Home Buying in 08037>Question Details

Cheers442, Home Buyer in 08037

can the mortgage co. be notified if a back up offer is higher than the submitted contract offer in a short sal

Asked by Cheers442, 08037 Mon Apr 20, 2009

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Diane Glander’s answer
Since the mortgage company has final approval on any offers received, it is normal practice to notify them whenever a better offer is presented to the listing agent. The bank wants to get the most $$$ to satisfy the debts.
Web Reference: http://www.dianeglander.com
1 vote Thank Flag Link Mon Apr 20, 2009
I think confusion may lie in how John's attorney's usually work by submitting an offer waiting for bank approval before starting attorney review

John said:
"if it is submitted, the attorneys office has to resubmit all the documents again for another person.. time = $ and guess what happens.......
the term "back-up offer" is used."

If this is the case, you should be aware once the contracts are signed by both buyer and seller you've got yourself a fully executed contract and the attorney review period starts counting time wait 3 days and you've got a solid contract or get it to the attorneys within that period to being attorney review and they can send letters back and forth and drag out the review process for a very long time.

Some attorneys will not complete the review process until they get approval from the bank but the good ones will end attorney review and wait for the banks approval as a contingency which must be met just the home inspection and mortgage contingency periods being contingencies. There are pluses and minuses to both approaches but I gotta run and show a house now so.... Later...
1 vote Thank Flag Link Fri Apr 24, 2009
The short answer here is YES. The offer should be presented to the bank. it may not be acknowledged, but it is to be presented to the bank for review.

There is no "gave my word" to the buyer in a short sale, the seller "gave their word" to the bank that they would /could pay the mortgage. The bank is about to lose money and is trying to recoup as much as possible. .. hence the term: "short sale" = When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due.

Since it is about the money there is a time period that the bank can shut down an offer and accept another offer if it makes sense. Of course if the transaction is deep in the process and awaiting closing.. it probably will not happen.

As far as agents not understanding the process, I would never advise my clients to pass from making an offer on a property because of the listing agent experience or inexperience. I would be able to help that listing agent along the way to understand the process and get the offer through. Every transaction I am involved in, I monitor both sides of the transaction anyway.
0 votes Thank Flag Link Fri Apr 24, 2009
The short answer is NO!

Why would anyone want to inform the bank that a BACKUP offer is higher?
First you need to understand the short sale process, although a bank, lender or other 3rd parties approval may be required for the sale to continue, you must remember they are NOT the owner or the seller.

That being said, think of it in these terms...

Say I am the owner of a really nice car that I purchased using lender financing.
(I haven't paid it off yet however want to sell it now.)

I placed an ad, find a buyer and accepted their offer. Then you step into the picture answering the ad a little too late and want to make a higher offer but I don't want to accept it because I already gave my word I'd sell it to another buyer.

Now say you go to the finance company I got the loan from to purchase the car and try making a higher offer to them to buy MY car. What do you suppose will happen? This scenario is a perfect example to demonstrate your position in this transaction, except the car is really a house!

As to not rub anyone the wrong way let me further explain...

For your offer to be a backup, it would mean that another offer has already been accepted by the "seller" and went to attorney review and is now OUT of attorney review and then the offer is now just waiting for 3rd party approval which by the way is not always a bank. In any case the lender is not the owner, all offers DO NOT have to be presented to the bank because technically they don't own the house, so you'll need to deal with the seller.

(There are WAY too many so called "short sale experts" out there that are agent that did 1 or 2 of them or none but just took a class to learn what a short sale is or how to submit an offer. It's next to impossible to realize who really is a short sale expert or not but I'd have to say the proof is in the pudding. How many short sale deals have ya closed and out of how many you submitted?

Usually but not always it depends on the listing agent which is suppose to be the expert in the process. I have advised buyers to pass on properties where the listing agent didn't seem to be the sharpest pencil in the box on the topic of short sales due to the probability of them dropping the ball on the process and having the deal die or not get accepted. Short Sale agents need to be on top of their game and be pro-active vs re-active.)

Short sales can be a tedious process to get approved and even more difficult when buyers constantly back out because of the long wait for bank approval. If I was a home seller I would stick with the person I thought would have the best chance of getting a mortgage, seems to really want the house and will stick with the offer until the end which can be many months as opposed to someone wanting to make a higher offer that may back out a month down the road because they have second thoughts that their offer is too high and market value could have possibly dropped and no longer want to keep their offer on the table because now they think its too much.

The highest offer is not always the best.

Good Luck...
0 votes Thank Flag Link Thu Apr 23, 2009
P.S. If u are not currently represented by an agent, I have a great fella with whom I work with in Atlantic County that may be able to help and won't ask him for a referral fee.
0 votes Thank Flag Link Wed Apr 22, 2009

I'm talikng logic here off the top of my head and not experience. But, if a current homeowner would owe the bank $30 vs. $50, why should he/she not want that "higher offer" not be submitted? Attonrneys can find a plehtora of ways to "kick" one out of a deal.

From what I am told regardng short sales, terms and conditions carry more weight than actual price. For example, one person an offer $100k, cash, 30 days to close, while another can offer $130 cash w/ no home inspection contingency.

I'm told that the most acceptable short sale deals are those where thare are NO CONTINGENCIES, no mortgage, no home inspection.

Short sales can sound good in terms of $$, but they do carrt complications.

Love ane Peace,
Fracncesca, Realtor, ePro
Web Reference: http://www.PatrizioRE.com
0 votes Thank Flag Link Wed Apr 22, 2009
The short sale process is just that, a process. Not rocket science. There are documents that need to be filled out for the bank to move forward from the hardship letter to the financial statement, BPO's, authorization forms for agents and attorneys to speak to the bank on behalf of the client and the HUD drafted by the attorney.

As I stated in another post, the attorney for the seller needs to be competent and concerned. It has been my experience that some seller attorneys just want to get the offer in and accepted.. and move on to the next deal, not concerned with people wanting to buy the house for more $.. if it is submitted, the attorneys office has to resubmit all the documents again for another person.. time = $ and guess what happens.......
the term "back-up offer" is used.
0 votes Thank Flag Link Tue Apr 21, 2009
As an Attorney and Broker in NYC I see many mistakes made when submitting short sale packages with an offer to the bank. I would say before any agent attempts to submit offers to a bank and not risk their chances of getting sued later on, educate yourself before submitting offers and multiple offers to banks on a whim. Mark my words the litigious population has yet to come to full force when short sales are concerned. Just a bit of advice before you take on that next shorts sale, you are better off taking a referral on a short sale than putting your money where your lack of knowledge is. Not directed at anyone just a general piece of advice. Make sure the referral is to a Realtor who knows what a Short Sale really is.
0 votes Thank Flag Link Tue Apr 21, 2009
If a better offer comes in, ie cash, substatially more money, the mortgage company should be notified. However, in a short sale it is the seller that ultimately decides which offer to submit.

Laura Giannotta
0 votes Thank Flag Link Mon Apr 20, 2009
Sure, it "could" and it Should.

Sometimes the offer is acknowledged.. if it is hands down better, the people are qualified there is a chance the at it may be looked at and accepted if the process is not too deep.

I did have an experience where the attorney refused to send the contract after he held me off for three weeks and took another offer. ( I have suspicisions that he arranged a friend or family memeber to get the house) The other offer, I know was less then what I had.. he just stopped returning my calls and refuses to answer me.. him and his office. I am looking into how I can get this creep.

Anyway, it is not unheard of.. unlikely.. yes, but It can be done.
0 votes Thank Flag Link Mon Apr 20, 2009
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