Short sale process

octrends

octrends

New member
I am in the process of pursuing a short sale SF in Irvine. I put an offer in Jan. Actually bank had already approved it for some other buyer but he wasn't interested any more. At that time, as per the listing agent recommendation we forwarded a new offer to bank as a new buyer so that bank doesn't create any problem. We did think about using the same approval to do the closing, but since it was on a different buyer name, we dropped it, just to avoid any issues.

Today bank responded back with an email and asked why this house hasn't closed yet. Now it seems listing agent wants us to open a escrow so that he can send all these details to bank to get the approval letter.
I am not sure what's the process of short sale, i thought, we will get a approval letter first and then we are suppose to open a escrow. Is there any harm opening a escrow before getting a approval letter.

BTW, we are using listing agent as our agent(buyer) as well.

 
octrends said:
I am in the process of pursuing a short sale SF in Irvine. I put an offer in Jan. Actually bank had already approved it for some other buyer but he wasn't interested any more. At that time, as per the listing agent recommendation we forwarded a new offer to bank as a new buyer so that bank doesn't create any problem. We did think about using the same approval to do the closing, but since it was on a different buyer name, we dropped it, just to avoid any issues.

Today bank responded back with an email and asked why this house hasn't closed yet. Now it seems listing agent wants us to open a escrow so that he can send all these details to bank to get the approval letter.
I am not sure what's the process of short sale, i thought, we will get a approval letter first and then we are suppose to open a escrow. Is there any harm opening a escrow before getting a approval letter.

BTW, we are using listing agent as our agent(buyer) as well.
Click to expand...
Not sure why you would open escrow until you have official approval from the lender/s and I'm not sure the escrow company would be too keen on doing it without a lender approval.  The possible issue that I see in opening an escrow without an approval is that the clock may start ticking on the timing of removing contingencies which could put your earnest deposit at risk.  I would not advise my buyer to open an escrow with a deposit of any significance without a formal approval from the lender/s.  Also, be really careful since the listing agent is representing both you and the seller.  Remember, the listing agent's first priority is to serve the interest of his seller (and unfortunately their own pocket since they'll get to double dip on the commission).  That being said, feel free to contact me if you have any questions during the process and want to get some insight from an independent 3rd party. 

I am curious, why did you decide to have the listing agent represent you on the purchase and not use another independent agent?  Did they somehow hint to you that if you went through them that you would stand a better chance of getting the home?  I ask because that is exactly what an agent told one of my buyers at an open house recently.
 
usctrojancpa said:
octrends said:
I am in the process of pursuing a short sale SF in Irvine. I put an offer in Jan. Actually bank had already approved it for some other buyer but he wasn't interested any more. At that time, as per the listing agent recommendation we forwarded a new offer to bank as a new buyer so that bank doesn't create any problem. We did think about using the same approval to do the closing, but since it was on a different buyer name, we dropped it, just to avoid any issues.

Today bank responded back with an email and asked why this house hasn't closed yet. Now it seems listing agent wants us to open a escrow so that he can send all these details to bank to get the approval letter.
I am not sure what's the process of short sale, i thought, we will get a approval letter first and then we are suppose to open a escrow. Is there any harm opening a escrow before getting a approval letter.

BTW, we are using listing agent as our agent(buyer) as well.
Click to expand...
Not sure why you would open escrow until you have official approval from the lender/s and I'm not sure the escrow company would be too keen on doing it without a lender approval.  The possible issue that I see in opening an escrow without an approval is that the clock may start ticking on the timing of removing contingencies which could put your earnest deposit at risk.  I would not advise my buyer to open an escrow with a deposit of any significance without a formal approval from the lender/s.  Also, be really careful since the listing agent is representing both you and the seller.  Remember, the listing agent's first priority is to serve the interest of his seller (and unfortunately their own pocket since they'll get to double dip on the commission).  That being said, feel free to contact me if you have any questions during the process and want to get some insight from an independent 3rd party. 

I am curious, why did you decide to have the listing agent represent you on the purchase and not use another independent agent?  Did they somehow hint to you that if you went through them that you would stand a better chance of getting the home?  I ask because that is exactly what an agent told one of my buyers at an open house recently.
Click to expand...

