Thursday, September 24, 2009
Best Short Sale Process is the one Everybody Agrees on
Dear Sue,
I want to buy a short sale that has an offer on it pending the lenders approval. I asked my agent to write an offer for substantially more than the asking price in an effort to beat out the existing offer.
My agent explained that my offer would be in a “back-up” position since there was already an offer. The agent who has the property listed, said she wouldn’t give my offer to the lender until the lender responded to the first offer.
That doesn’t seem right to me. I thought that all offers had to be submitted to the sellers. Should I get legal advice? I am tempted to submit my offer directly to the bank! Please advise.
Mad Mark
Dear Mark,
The short sale process can be very confusing. There is no uniform short sale system in place at this time. The best process is the one that the seller’s agent, seller and lender agree on.
Keep in mind that properties listed as “short sales” belong to homeowners that are selling their homes subject to their lenders accepting a short pay off. In other words the offers are being submitted to the sellers (home owners). The lenders are not the owners. The lenders approval of a “short pay-off” is merely a contingency or condition of an offer. The condition for a short pay off is necessary because the lenders or investors must agree to take less than the homeowner owes them.
Another way of looking at it; an offer is written subject to the lenders approval for a loan to purchase. Who is the owner? Not the lender.
There are exceptions. A listing agent, seller and lender can agree right up front that the first buyer in the short sale process has the right to meet or beat any subsequent offers. If he/she is unwilling or can’t meet the price, the subsequent offer is put in first position.
Knowing the short sale agreement “up front” can assist you in your negotiations and be a matter of good home dollars and sense.
For more Home $$s and Sense articles, up to date real estate news, listings and local information visit:
HomeTown Realtors
I want to buy a short sale that has an offer on it pending the lenders approval. I asked my agent to write an offer for substantially more than the asking price in an effort to beat out the existing offer.
My agent explained that my offer would be in a “back-up” position since there was already an offer. The agent who has the property listed, said she wouldn’t give my offer to the lender until the lender responded to the first offer.
That doesn’t seem right to me. I thought that all offers had to be submitted to the sellers. Should I get legal advice? I am tempted to submit my offer directly to the bank! Please advise.
Mad Mark
Dear Mark,
The short sale process can be very confusing. There is no uniform short sale system in place at this time. The best process is the one that the seller’s agent, seller and lender agree on.
Keep in mind that properties listed as “short sales” belong to homeowners that are selling their homes subject to their lenders accepting a short pay off. In other words the offers are being submitted to the sellers (home owners). The lenders are not the owners. The lenders approval of a “short pay-off” is merely a contingency or condition of an offer. The condition for a short pay off is necessary because the lenders or investors must agree to take less than the homeowner owes them.
Another way of looking at it; an offer is written subject to the lenders approval for a loan to purchase. Who is the owner? Not the lender.
There are exceptions. A listing agent, seller and lender can agree right up front that the first buyer in the short sale process has the right to meet or beat any subsequent offers. If he/she is unwilling or can’t meet the price, the subsequent offer is put in first position.
Knowing the short sale agreement “up front” can assist you in your negotiations and be a matter of good home dollars and sense.
For more Home $$s and Sense articles, up to date real estate news, listings and local information visit:
HomeTown Realtors
Friday, September 18, 2009
US Treasury to Introduce Streamlined Short Sale Process
Dear Sue
I have been in escrow on a short sale property for over a month. My agent has not heard from the lender so I don’t know if the sale will be approved or not.
My agent said that I should be patient. She said that my patience would be rewarded because the property is such a good deal.
The problem is, I can’t wait because I am doing a 1031 Tax Deferred Exchange and I must identify the property that I am exchanging into by October 2.
If I don’t get the property I will have to pay taxes on the money I made on my sale.
Should I stay in escrow and take my chances or should I move on to another property?
