RealTown's RealTalk

I submitted a short sale package today to Chase and with a second to Citi.

I believe that Pending taking backups should be the proper status. Anyone have anything to add?

Hi, Brad. You don't say where you are -- I'm in the Tampa Bay area. We are putting "3rd party approval required" in all our short sale listings and use a "short sale" addendum on the contract that says the bank may entertain multiple offers. Some buyers and their agents want us to pend the listing while waiting on the lender approval (and cross out that part of the FAR/BAR approved addendum). I won't do it. It invites low-ball offers that in-effect take the listing off the market during an approval period that is taking sometimes 3-6 months. With a "pending" or "active with contract" status, the listing won't go out on automated searches from the MLS to clients and sometimes will be removed from third party web sites. I don't change the active status until the lender approves the contract and we go into the inspection or financing period.

This is what our Association instructed us in re short sale transactions in MLS:

[At NAR`s mid-year conference 2008 some decisions were made for MLSs regarding
short sales . . .Once you have an executed contract the listing must be pended in the MLS. The approval of the lender is secondary to placing the listing pending, in other words you can not wait for the short sale approval from the lender to put your listing pending. Mark continue to show if your client wishes.]

And as far as backups, our Short Sale Addendum has this verbiage:

http://www.realestatebhc.com/Backups.JPG

and so our 'agent-only remarks' say "Awaiting lender approval; submitting all subsequent offers to Lender until an offer is approved."

YMMV of course . . . that's in AZ.

Candice

Candice A. Donofrio, ABR, CCSS, ePRO, MRE, REALTOR
Owner/DB Next Wave Real Estate Investments 928-704-5181
Bullhead City AZ ~ On The Beautiful Colorado River
Certified ePRO Internet RE Professional and Trainer
Certified Commercial Sales Specialist and Instructor
Candice@RealEstateBHC.com www.RealEstateBHC.com
www.RealEstateBHC.biz www.CommercialBHC.com
www.Twitter.com/CandiceD www.Twitter.com/bounceradio

Reality is you don't have a deal until bank approves it! IMO, this would be similar to making an Offer on a privately Owned (typical deal) and expecting agent to change the status to P or PB while Offer is being negotiated.

Jim
Jim Cummings
AVALAR 360
512-633-3853

JIM
Jim Cummings
AVALAR360
512-633-3853

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From: "Tish Osborne"
Date: Fri, 24 Apr 2009 16:34:57 -0700
To: Jim Cummings<jim@austintxmls.com>
Subject: RealTalk: Re: Pending or Pending taking backups ID00DTAP

>>Mary Lou Wall wrote:
>>YMMV, what does this mean Candice.(sic)<<

PMFJI. Google is your friend. :) http://google.com; search term: YMMV

Fred
fred@salzer.us
Poway, CA

Hi Trish,

I'm in Texas. I have since called the Texas Assoc. legal hotline. I think Pending taking backups is the proper choice here.

When people think of "backup contracts" it is usually in the context of a Buyer only needing to perform to retain his primary position. But in the case of a backup to a contract with a short sale adendum, not only does the Buyer have to perform but the leinholding bank must also cooperate to prevent the contract from terminating and thereby elevating the backup to the primary position.

I tend to get confused thinking about all of this. I am proceeding slowly, seeking clarification from all parties. I feel like there is a good chance that I will get a significantly better offer in a few days. The Buyer's agent with the present offer is not expecting to lose the primary position as long as the Buyer performs. It is a learning experience for us in this area. Short sale transactions have not been common in this area.

<Reality is you don't have a deal until bank approves it! >

Practically speaking that is true but technically when Buyer and Seller sign the contract that is a done deal - subject to approval. This is why it is confusing to me. Technically the primary contract is in the first position but it seems to me to be sort of meaningless because it can so easily lose it's first position; unlike the typical backup situation.

I appreciate everyone's feedback. Maybe we can get some clarity. Short Sales may be larger in the future.

The second leinholder, Citibank, is stipulating that the Home Owner sign a note in addition to receiving $3000 from the sale proceeds. Is that common in anyone's experience? In this case I believe that the Home Owner will agree but I imagine that this policy could kill a lot of deals.

Wouldn't most Home Owners rather just go to foreclosue rather than to take the short sale hit on their credit report AND also have a note to pay off?

First of all remember that all things are negotiable.

That said, yes, this is becoming more and more common. These second mortgages are taking major hits and really is it all that unreasonable that they would like to get a little more back? And remember that the money was borrowed.

As to sinking a lot of short sales... maybe some. But one can negotiate these notes as well. In most cases that I have seen these notes are not crazy in amount or terms. If they are not affordable show the lender. Maybe a compromise can be reached.

Steele