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Most of the time the realtor in a short sale won't get the full commission. Either he takes what he can get mostly 3% or less or the deal can be off. But if he is the agent for both sides it would surprise me if he gets more than 3%. Banks are not stupid.
The seller might end up with a judgment, it is up to the seller to take it or leave it and foreclose on the home. I just bought a short sale home and the seller is left with a judgment of $ 23,5 K which is reasonable to me since she was experienced and should have know and wanted out so she shouldn't walk free without still having to pay. To me this was justice since she is a real estate lawyer and her husband a realtor. Not an average joe who doesn't know anything about the market. She even gives seminars on foreclosures!!! To me that is a red flag to even use this lawyer and realtor for me personal.
Ok well we just got a call from the agent and this to me seems beyond odd but again I am new to short sales.
The banks lawyer is asking for a 4,000 deposit extra after the attorney's approval. Our agent just told us that all the other 2 parties who submitted offers are going along with this.
Ok well we just got a call from the agent and this to me seems beyond odd but again I am new to short sales.
The banks lawyer is asking for a 4,000 deposit extra after the attorney's approval. Our agent just told us that all the other 2 parties who submitted offers are going along with this.
Does that make any sense to anyone?
This is definitely different from any short sale I've done, but then things vary from state to state and lender to lender. Your deal keeps sounding more like this is a bank owned property rather than a short sale.
These are the questions that come to my mind:
1) What, exactly, is the bank's lawyer "approving"? Are we talking the Short Sale Agreement between the bank and the Seller? Or is the lawyer "approving" which of the 3 contracts the bank is willing to look at as a possibility for the short sale?
2) What about "approval" from the other 2 lienholders on the property?
3) I'm assuming that only one of the 3 parties will be asked for the additional $4k, and that the other 2 parties drop out at that point?
4) Is the additional $4k deposit refundable?
Depending on the answers to the above: IF the attorney's "approval" is for the short sale agreement, AND you're certain that the other 2 lienholders will also agree to the short sale (so that you'll have a clean title), AND the additional $4k is refundable AND that you'll be able to close within 30 days, THEN it doesn't sound so bad.
However, if there's any question about the other 2 lienholders releasing their claim to title, OR if this attorney "approval" is only a preliminary approval as in "we like this contract the best" but with no guarantee of short sale approval, OR if there's a possibility your $4k is going to be tied up for an extended period waiting for all these lienholders to decide whether or not they'll agree to the short sale, OR (the very worst) the $4k is non-refundable, then I'd be very leery of proceeding.
Is there really nothing else out there (in the way of properties) that's as good a deal without all the hassle?
Keep us posted, fcastro. Too bad you don't have a buyer's agent representing you so that you'd have somebody watching out for your interests only (instead of an agent trying to play both sides of the deal).
Gretchen, its a good and bad thing that we don't have our own agent. The way I see it is by using the same agent he will be more likely to help "us" since he will be getting the whole commission.
The 4k (100% refundable) goes in the escrow account that our lawyer would set up. We would like to get a lawyer to make sure that all the documents are taken care of effectively (we still haven't done this)
The bank's lawyer is approving the contracts that are being submitted; making sure the terms and conditions are legal.
Nothing was mentioned about the other 2 lien holders as far as this was concerned. (Agent mentioned before that the 2nd mortgage will probably settle for 5k of the money from the sale and the equity loan will settle for 1k).
The 4k is an additional deposit which will be applied to the overall down payment and later the monies will be divided among the 3 lien holders. I don't think the 4k is directly being assigned to one lien holder.
Our agent did say it may take awhile for the bank to decide, possibly some time in April, but once they decide, they want to close in 1 month, so most likely the closing will happen in May.
The other offers have a clause in their contract for an additional deposit that will be submitted in their own lawyer's escrow within 10 days of the bank's attorney approval on the contract. They have there attorney's approval already, so they are placing their deposits in their own lawyer's escrow. We are just submitting our offer to the bank's lawyer and the bank. Our agent put the additional clause of the 4k deposit on the contract saying once the bank's attorney approves it, we'll submit 4k in our lawyer's escrow. But he's still submitting our offer to the bank saying "this is a better offer, but was sent simultaneously to the bank lawyer so he hasn't approved it. When he does approve it, this potential buyer will put a 4k deposit."