Nervous Ned
Dear Ned
You are wise to be concerned. Getting short sale acceptance from certain lenders is sketchy at best. While some short sales are approved within a two to three week time period, some take three months or more. Some are not approved at all.
I would suggest that you keep your current escrow in place and locate and identify at least two other properties that would work for you. The “Three Property” Rule, under Internal Revenue Service guidelines, allows you to name three properties within 45 days from the closing of the escrow of the property you are exchanging out of.
The three properties must be identified within the 45-day time period but you have six months to close the escrow on one of the three properties that you identified. You can buy more than one property as long as the total amount is at or more than the relinquished property. It is very important that you verify the time frames with your exchange consultant and/or tax professional.
Good luck with your exchange!
Dear Sue
I am burning with envy! Here I am sitting in a house that I am upside in down while my friends are out buying homes that are “killer deals”.
Homes in my neighborhood are being purchased for 40% less than I bought mine for. Is there any way I can get out from under my house and just start over?
Frustrated Frank
Dear Frank,
The administration is expected to introduce a foreclosure alternative program by months end. It will provide incentives for, and encourage servicer’s and borrowers to pursue short sales and deeds in lieu of foreclosure, in cases where the borrower does not qualify for other programs.
The program will simplify the process of pursuing short sales and deeds in lieu. The program will standardize the process, documentation and short performance time frames.
According to David Stevens, FHA Commissioner, “These options eliminate the need for potentially lengthy and expensive foreclosure proceedings, preserve the physical condition and value of the property by reducing the time a property is vacant and allows the homeowners to transition with dignity into more affordable housing.”
No matter how you cut it, this is good news! A prudent “under-water” homeowner would wait for the details of this plan. It could be a matter of good home dollars and sense!
Visit HomeTown Realtors
I have been in escrow on a short sale property for over a month. My agent has not heard from the lender so I don’t know if the sale will be approved or not.
My agent said that I should be patient. She said that my patience would be rewarded because the property is such a good deal.
The problem is, I can’t wait because I am doing a 1031 Tax Deferred Exchange and I must identify the property that I am exchanging into by October 2.
If I don’t get the property I will have to pay taxes on the money I made on my sale.
Should I stay in escrow and take my chances or should I move on to another property?
Nervous Ned
Dear Ned
You are wise to be concerned. Getting short sale acceptance from certain lenders is sketchy at best. While some short sales are approved within a two to three week time period, some take three months or more. Some are not approved at all.
I would suggest that you keep your current escrow in place and locate and identify at least two other properties that would work for you. The “Three Property” Rule, under Internal Revenue Service guidelines, allows you to name three properties within 45 days from the closing of the escrow of the property you are exchanging out of.
The three properties must be identified within the 45-day time period but you have six months to close the escrow on one of the three properties that you identified. You can buy more than one property as long as the total amount is at or more than the relinquished property. It is very important that you verify the time frames with your exchange consultant and/or tax professional.
Good luck with your exchange!
Dear Sue
I am burning with envy! Here I am sitting in a house that I am upside in down while my friends are out buying homes that are “killer deals”.
Homes in my neighborhood are being purchased for 40% less than I bought mine for. Is there any way I can get out from under my house and just start over?
Frustrated Frank
Dear Frank,
The administration is expected to introduce a foreclosure alternative program by months end. It will provide incentives for, and encourage servicer’s and borrowers to pursue short sales and deeds in lieu of foreclosure, in cases where the borrower does not qualify for other programs.
The program will simplify the process of pursuing short sales and deeds in lieu. The program will standardize the process, documentation and short performance time frames.
According to David Stevens, FHA Commissioner, “These options eliminate the need for potentially lengthy and expensive foreclosure proceedings, preserve the physical condition and value of the property by reducing the time a property is vacant and allows the homeowners to transition with dignity into more affordable housing.”
No matter how you cut it, this is good news! A prudent “under-water” homeowner would wait for the details of this plan. It could be a matter of good home dollars and sense!
Visit HomeTown Realtors
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