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My wife and I have been approved for a short sale through Wells Fargo. We had our house listed for 5 months (before applying for short sale) with no real interest, several looks but no offers. We actually didn't apply for a short sale until we got an offer ($160,000) but it is was less than what we owe($166,000). We are approved for a short sale and have signed a purchase agreement to accept the "offer contingent upon the lender's approval of short sale". Wells Fargo has not accepted the offer at this point(still in reveiw process). All necessary paperwork has been submitted and the appraisal was done yesterday (10-15-09). Here is my situation. A very close friend of my brother recently inheritted a large amount of money. He contacted me 3 days ago and stated he would like to buy my house and would be willing to give full price for it. This would greatly benefit me as my credit score would not be affected by a short sale and I'm only 2 payments behind (which the friend offered to catch up for me if he can buy the house).
1. Can I simply call the bank and tell them I want to cancel the short sale?
2. Am I in a legally binding contract at this time since the purchase agreement states "offer contingent upon the lender's approval of short sale"?
My realtor will not give a straight answer. I speculate because her listing contract expires in 3 weeks and she is worried that I will cancel the short sale, wait a month and sale the property to my brother's friend. I would not do this because she has worked very hard for me and is owed her commission as she has earned it.
Thanks for any advice
My wife and I have been approved for a short sale through Wells Fargo. We had our house listed for 5 months (before applying for short sale) with no real interest, several looks but no offers. We actually didn't apply for a short sale until we got an offer ($160,000) but it is was less than what we owe($166,000). We are approved for a short sale and have signed a purchase agreement to accept the "offer contingent upon the lender's approval of short sale". Wells Fargo has not accepted the offer at this point(still in reveiw process). All necessary paperwork has been submitted and the appraisal was done yesterday (10-15-09). Here is my situation. A very close friend of my brother recently inheritted a large amount of money. He contacted me 3 days ago and stated he would like to buy my house and would be willing to give full price for it. This would greatly benefit me as my credit score would not be affected by a short sale and I'm only 2 payments behind (which the friend offered to catch up for me if he can buy the house).
1. Can I simply call the bank and tell them I want to cancel the short sale?
2. Am I in a legally binding contract at this time since the purchase agreement states "offer contingent upon the lender's approval of short sale"?
My realtor will not give a straight answer. I speculate because her listing contract expires in 3 weeks and she is worried that I will cancel the short sale, wait a month and sale the property to my brother's friend. I would not do this because she has worked very hard for me and is owed her commission as she has earned it.
Thanks for any advice
Yes, if you and the buyer signed the purchase agreement, you have a legally binding contract. The question is, does the contract allow you an opportunity to cancel the sale prior to lender approval? You need to carefully read it to understand your options. I recommend you also review with an attorney.
... We are approved for a short sale and have signed a purchase agreement to accept the "offer contingent upon the lender's approval of short sale". Wells Fargo has not accepted the offer at this point(still in reveiw process). ...
2. Am I in a legally binding contract at this time since the purchase agreement states "offer contingent upon the lender's approval of short sale"?...
So, I'm a bit confused. What does "approval" mean here? How can you be approved, yet offer not accepted?
In our AZ short sale addendum, we have a clause that allows the buyer to cancel prior to the lender providing a notice of acceptance of the offer. In your case, "approval of short sale" I'm sure was meant to be similar, and not just approval to start the review process.
Ok, I will say this. I always take back ups on the properties that are short sales, then tell the bank about the presence of the backups. and the terms if they want them. They will sometimes recommend going back for highest and best from all.... maybe your situation could be handled similarly? I don't know... but you could talk to your attorney about it.
if that sounds acceptable to your attorney, have your friend get with a real estate agent (or call yours) and write an offer detailing the above. this way, you won't jettison a good offer, for a passing remark from a friend that won't come through in the end. and now you have a legally binding BACK UP OFFER.
Shelly made a good suggestion. Have your friend put his offer in writing and let the bank know about the back up offer. However, still confused if the bank has accepted your current offer or not, sounds like not. If they have, then too late for back ups unless the buyer cancels.
We are approved to participate in the short sale process. We had to submit a cost of living report, hardship letter, w-2 forms, recent pay stubs, proof of listing with a licensed agent, etc. to be approved to participate in the short sale process. Since we have been approved for short sale participation and the appraisal has been completed the bank will now begin looking at short sale offers and make a decision to either accept, counteroffer or deny(according to the Wells fargo liquidation department).
I actually got my copy of the purchase agreement out. I did not quote it right . It reads "contract contingent upon lender's approval of short sale offer" which is $160,000.
So does than mean until the bank accepts the $160,000 short sale offer that I'm not in contract?
Sorry for the confusion!
you currently have a RATIFIED contract, with a contingency. the contingency is the banks approval of the price. I also wish your contract read "without pursuit of a judgment for definciency". Because the bank can "approve" and still come after you right now for all or part of the definciency.... and you would have to perform as the bank accepted per your agreement.
It reads "contract contingent upon lender's approval of short sale offer" which is $160,000.
So does than mean until the bank accepts the $160,000 short sale offer that I'm not in contract?
Sorry for the confusion!
Thanks for clearing up the language. You are in a contract that requires the bank to accept the offer to complete the sale. If the bank does not accept, then the contract is canceled.
Shelly, I called Wells Fargo Loss Mitigation/Liquidation Dept. because your comment about me possibly having to repay the deficient amount made me gasp. The representative said that they forgive the deficient amount and do not pursue judgement with their short sales. I sure hope she is right!
She also said that I can cancel a the short sale at any time even if the short sale offer has been approved and its the day of closing (obviously I would be liable for my realtors commission and the cost of any inspections, surveys, etc that had been performed).
... She also said that I can cancel a the short sale at any time even if the short sale offer has been approved and its the day of closing (obviously I would be liable for my realtors commission and the cost of any inspections, surveys, etc that had been performed).
I'd check with an attorney on this. Your buyer may have a different opinion. They could sue to enforce the contract.
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. It reads "contract contingent upon lender's approval of short sale offer" which is $160,000.
