Short Sale approved but not by Bank?

[Lake Conroe resident]

Look, this is real simple for all you buyers out there looking for "good deals/steals" on short sales.

First; find a good agent who is familiar with the ins and outs of getting short sales to the closing table. A good buyers agent will know real quick if they're dealing with a pro or a derelict on the sellers side and be able to convey to you whether it's worth proceeding or not at that point.

Second; Do not give up any earnest or options $ until you have the deal; meaning the bank has signed off on the terms of the contract you have with the seller. So many times you will see listings that say "short sale approved". This is more likely incompetence on the listing agent for wording it like this as shorts are never approved before they have an actual contract from a buyer.

Third; Do not spend any money on inspections, or have your lenders ordering appraisals, surveys etc... No need to do any of this until you actually have a deal and title is open. Title companies are also in no hurry to do any title work without the lien holders acceptance either; they are getting privy to these transactions as well and do not want their time wasted for no reason either.

Fourth; be patient and do not have a high expectations to obtain the property, especially not in a certain time frame.

If these four simple steps are followed, not only will you avoid the many pitfalls that can happen while trying to make a run at these types of transactions, but your success ratio in obtaining them will be much higher.

[LynnKK]

Get a different buyer's agent. This one has no idea what he/she is doing and certainly is not concerned about your best interests. There is more to being a buyer's agent than driving you around looking at homes.

[dragon.fly22]

Thanks for all the information. Yes, I was aware it was a short-sale early on. I also proposed one price, they accepted it, and then I had the inspection and I lowered the offer. I think the whole problem here is that both the seller's lawyer and the realtor, gave the impression that the bank had already been involved and had approved the last contract. We were smacked in the face finding out that they JUST now are dealing with the bank after all the time and effort has been involved in this whole process.

[dragon.fly22]

Lake Conroe - all good advice. (and I thought that was the process we had followed - see above)

[dragon.fly22]

Just a point of note - Watch what you sign for a Seller's Rider! The Seller has 120 days to obtain written verification from the lienholders etc. My original contract had provided for 45 days. My current landlord wants me out and if the house falls through.... I'm going to be in a world of hurt. I hope others will be able to use this information to protect themselves. Get a good Lawyer and a good Realtor!

[nwcountrygal]

Good luck Dragon.fly
Question to everyone - I was looking at property in Hawaii and frustrated at the length of time it can take for the banks to respond to a offer on a short sell. Told it could take up to 4 months to accept or decline offer. What is a "typical" wait time period and does it change from state to state? And as far as earnest $$ you don't put any down? I understand not to proceed until lien holder agrees to terms. And if the short sale includes two seperate banks - just run away?

Thank you for any comments.

[2bindenver]

It's not the state, it's the servicer, the type of loan, the location of the setup person, the loss mitigator, the management team, the MI company, the investor....

[Norsky1]

Originally Posted by Lake Conroe resident

Look, this is real simple for all you buyers out there looking for "good deals/steals" on short sales.

First; find a good agent who is familiar with the ins and outs of getting short sales to the closing table. A good buyers agent will know real quick if they're dealing with a pro or a derelict on the sellers side and be able to convey to you whether it's worth proceeding or not at that point.

Second; Do not give up any earnest or options $ until you have the deal; meaning the bank has signed off on the terms of the contract you have with the seller. So many times you will see listings that say "short sale approved". This is more likely incompetence on the listing agent for wording it like this as shorts are never approved before they have an actual contract from a buyer.

Third; Do not spend any money on inspections, or have your lenders ordering appraisals, surveys etc... No need to do any of this until you actually have a deal and title is open. Title companies are also in no hurry to do any title work without the lien holders acceptance either; they are getting privy to these transactions as well and do not want their time wasted for no reason either.

Fourth; be patient and do not have a high expectations to obtain the property, especially not in a certain time frame.

If these four simple steps are followed, not only will you avoid the many pitfalls that can happen while trying to make a run at these types of transactions, but your success ratio in obtaining them will be much higher.

Very good advice, right down to the T from my experience.

Originally Posted by nwcountrygal

Good luck Dragon.fly
Question to everyone - I was looking at property in Hawaii and frustrated at the length of time it can take for the banks to respond to a offer on a short sell. Told it could take up to 4 months to accept or decline offer. What is a "typical" wait time period and does it change from state to state? And as far as earnest $$ you don't put any down? I understand not to proceed until lien holder agrees to terms. And if the short sale includes two seperate banks - just run away?
Thank you for any comments.

Ours was actually 4 months and 1 day for acceptance. There are two mortgages and one month of that was negotiation between the two so the second could pull a couple more bucks. If you got the time and want to deal with the wait, go for it.

Edit: Sorry I just realized this was in the RE Pro's section.

[dragon.fly22]

In case anyone is monitoring this.... I'm still waiting....