Hooray I think? Need help with short sale process.

Asked by Buyer, 20152 Thu Feb 17, 2011

Made offer on short sale, I offered $2,500 more than the listed price and seller accepted it.
I did some research and found out that in August 2010 the home was initially listed at $280,000 and in December price dropped to $270,000. Home was purchased in 2003 for $220,000 – do I have a chance in having bank accept offer? How long will the process take?

Thank you for your comments.

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Heather Hope…, Agent, Southern Pines, NC
Thu Feb 17, 2011
Like my colleagues have stated each bank is different in their response time and each loan has a different investor behind that loan that will have different criteria that they will allow. I have 2 GMAC short sale listings that I am doing right now that I submitted the same day on December 23rd with a full financial package and offers. One was accepted and closes next week while the other is still in negotiation and probably wont close til the end of March. Why you may ask? Different investors behind the loans. Here is how the basics break down:

If it is a VA loan that is being short sold they will accept up to 88% net of the BPO value. (A mini appraisal)
FHA minimum net proceeds also include Length of Time From Date of Approval:
- Less than 30 days = 88% 30-60 days = 86% 61+ days = 84%.
Conventional is typically up to 81% ("Up to" is the optional phrase here)
So, the net proceeds that the lender needs to receive at closing MUST be no less than the percentages listed above of the BPO value, which is referenced on the HUD. This means that you MUST ensure that everything in the transaction that will be paid (i.e. Realtor commissions, closing costs, liens, judgments, seller incentives, prorated taxed, etc.) has to be accounted for before reaching the appropriate threshold.

The other factor is the BPO value. Have your Realtor do their own BPO and pull the type of loan it is on the MLS. We have it hear in Virginia Beach on Real List so I don't know if your Realtor has access to that info...if not then tell him to ask the listing agent what type of loan it is. Once you have that info you will have a pretty good indication of what they will accept based on the thresholds above, but then your type of loan will have an impact as well. For example Fannie Mae usually wont pay closing costs if the purchaser is getting a conventional loan. Don't know why...just what they do. FHA to FHA will only pay 1%. 99 out of 100 times the banks will counter unless you are at their BPO value with your current offer. Unfortunately a lot of agents will list their properties at ridiculously low prices in order to get an offer...it's really just throwing mud on the wall.

Bottom line there is a lot of mitigating factors in the process. I do a tremendous amount of short sales and have never had one that was the same. I've closed one in 32 days and I have worked one for 9 months. I will say this...it is trending to become easier because now asset managers are getting involved in loss mitigation and are involving me in the pricing of the property. Hope this helps and let me know if I can be of assistance. My website also has good info to read. Speaking of which I need to update it with the latest info!
2 votes
Vivianne Rut…, , Fairfax County, VA
Thu Feb 17, 2011
This is the question you should direct to your buyer agent.

If you chose to go un-represented and you submitted the offer directly to the listing agent, than the listing agent should be able to give you some of the answers. However, keep in mind that the listing agent represents the seller and cannot violate his/her fiduciary duty to the seller and the seller's lender. This is the nature of agency.

If you do not have an agent representing your best interests as a buyer, you may seek a legal advice from a real estate lawyer, although it will cost you some legal fees. If you hired a buyer agent, it would cost you nothing because the selling broker is compensated by the listing broker.

Vivianne Rutkowski
1 vote
Sally Grenier, Agent, Boulder, CO
Thu Feb 17, 2011
All short sales are different. Some go smoothly, some are difficult. Some go quickly, some take months. It depends on how many lienholders are involved, and who they are (some banks are better than others). Just because the seller accepted your offer, doesn't mean the bank will. They could come back months from now and ask for a higher purchase price. The key is to be patient, and stay in constant contact with your Realtor. (And make sure your Realtor is in constant contact with the listing agent and/or third party negotiator). If you get requests from the bank or negotiator for things, you jump when they say jump. Good luck!
1 vote
Vivianne Rut…, , Fairfax County, VA
Mon Jul 25, 2011

To agent who posted this link:

In Virginia real estate agents must be affiliated with a broker AND the broker's name and address must be disclosed on all websites and in advertising. Your website is not doing that.
0 votes
Mike Linkena…, Agent, Jacksonville, FL
Mon May 16, 2011
Best bet is to choose a good short sale specialist in Loudoun County, VA to offer assistance! Check out -
0 votes
Cameron Piper, Agent, Forest Lake, MN
Thu Feb 17, 2011

The question you need to answer is: Did I pay fair market value? If you got a smokin hot deal on the house compared to others that are for sale or have sold recently in that area - the bank is likely to deny the deal on the grounds that the seller sold the property for less than market value. It is possible that the seller may come back to you and ask you for more money to get the deal done - you don't have to give it to them but it is possible that the sale won't be approved.

You need to find out a lot of information about the short sale - how many loans, how short, is there a PMI company involved, when will the package be submitted, etc. Answers to these questions and the advice of a knowledgeable short sale agent will determine whether or not you should feel good about your prospect.

Good luck with your purchase.

Cameron Piper
Coldwell Banker Burnet
Web Reference:  http://www.campiper.com
0 votes
Joshua & Mic…, Agent, Lynchburg, VA
Thu Feb 17, 2011
Short Sale = Long Sale...enough said :/

All banks are different and you definitely need to be talking with your Realtor to help guide you through the process.
0 votes
Danilo Bogda…, Agent, Reston, VA
Thu Feb 17, 2011
Dear "Buyer",

With all due respect, these are questions that you should have asked and had answered by your Buyer's Agent before you submitted an offer, not afterward.

Your first question is very hard to answer without knowing all of the details of the property and the transaction. Speak with your Buyer's Agent about that.

In regards to your second question, I also suggest you speak with your Buyer's Agent. But also read this post I wrote on the subject...


Danilo Bogdanovic
Real Estate Consultant/REALTOR(r)

0 votes
Melissa Bark…, Agent, Washington, DC
Thu Feb 17, 2011
I recommend talking with your buyer's agent to help guide you thru this process, that is what they are there for. Each short sale is different, since each loan is different and each bank has a different turn around time they take to review and accept/revise each case. Few banks can turn everything around in a month or so but more often short sales are still taking 3-6+ months to get to the settlement table. Again, I would talk to your buyers agent to help you thru this process.

Good luck!
Web Reference:  http://www.wdcmetroagent.com
0 votes
Lisa Moroniak, Agent, Ashburn, VA
Thu Feb 17, 2011
The circumstances as you present them don't quite make sense - unless the seller took out a HELOC and overextended themselves. There will be a BPO (Broker's Price Opinion) performed by the seller's lender which may or may not impact your contract price. You will have the option at that point to release if the BPO supports a higher price than your contract. If you choose to move forward, your lender will also order an appraisal to assess the value of the property. My last two short sale transactions took approximately 90 days contract to close.

Good luck!

Lisa Moroniak | REALTOR® | Service360°
SFR - Short Sale & Foreclosure Certified
Keller Williams Realty
Phone: 703-635-0388
Fax: 703-679-1701
Licensed in VA
Web Reference:  http://www.LisaMoroniak.com
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Thu Feb 17, 2011
I am sure you have chosen an agent who can provide you with information as to what to expect from this process, someone well versed in short sales. Your agent would be the best one to guide you. As the agent below indicated, all short sales are different. Unfortunately, none of the information in your post helps us know if the bank will accept your offer or how long the process will take. Again, I urge you to be in contact with your agent for this kind of information since he/she knows the details of the transaction. Best of luck to you!
Web Reference:  http://www.vickychrisner.com
0 votes
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