Loss Mitigation, they will then send it to the committee making the decision. The listing agent has to be proactive with the lender to keep it on top of their minds and moving along. It usually takes 4 - 6 weeks to get an answer. Once you receive an acceptance, you can move to closing at your speed.

Ask your agent to check in with the listing agent. They should be able to call the lender to get a closer timeframe. When I do shortsales as the listing agent, I am calling them constantly and have had good success in closing. The squeeky wheel gets the grease.
0 votes
Susie Genet, Agent, Tulsa, OK
Sun Feb 17, 2008
Gina, the problem with short sales is there is no formula to tell how long it will take. Some can be accomplished in a couple of weeks and others take months to work through. It depends on the type of loan on the house, the appraisal, the amount of repair work needed, etc. Even if you are the only offer at this time, until your offer is accepted, the bank can continue to accept offers. Some of these can never be worked through and the house can end up going into foreclosure. If you are in a hurry to purchase a home, this may not be your best option.
0 votes
Donald J. Le…, Other Pro, Tacoma, WA
Sun Feb 17, 2008
You asked about a Short Sale..., which is very different than a Foreclosure.

What is it: A Short Sale is a term that is used when a Bank or Lender, who holds the mortgage or Note on a property that is seriously delinquent by several months, is about to Foreclose and will consider offers that are less than the payoff of the underlying note(s). They would also like to avoid a foreclosure which can lead to an REO or Bank owned property.

The process: When done properly, a Buyers Agent will put in an offer, on his/her clients behalf, to the home owners Licensed Agent to then be combined with a required "Short Sale Package" that will be considered by the home owners Lien Holder, who in many cases will sell for less than what is owed on the property rather than foreclose and chance the less than desirable options of a Foreclosure & Auction or worse yet... the property becomes an REO headache. Important Note; unless the property has been taken back by the Bank or Lien Holder via a full Foreclosure, Lien Sale or Auction etc..... the Short Sale will require the owners approval. Thus "short" sale", which is short of amount due. The seller or owner will not receive any funds, as the funds received from the Lien Holder was less than the home owners payoff. However via this process they may avoid the full foreclosure and hit on their credit.

*Important Note: Most Lien Holders may "indicate" that they accept an offer, when properly tendered, but NOT actually give final approval of the ... "Contingent on Lien Holder Approval" stipulation on a buyers offer of a Short Sale. Listing Agents must however put this wording into a paragraph or a separate addenda so stating this fact on their clients behalf, but the Lien Holder generally will not accept these offers in a conventional way...ever. You will normally NOT get an affirmative reply, notice of approval or letter of acceptance. NADA, Zip, Nothing... it will just make its way to closing and everyone must hope for the best. It really should be criminal for a Lender, seller or Bank to NOT give... in all good faith, some kind of letter or written approval or denial of a buyers offer...but it happens every day. I am involved in two Short Sales right now, one is closing this coming week after a lot of work on my part to do the listing agents job of getting the right paperwork from their client. Touchy thing to do, but sometimes we have to step in and help all involved. - This process and take 90-120 days if everyone knows what they are doing.

There is a lot more info on short sales online and my link below.
Best of luck,
-Don
0 votes
Perry Hender…, Agent, Austin, TX
Wed Feb 6, 2008
FORECLOSURE REALITY CHECK.... Seasoned investors who buy foreclosures know the REO manager at the bank and get "off market" deals. They never have to bid or find a place to learn what's available.

FOR ALL OTHERS: The only "sellers market" in america is the foreclosure market. Don't expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market. For government foreclosed homes, by law, they have to be priced "at market".

The REO manager has a short list of "cash/close in 2 day buyers", they always get the first right to bid. Then they have to wait for the "public auction" Which drives up those prices. After a 30-60 day period. Then the REO picks the best bid. Sometimes, only sometimes does a REO manager take a property directly to a buyer he knows peronsally. Why should he, he has a bunch of people bidding and driving up the prices.

My REO manager friend likes to joke about all the "first timers" who continue to drive up the bid when they don't hear anything from the bank. Every time I see the "how come I haven't heard from the bank about accepting my foreclosure bid after 30+ days" on trulia, I have to let out a chuckle because he's so right. For those newbies, this is real. They know that when you don't hear from them that a large percentage of people drop a second or third offer higher than the previous one. **WARNING, YOU ARE BEING TAKEN ADVANTAGE OF HERE**

You want a deal on a property right, everyone wants that.... So the moral of this story is:
1. the 60 days you have to wait to hear from a REO, you could have made 2 or 3 better deals with a property that has been on the market for a long period of time. Any realtor can help you drop a crazy offer.
2. You are attempting to make a deal in a house covered in a cloud of bad energy, don't be surprised when it rubs off. Personally I stay away from these for this reason entirely.
3. One way to get a deal is dropping a hand written note on ANY house in a neighborhood you want to buy that says "my girlfriend and I want to buy a house in this neighborhood and yours looks cute from the outside. Do you know anyone that is looking to sell?" I always get responses, better prices and positive energy into the home.
0 votes
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