Here in my state (AZ), attorneys are seldom involved in real estate transactions unless it's a FSBO or there's some unique legal situation. If you live in an attorney state, I would definitely want an attorney to look over my contract. Are you covered so that you can cancel the contract at any time prior to the bank issuing short sale approval and have your earnest money refunded? Does your inspection period not start until the short sale agreement has been executed? These are things that are standard here in AZ. In fact our standard Short Sale addendum allows for the earnest money to not even be deposited in escrow until the short sale agreement has been executed. (Usually it's deposited before then, but not a stipulation of the contract.) AZ is a very "buyer friendly" state. If your state isn't, then I'd want to have my attorney make sure I had the necessary "outs". After all, you don't want to have $4k tied up if you find another home in the meantime that's a better deal (and a sure deal vs the unknown of a short sale). Even if you're being told "April" for the short sale approval, with the other lienholders I would suspect it could take longer.
What incentive does your agent have to watch out for your interests? I think it would be in your best interest to get yourself an atty to review the contract ASAP.
$4K additional to what? We only put $ 1K in escrow. I didn't want my money for months on a bank account without me getting any interest. If they had wanted more I wouldn't have done it. It took 2 months almost 3 for the bank and the seller to reach an approval. I paid cash and closed on the short sale. If they try to play buyers against each other I would have dropped out immediately. I'm not dancing with who ever thinks he can play me for a fool. By the way I wasn't represented by a realtor or a lawyer but had a lawyer ready if I needed and only asked 1 question. I for sure wouldn't have used the same realtor as the seller, to me it is a conflict of interest and I know the seller side is paying for the commision.
Our offer had a 500 dollar down upon approval (we don't like tying up money). The banks lawyers came back and asked everyone involved for 4k down after the banks lawyers approved the contract.
I agree with both notions. NJ imo is just a scam of a state when it comes to real estate prices (this market is still seemy strong). Our state has a standard contract like other states that must be submitted by an agent. We have submitted contracts outside of this state without an agent but here its different.
Our agent made it sound as if it just an assurance to the bank that you are serious but again the hold period is the tricky part. However, our out is in the contract if they do not approve by April.
Our offer had a 500 dollar down upon approval (we don't like tying up money). The banks lawyers came back and asked everyone involved for 4k down after the banks lawyers approved the contract.
I agree with both notions. NJ imo is just a scam of a state when it comes to real estate prices (this market is still seemy strong). Our state has a standard contract like other states that must be submitted by an agent. We have submitted contracts outside of this state without an agent but here its different.
Our agent made it sound as if it just an assurance to the bank that you are serious but again the hold period is the tricky part. However, our out is in the contract if they do not approve by April.
Some realtors have told me the same the bank wants to know if you are serious. That doesn't change with $1K or $ 4K. It matters what the rest of the offer is and how much down payment and how much you need for a mortgage. That together makes the offer serious.
The larger the amount put up as earnest money the more serious the buyer. That is how transactions are viewed by those in commercial real estate and to a lesser degree in the residential world. 4,000 earnest money payment on a transaction in the 300,000 range is not alot of money from a seller's point of veiw. Most contracts hold that the earnest money is forfitted as the sole damages due to the seller if the buyer defaults on the property. Real Estate contract law in many states allows for up to 5% of the purchase price as damages. So, 4,000 is not a great deal of money when it comes to a 300,000 transaction for the rights that the seller is giving up in lue of the earnest money. So, since banks have a strictly commercial angle they are dealing in it would not be uncommon or unexpected for the lawyer to request this sum for earnest money. Now with that said you as the buyer want to put as little money at risk as possible. Good luck fCastro, if you really want the property I hope you get it.
I haven't read what the others wrote,but we had a down payment on a short sale,they kept us waiting for ever and then we pulled out and bought a house.
The short salewound up having two liens against it.
Now the house is back up for sale at a higher price but still a bargain.Though the person is still living in it.No idea why.
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