We are looking to buy a home... The seller agent states that the house is already bank approved and ready for

Asked by familyof3, 95138 Wed Jul 22, 2009

21 day COE. Is this too risky? What will happen if we don't close in 21 days? Why does it say bank approved but then it also states based on lender approval.

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8
Elena Talis, Broker, Palo Alto, CA
Thu May 3, 2012
Get your agent and the loan broker review the situation. Don't sign a contract without your loan broker agreeing to 21-day escrow. The conditions stated by the listing agent seem fishy to me.
1 vote
Irina Karan, Agent, Aventura, FL
Thu May 3, 2012
There are two possibilities: 1) HAFA short sale where there was no contract and the bank approved a certain price without an actual buyer 2) The previous buyer got approved, but walked for whatever reason.

If you don't close in 21 days, you will need to get the extension (subject to seller's agreement), and then, you'll have to get the extension from the short sale lender. The seller will likely to agree, with banks being somewhat unpredictable, yet, probably agreeing also - for 10 days or so. No guarrantees though - short sales are like that.

If you have cash, 21 days seems to be reasonable. If you need a mortgage - talk to your mortgage loan officer about how long this will take. You can also request in your contract the approval to state 30 or 45 days (this has to be approved by the bank), and every change might trigger a cancellation of approval...

Important: Ask for the written approval of the lender, to see what's there - so there are no surprises.

Irina Karan
CDPE - Certified Distressed Property Expert
Beachfront Realty, Inc.
IrinaKaran@google.com
1 vote
Gina Duncan, Agent, Wailea, HI
Fri Jul 24, 2009
It sounds like the lender has approved the price the Realtor is advertising the home for sale at. This is not always the case in a short sale. Most times the home is priced where an agent thinks it will sell not exactly where the bank would like to see it sell so the waiting for approval, appraisals, etc can take months.

In this case it sounds like the lender is ready to get this one "off their books" quickly or perhaps a previous approved buyer walked on the deal and now they want it to close given the previous timeline.

If the home is one you like, the price is what you want to pay and (this is the biggest part) you can get the home inspected to your satisfaction, and complete the funding and still close on time than it could be a good thing.

Most lenders if you are well into the process and are sincere. (Your pre approval is done, your inspections are done) will give an extension to close if needed.
0 votes
Gina Duncan, Agent, Wailea, HI
Fri Jul 24, 2009
It sounds like the lender has approved the price the Realtor is advertising the home for sale at. This is not always the case in a short sale. Most times the home is priced where an agent thinks it will sell not exactly where the bank would like to see it sell so the waiting for approval, appraisals, etc can take months.

In this case it sounds like the lender is ready to get this one "off their books" quickly or perhaps a previous approved buyer walked on the deal and now they want it to close given the previous timeline.

If the home is one you like, the price is what you want to pay and (this is the biggest part) you can get the home inspected to your satisfaction, and complete the funding and still close on time than it could be a good thing.

Most lenders if you are well into the process and are sincere. (Your pre approval is done, your inspections are done) will give an extension to close if needed.
0 votes
CJ Brasiel, Agent, San Jose, CA
Wed Jul 22, 2009
Family -

First, confirm with your loan agent that they can complete a 21 day close. Then have your agent add a short sale addendum that clearly states your contingency periods and deposit start when you receive written approval from the lender/seller on the short sale. Your 21 days start then and not before.

In most cases, the lender is not waiting on the buyer. The buyer is waiting on the lender. No matter what, your "new" offer will have to be approved. If it looks exactly like the previous offer, they may approve quickly. You have some safety nets. Short sales are challenging but no impossible. Make sure your agent is on top of it. Communication is key.

Good luck!
CJ
Web Reference:  http://www.TalkToCJ.com
0 votes
Bill Mccord, Agent, San Jose, CA
Wed Jul 22, 2009
Strictly speaking "Bank Approved" simply means that the Bank has agreed to a Short Sale. It does not mean that it has agreed to a price. That typically takes 3 to 4 months in todays world. Even if, as Melissa suggests, the Bank had agreed to a given price on a previous offer, 21 days would be very risky as you need time to get the required new appraisal, complete your loan procssing, and all your inspections. I would not allow a client of mine to go into such a contract.
Where does the 21 day requirement come from?
Bill
0 votes
Andrea Wince…, Agent, Milpitas, CA
Wed Jul 22, 2009
If you don't have your own agent, you need to get one asap to write your offer for you and look out for your best interest throughout the transaction. When buying real estate in our area, the buyer doesn't pay the realtors involved in the transaction, the seller pays for both realtors, the agent who brings the buyer and the agent who puts the sign in the yard. Your realtor is free to you so why not have someone on your side, looking out for you and family? You need your own representation. From what you have explained so far, I would surmise that the best question to be answered right now is, can your lender, the bank whom you are getting your purchase loan from, close escrow in 21 days. That's a very quick loan processing time for this tight lending market. If you are doing FHA financing to buy a home, I would be shocked if 21 days would be a long enough escrow as well. It depends highly upon what type of financing you are doing, not just how long it might take the sellers bank to approve the short sale to you. Your offer on any property, depending on the circumstances of the sale, needs to be written in a way that protects you and most importantly, your deposit. Kind regards.
0 votes
Melissa Zava…, Agent, Escondido, CA
Wed Jul 22, 2009
That's a good question. I have a good answer. What this usually means is that there was a previous buyer on board who actually changed his mind and cancelled AFTER the short sale was approved. In most cases, a new buyer (such as yourself) can write an offer with the same terms and conditions and the listing agent could secure a new approval letter with the new buyer's name in short order.

This is not a risky transaction. If you mark on page 1 of your offer that the loan contingency stays in effect until the deal is closed, then no matter what happens you will not lose your deposit. Also, it is possible to get a short extension from the seller's lender if that is necessary.

If you like the property, I'd say 'go for it!'
0 votes
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