Re ShortSale - I was informed by the selling agent two offers were taken by the bank and no more can be

Asked by Henry, San Francisco, CA Wed Jun 25, 2008

submitted, is this true?

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Mike Kelly A…, Agent, Santa Rosa, CA
Wed Jun 25, 2008
Henry,
When it comes to "Short-Sales" we are in the Wild, Wild West! Our "best practices" line of thinking is to present all offers to the Seller, they inturn sign "subject to lender approval", as you might have with any other contingency in a contract (pysical inspections, loan or appraisal approval) and you have ONE accepted offer with perhaps a "back-up". Now, does that happen? NOPE! I've seen agents sent every offer they can get their hands on to the lenders WITHOUT the Seller's signature! obviously, contract law eludes these individuals. Therefore, if the agent is following "best practices" he has acceped an offer with perhaps a backup. You can continue to submit as the bank can "reject" an offer if they know another "fat" one is behind it. Remember, they are NOT qualifying the Buyer's but the loss they'll be taking on the sale. However, a solid approval letter would get you noticed plus a big down payment. Going in with nothinig down might be problematic if you've got another party buying with 20% down!
Also--don't back out of the deal, if your offer is accepted, by saying to the agent, "They are tired of waiting or they've found a better home!" Remember, you have an accepted offer, regardless of the "Short-Sale" nature of it. So if you wish to back out of the transaction make sure it is done according to the contract. This could bey physical inspections contingency, disapproval of the TDS, etc. Agents think because it is a "Short-Sale" they can be sloppy, not so! Also, a deposit is still needed!! And don't think you can write offers on 10 other properties at the same time and get 5 accepted and then back out of each one. If your intent is to buy all 5 then no problem, but if you're just playing the numbers and have every intent to only buy ONE--then this is fraud!!
In other words--This is a valid, viable contract with all inherent obligations, once accepted, in effect!
0 votes
Rebecca White, Agent, San Francisco, CA
Wed Jun 25, 2008
Hey Henry,

First of all, an offer has to be accepted by the seller--the owner of the property--before it is submitted to the bank. Some listing agents submit several offers at once to the bank; some submit one at a time. This is very discretionary by the listing agent. As already mentioned, every short sale is different and each lender is different.

If the offers have been "taken" by the lender--as in accepted--you could write an offer that would be in back-up. Many of these deals fall out of escrow and there is a chance with a strong pre-approval letter, good credit and a good down-payment, you could pick up the property.

Whatever you do, do not go directly to the bank as 1) the property is listed and the seller is the one who decides to accept your offer subject to bank approval and you would be attempting to circumvent a legal contract and 2) most banks would rather deal with licensed agents as opposed to individuals as many investors are unscrupulous (I’m NOT saying that you are but you bear the onus of being lumped in with some who are) and we are seeing more instances of lender fraud again.

I know that I ask many questions on behalf of my clients and your agent needs to probe a bit more. The listing agent wants to get the property sold as quickly as possible for as much as possible (we are paid on commission, after all) so it behooves everyone—if practical—to accept a higher offer.

Rebecca
0 votes
Lisa Cartola…, Agent, Oakland, CA
Wed Jun 25, 2008
In all transactions any an all offers are to be presented to the seller. In the instance of a short sale the lender has the final say regarding the offer accepted. I personally have represented a buyer on a short sale where we were one of 15 offers. The bank may have indicated that they want any an all offers on a particular date so they can review the offers. This can happen becuase the bank typically has a process they go through to approve a short sale. For every new offer that comes in, they have to restart the process. And as it has already been mentioned, every bank can have a different methodology they adhere to when evaluating a short sale. So what one bank A does for a short sale can be very different from bank B.

Your Realtor should be able to ask a few questions of the listing agent to get a clearer picture of where they are in the process; if the bank is currently just reviewing offers or if there is on that has been accepted by the bank. If an offer has already been accepted if may be that the sale is moving forward. Again your Realtor should be able to find this information out for you. Even if the sale is moving forward and you could consider putting in an offer as a back up offer in case the buyer who has the accepted offer cannot perform.

Good luck!

Lisa Cartolano
Alain Pinel Realtors
http://www.LisaCartolano.com
Web Reference:  http://www.LisaCartolano.com
0 votes
Henry, Home Buyer, San Francisco, CA
Wed Jun 25, 2008
It is still listed as "short sale". I'm not familiar with the rule but it dosn't sound right to me too and I'm no expert. I would consider going 10-15k higher but don't know if it's worth my time. Is there a way to go straight to the bank? Is this possible and where could I find this info.
0 votes
Jed Lane, Agent, Petaluma, CA
Wed Jun 25, 2008
Michael,
Your answer informs Henry on what is the proper question and gives notice that there is good reason to work with an agent that knows as much as you do. Your answer is spot on and it really is informative.
0 votes
Mike Kelly A…, Agent, Santa Rosa, CA
Wed Jun 25, 2008
It all depends on what you mean by "taken"? If the offers have been accepted with one as a backup then they've agreed to work with one offer and have another in the wings should the first offer bail. With "Short-Sales" you can have many weeks of goign back and forth. Have these two offers been there for a while? Are you sure this is a "Short-Sale" and NOT an REO? Usually with a "Short-Sale" many agents let them keep stacking up as the offer is NOT really the issue but the whole idea of the lender taking LESS than they currently owe. As usualy, we need more details from you folks when you submitt a questions.
0 votes
Natasha Lovas, Mortgage Broker Or Lender, San Francisco, CA
Wed Jun 25, 2008
I have not heard of an overall rule like that, but I have worked on enough short sales to know: every short sale is different. Perhaps the bank has limited the number of offers it will entertain -- but this sounds highly unlikely to me. The bank certainly wants to get the highest possible price for the property and should entertain all possible offers.

I have seen this happen: a short sale is in escrow, a higher offer comes in and bumps the first offer, and is accepted by the Bank -- much to the dismay of the original buyers.

Can you ask your agent to dig deeper on this, and to find out more about this unique "policy"?
Web Reference:  http://www.natashalovas.com
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