[airics]

why didn't you have the loan in place?

[olecapt]

First off you read the documents. There are really three in play. The purchase contract, the short sale addendum and the sale approval letter from the bank.

The first two should define what is supposed to happen on bank approval. The third tells you what the bank wants.

The Buyer's agent or Seller's agent should then prepare an addendum to give the bank what it wants or to change what the bank wants to what is acceptable to buyer and seller. That then gets signed by buyer and seller and sent to the bank by the seller's agent - or whoever is handling the short sale.

Lots of stuff that people presume cast in concrete is not...ie the lenders change close dates all the time.

If this does not come together go to your agent's broker. Virtually every office has someone, often the broker, who is good at this stuff.

If you don't get satisfaction at that point you might consult a lawyer. But most likely you walk away at that point.

[Rubyww]

Originally Posted by olecapt

What does your contract say? There is normally a provision or one is countered that sets the timing for close after bank acceptance. It would normally be in the short sale addendum or a counter thereto.

Figure out when you can close and submit an addendum changing it the best you can do.

Thirty days is unusually short by the way. Standard is 45 days. And normally the clock starts when your agent gets the bank approval letter.

If the bank has approved the short they can be flexible. So try and change the close date.

Thanks for the help. I am looking at the short sale addendum and it says "Buyer and Seller understand that Lender Approval will include an expiration date by which Close of escrow must occur. Lender Approval is valid for 30 days. The parties agree to use best efforts to meet the Lender's COB deadline and understand that any extension(s) must be mutual written agreement and Lender's consent. Buyer understands that Lender may impose additional requirements, such as per diem funds to be paid by Buyer, as additional consideration for extension(s)”. The lender here is the seller’s bank which will approve the short sale.

Are you recommending that we should send a counter offer to amend the addendum on the closing date and after their approval of the extension, we can start the inspection and loan process? I am not familiar with short sale but for normal sale, there needs to be an agreed upon closing date by all parties and it is generally ~ 30 to 45 days after acceptance of the offer. Inspection and loan process starts only after offer acceptance for a normal process; however, I am so confused on when this should start in the short sale process.

We received the seller’s bank approval letter only last Friday (9/9/2011) and somehow the letter is dated 9/1/2011. According to an email from the seller’s agent on 9/2/2011, the seller’s bank was still negotiating and there was no indication that the short sale was going to be approved. Without the bank approval letter, we couldn’t possibly start the loan process before hand. We have excellent credit scores but all of my potential lenders said they couldn’t close by 9/30/2011. According to the short sale addendum, any extension needs to be approved by the seller’s bank and they might choose to impose per diem on the extension. Without knowing if the bank will approve the extension, I still can’t start the loan process so it seems I’m going nowhere. I just feel it is a little unfair after waiting for 8 months, we got a bank approval letter only to see an unrealistic closing date; meanwhile, we are still in square one since we have to ask for an extension and without knowing if the extension will be approved, we won’t be able to start the inspection or the loan process.

[macgeek]

just a aside here,
My short sale was SHORT (< 2 mnths)
I got the approval from the bank for my original offer, 20 days later, paid cash
was in and out of Nevada title in 30 mins.

Jonathan

[Rubyww]

Originally Posted by airics

why didn't you have the loan in place?

I don't understand what you mean? How can I have a loan in place when there is no short sale approval letter? Without knowing if the seller's bank will approve the short sale, there is no property for closing and therefore no loan application. All I have is pre-approved qualificaiton for the loan but that is about it. I have been talking to the lenders for eight months and none of them will start any loan process without the bank approval letter or a target closing date.

When I bought a house via normal process before, the seller accepted my offer and we have a set closing date on the contract. I used the purchase contract to start the loan application process where my bank who is going to lend me money will order an appraisal on the property and verify my ability to pay. In this short sale situation, there was no property and no date for the loan application. Am I missing something here? I am so frustrated.

[olecapt]

Originally Posted by Rubyww

Thanks for the help. I am looking at the short sale addendum and it says "Buyer and Seller understand that Lender Approval will include an expiration date by which Close of escrow must occur. Lender Approval is valid for 30 days. The parties agree to use best efforts to meet the Lender's COB deadline and understand that any extension(s) must be mutual written agreement and Lender's consent. Buyer understands that Lender may impose additional requirements, such as per diem funds to be paid by Buyer, as additional consideration for extension(s)”. The lender here is the seller’s bank which will approve the short sale.

