wells fargo short sale HELP please!!

Asked by Vigalz11, New Hampshire Sat Nov 5, 2011

We made an offer on 11/4 on a short sale property that has been sitting on market over a year. Today, 11/5 my agent called me said that the bank has accepted my offer (not approving the offer). And they want me to sign the addendum (not sure what it is) on monday 11/7 and run inspection also appraisal soon after. Everything will cost around $1200.
Is this suppose to be a good sign? aren't they suppose to approve my offer first then inspection and appraisal? I waste all my money out of window if they won't accept my offer then? is that true that wells fargo has speed up their short sale process? if everything goes thru, how long it will close?
anybody experience with this before?

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Scott Godzyk, Agent, Manchester, NH
Wed Nov 9, 2011
You are mistaken in the short sale process. First the owner accepts your offer and signs it. Secondly it is sent to the bank for approval. Until you receive approval from the sellers bank, it is NOT an approved short sale. If you are spending any money before you receive wrotten approval, it is at risk to being lost if the sellers bank does not approve it.

Yes by completing the inspections you move things forward but then come to a stop waiting for that written approval. As far as the appraisal, if you have it done and then it takes more than 3 months for approval, you may need to pay for a new appraisal, (check with your loan officer on this) . Your buyer broker should be guiding you through this process. It sounds as if you have not been guided or informed how it works.

http://www.trulia.com/blog/scott_godzyk/2010/10/so_you_want_…

Please see my blog with tips and advice on buying a short sale.
Web Reference:  http://www.ScottSellsNH.com
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Vigalz11, Home Buyer, New Hampshire
Mon Nov 7, 2011
Hi Suzanne, you are right about addendum I signed today only stating all parties agree to and understand that the property is subject to short salve approval from 3rd party, however, the seller’s bank wants me to move forward with inspections, appraisal and financing so as not to delay things upon receipt of short sale approval. Because the house was under contract twice, but the buyers backed out. But my agent said that we are technically 'under contract' is that true??? I'm confused?
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Suzanne Damon, Agent, Manchester, NH
Mon Nov 7, 2011
I am a very experienced with short sales. My recommendation to you is to get the short sale approval in writing from the bank that is authorizing the short sale PRIOR to any home inspection or upfront investment on your part. Typically, an offer made on 11/4 with bank acceptance of short sale on 11/5 is impossible. I suspect, it was the seller that accepted your short sale and the addendum that needs to be signed is a short sale addendum stating that all parties agree to and understand that this property is subject to short sale approval from a 3rd party lender.
Have your agent fully explain the process to you so that you fully understand the time investment as well as the financial investment that you are embarking upon
Web Reference:  http://suzannedamon.com
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, ,
Mon Nov 7, 2011
Work closely with your Realtor, none of us have copies or histories of exactly what you have offered or the responses. A short sale is much more complicated because of the multiple responses required. Your Realtor is the best source for guidance. I bet most of the communication has been over the phone with your agent, it may be a good idea to shift to face-to-face meetings so you can ask questions while reviewing documentation. Take your Realtor to lunch and go over everything you need answers to, include your co-buyer in all meetings to make sure everyone is on the same page.

Yeah, I know, work schedules etc. No idea what your pay scale is but it pales in comparison to the size you stand to gain or lose in this transaction. Focus!
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Vigalz11, Home Buyer, New Hampshire
Sun Nov 6, 2011
Ya I found out today that the house has 2 liens (bank of america and wells fargo) hows the process will go in this case? I decided to sign the addendum tomorrow. wish me luck!
btw, the $1200 will be for inspection (wells, septic, home) and appraisal fees.
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Garrigus Real…, Agent, Redlands, CA
Sat Nov 5, 2011
It's not unusual for a bank to operate this way with a short sale offer, but, what is the $1200 for?
Web Reference:  http://8889ListIt.com
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Allison Norm…, Agent, Santa Rosa, CA
Sat Nov 5, 2011
I'm a little confused. What you are describing sounds very much like a foreclosure sale. A short sale offer is made to the homeowner, not to the bank. The contract is simply contingent on the bank approving the sale for less than the property is worth.

A foreclosed property is sold by the bank. An offer is accepted subject to the buyer signing the bank addendum,which should be read very carefully, as the bank tends to make up its own rules. Once the addendum is returned to the bank,and signed (or ratified)by the bank's asset manager, you are officially "in contract". I would line up inspections once you receive the addendum, but not start any inspections until you have a ratified contract.

If it is indeed a short sale, the seller (current owner) removes their contingency when they deliver to you, the banks approval of the short sale. If negotiated correctly, your timeline for inspections begins upon buyer's receipt of short sale approval. It is possible that your agent didn't write the offer up that way....in which case, the inspection timeline begins upon Seller's acceptance of your offer.

This is a common misconception of many, including some real estate agents, who really don't get that the bank is not a party to the contract in a short sale.

I'm basing my answer on California real estate. New Hampshire may be different. But, I'm not aware of any situation where a short sale offer is accepted by the bank. I would ask your agent to clarify.

Best of luck.
0 votes
Alain Picard, Agent, Puyallup, WA
Sat Nov 5, 2011
An addendum could be a lot of different things. It is something included with the original contract to purchase a property. Some examples are that you will have a certain amount of time to perform an inspection and will be able to get out of the contract if you don't like the inspection results. Another example is the bank could require you to close by a certain date. It could be a lot of things so you need to talk to your agent and ask them what type of addendum they want you to sign and what will be the result of the addendum.
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Vigalz11, Home Buyer, New Hampshire
Sat Nov 5, 2011
thanks for you answer! but what is addendum mean? I google it, and they said the bank approved the offer then sign an addendum. But my agent said it's not an approval, but WF only accepted our offer without reviewing it.
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Alain Picard, Agent, Puyallup, WA
Sat Nov 5, 2011
You should definitely talk to your agent and have them find out what is all on the title. You should find out if there is only one mortgage on the property or more than one. If there is only the wells fargo 1st mortgage on the property and no other liens on the property than you have a better chance that it will close. You also shouldn't sign anything that you don't fully understand. If you have an inspection on the property you will have to pay for that without knowing if you will actually close on the property. Also you should find out when the property will be foreclosed and make sure you have enough time to close. I have heard and seen that a lot of banks are speeding up the short sale process and more seem to be closing than before.
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