Educate me re: Short Sale Purchase Please

[ProPerDoper]

What is the name of your state? CA

We've become interested in a home up for Short Sale. Seems it's been on the market for about 5 months. My agent called the listing agent, and the response was that they were waiting on a counter offer. She was discouraged from even showing us the property.

I know very little about the short sale process. I've been told that the bank can continue to entertain offers all the way up until you actually open escrow??

Does that bank legally have to accept your offer if you come in with a full asking price offer? (MLS listed property)

What else should I learn/think about/ask?

 

[FlyingRon]

As far as you are concerned, a short sale is just like any other, except that you're at a higher risk of the transaction not going through.

You make an offer, if the OWNER (not the bank) accepts it, then at closing you are supposed to get clear title after providing the agreed upon price. Of course, the OWNER can't do that unless the bank agrees to take the amount of money you offer as payment in full to release their interest, this is why no sane owner will accept he has approval from the bank.

The owner (not the bank) can solicit other offers up until he accepts one. This is why it's always a good idea to put a time limit on an offer so they just don't hold it for a long time to see if something better comes along. You can (if they haven't yet accepted) withdraw your offer now (the threat of a withdrawl may move things along).

 

[ProPerDoper]

As far as you are concerned, a short sale is just like any other, except that you're at a higher risk of the transaction not going through.

You make an offer, if the OWNER (not the bank) accepts it, then at closing you are supposed to get clear title after providing the agreed upon price. Of course, the OWNER can't do that unless the bank agrees to take the amount of money you offer as payment in full to release their interest, this is why no sane owner will accept he has approval from the bank.

The owner (not the bank) can solicit other offers up until he accepts one. This is why it's always a good idea to put a time limit on an offer so they just don't hold it for a long time to see if something better comes along. You can (if they haven't yet accepted) withdraw your offer now (the threat of a withdrawl may move things along).

Thanks for the reply.

Here's where I'm confused; In a regular real estate transaction, I believe the seller is legally bound to accept a full price offer. (True?)

If we come in with a full price offer on a short sale, is the owner bound to accept? Or does the bank simply have the authority to reject it?

 

[seniorjudge]

Q: Here's where I'm confused; In a regular real estate transaction, I believe the seller is legally bound to accept a full price offer. (True?)

A: Not really. The seller can refuse any offer; but, of course, there could be legal and monetary ramifications.



Q: If we come in with a full price offer on a short sale, is the owner bound to accept? Or does the bank simply have the authority to reject it?

A: You are dealing with the owner, not the bank.

 

[ProPerDoper]

Looks like the bank has the final say though....

I'm advised by two different real estate agents, and a loan broker that in this situation, the bank has the final say.

Apparently, the owner can accept an offer, but the bank has the authority to accept or reject, pick and choose between the best offers, and drag their feet in the process.

The real estate agent must be exceptionally sharp and stay on top of the process, and it helps if he/she has a relationship with the listing agent.

Comments?

 

[FlyingRon]

Here's where I'm confused; In a regular real estate transaction, I believe the seller is legally bound to accept a full price offer. (True?)

Nope. The asking price isn't an offer in it's own right. The only thing that can muddy that water is if you can make a compelling argument that your reasonable offer was denied due to racial etc.. reasons.

As I said before, the seller is the only one that can accept the offer. He however, is a fool to accept the offer without the banks concurrence if he intends to sell short.

 

[nextwife]

If we come in with a full price offer on a short sale, is the owner bound to accept? Or does the bank simply have the authority to reject it?

The owner is not bound to accept it.

And not all offers are created equal.

Example: A $155000 CASH offer closing in three weeks with no continquencies may be preferable to a $164,000 offer subject to financing, closing Dec 30th.

Why? One is more of a sure deal.

Less carrying cost.

If it's vacant, less opportunity for vandalism or theft from the home. And no heat o0r winterizing costs.

AS to a short sale. If the home is owned by someone who owes more than it's worth, the bank must decide if they will take less for their payoff AND the owner must decide if they want the offer.

A short sale requires the current lender to agree to accept a smaller payoff. or THE OWNER MUST BE CAPABLE OF COMING TO CLOSING WITH CASH. Or BOTH.

 

[ProPerDoper]

Good perspective...thanks. I've found more here:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/12/BUC5RADBP.DTL

 

[FlyingRon]

Don't I know it NextWife. I bought at a previous market peak in New Jersey (mid eighties) and when I had a forced relocation I ended up having to take cash to the table to sell it. Fortunately, I had converted it to rental use for a few years before I sold it so I recouped some of that loss.