Are you recommending that we should send a counter offer to amend the addendum on the closing date and after their approval of the extension, we can start the inspection and loan process? I am not familiar with short sale but for normal sale, there needs to be an agreed upon closing date by all parties and it is generally ~ 30 to 45 days after acceptance of the offer. Inspection and loan process starts only after offer acceptance for a normal process; however, I am so confused on when this should start in the short sale process.

We received the seller’s bank approval letter only last Friday (9/9/2011) and somehow the letter is dated 9/1/2011. According to an email from the seller’s agent on 9/2/2011, the seller’s bank was still negotiating and there was no indication that the short sale was going to be approved. Without the bank approval letter, we couldn’t possibly start the loan process before hand. We have excellent credit scores but all of my potential lenders said they couldn’t close by 9/30/2011. According to the short sale addendum, any extension needs to be approved by the seller’s bank and they might choose to impose per diem on the extension. Without knowing if the bank will approve the extension, I still can’t start the loan process so it seems I’m going nowhere. I just feel it is a little unfair after waiting for 8 months, we got a bank approval letter only to see an unrealistic closing date; meanwhile, we are still in square one since we have to ask for an extension and without knowing if the extension will be approved, we won’t be able to start the inspection or the loan process.

The contract calls for best efforts. So do the best you can. I would also think the contract and addendum have expired and a new close date would be needed to resurrect them. So you do an addendum with a date that your lender tells you can be met. Send it to the seller and see what happens.

They can try and hit you with some costs for the extension but practically never do unless you slip right at the end.

I think you also need to get this stuff into the hands of your agent and his broker. I am not your agent and risk difficulty for getting specific about this stuff.

[Scott456]

I see the problem here:
1. not a cash buyer, but still want to play in the cash market and distressed property game.
2. fell in love with ONE property.

[Rubyww]

Originally Posted by olecapt

First off you read the documents. There are really three in play. The purchase contract, the short sale addendum and the sale approval letter from the bank.

The first two should define what is supposed to happen on bank approval. The third tells you what the bank wants.

The Buyer's agent or Seller's agent should then prepare an addendum to give the bank what it wants or to change what the bank wants to what is acceptable to buyer and seller. That then gets signed by buyer and seller and sent to the bank by the seller's agent - or whoever is handling the short sale.

Lots of stuff that people presume cast in concrete is not...ie the lenders change close dates all the time.

If this does not come together go to your agent's broker. Virtually every office has someone, often the broker, who is good at this stuff.

If you don't get satisfaction at that point you might consult a lawyer. But most likely you walk away at that point.

Thanks a lot for taking the time to help me. I’ll ask my agent tomorrow to draft an addendum to change the closing date to 45 days after I receive the bank approval letter and see what happens next. I am not sure that I can walk from the deal at this point since my agent told me that I would lose all my earnest deposit money. That is part of the reason that I feel somewhat frustrated. Even after such a long wait, we can't proceed without another around of the seller's approval on the extension and we can't cancel with our earnest deposit money at stake.

[olecapt]

Originally Posted by Rubyww

Thanks a lot for taking the time to help me. I’ll ask my agent tomorrow to draft an addendum to change the closing date to 45 days after I receive the bank approval letter and see what happens next. I am not sure that I can walk from the deal at this point since my agent told me that I would lose all my earnest deposit money. That is part of the reason that I feel somewhat frustrated. Even after such a long wait, we can't proceed without another around of the seller's approval on the extension and we can't cancel with our earnest deposit money at stake.

Last comment. Don't buy the earnest money stuff. You got lots of ways out.

[Rubyww]

Originally Posted by Scott456

I see the problem here:
1. not a cash buyer, but still want to play in the cash market and distressed property game.
2. fell in love with ONE property.

I didn't know that we need to be a cash buyer in order to get a house through short sale. Even though we really like the property, we wanted to cancel after 4 months but they always say the bank is negotiating and will be reaching a decision very soon. My agent also told us that we can cancel at any time as the 90 days right to cancel period has expired. When we got the approval letter last Friday with such an unreasonable closing date, the agent told us that we can't cancel now or we would lose our earnest deposit money.