Thanks for your valuable advice. In irvine, it's quite common having a same agent specially if it's a short sale home. i see many closed houses having a same agent.

Rightnow he's not pushing me to deposit any money into escrow, not sure why? just wanted to open it and on the side, he's suggesting to do a home inspection or open an escrow after the home inspection. As long as house is good, nothing comes up wrong during inspection and we are getting at the listed/offered price, we are fine.
Also how this  removing contingencies works? What kind of contingencies we need to take care of? since we may be doing a home inspection before opening a escrow.
if the house comes in good condition then what other contingency i need to look for?

Once again thanks for ur help.
 
octrends: Just my opinion but if you are actively looking for a house, it would probably be in your best interest to have your own agent. While you think that the selling agent may be interested in your needs, in many cases the priority is with the seller. Plus, a buyer's agent can help you do many other things like searching for other homes while you are waiting for short approvals.

As for removing contingencies... that's usually the point of no return. The seller and/or buyer can't back out without some type of monetary compensation but that is dependent on the contract and people here can speak on that better than I since I'm not a realtor.

Good luck... and let us know how things go.
 
irvinehomeowner said:
octrends: Just my opinion but if you are actively looking for a house, it would probably be in your best interest to have your own agent. While you think that the selling agent may be interested in your needs, in many cases the priority is with the seller. Plus, a buyer's agent can help you do many other things like searching for other homes while you are waiting for short approvals.

As for removing contingencies... that's usually the point of no return. The seller and/or buyer can't back out without some type of monetary compensation but that is dependent on the contract and people here can speak on that better than I since I'm not a realtor.

Good luck... and let us know how things go.
Click to expand...


Yes, you r right to have own agent. But i am not planning to do whatever the seller agent says. i will do whatever feels right to me. if it works out then its good otherwise i am always ready to back out. I don't know if any body has seen the short sale mkt or not, its controlled by the listing agents. i have seen many closed listings where both side had the same agent. lets see how it goes, i will keep updating here.
 
octrends said:
I don't know if any body has seen the short sale mkt or not, its controlled by the listing agents. i have seen many closed listings where both side had the same agent. lets see how it goes, i will keep updating here.
Click to expand...

Per the SoCalMLS, since 1/1/2006 there have been 665 reported closed short sales in Irvine.
Of those 665, 101 (15.2%) had an agent that represented both buyer and seller.
The remaining 564 closings (84.8%) used different agents to represent the buyer and seller.

Having closed on both sides (but not for the same transaction so far), I agree with octrends that the listing agent makes all of the difference.  Some know how to get the job done properly, and others are just fishing in the toilet.

Good luck,
-IR2
 
Lots of buyers like short-sale property because it comes with discount on price tag.

To close a short-sale , it need following elements
Compromise, and patient.

I have purchased a short-sale home in Irvine.
Irvine offer very limited supplies, if you insist to buy one or two models.
It would take forever, because the model you like may not be on the market at all.
So the first thing is to compromise on what you like.
This will broaden the potential pool of the houses.
After compromise , now you can make multi-offers to many short sales all at same time.
Personally, I made 15+ offers in NW, WB, WP before I nailed one.

You need to be patient. It takes me 8 months wait to get banks approval.
You also need a patient buyer agents such as USC or IR2.
As you know, 8 months is such long time.
If you don't have a patient buyer agents.
Some aggressive agents might urge you to buy regular-sale property.
So they can earn commission sooner, and spare their time to work with next buyer.

If you move-up buyer, there is another trick.
Re-finance your current house, convert equity into cash.
Use cash or big down to get privileges.
Cash is always welcome by trustee banks.
After short-sale close, sell your 1st house right away to reduce debts

I have purchased a short-sale home through my own buyer agent.

I agree IR2  there are (84.8%) used different agents to represent the buyer and seller.
 
Thanks IR,

My intention to start this thread was, to understand the short sale process, during this, came to know about the contingencies issues. I am wondering what other contingencies i will come across once a home inspection is done. I do have some Q's like how to check whether is there any lien on the title etc.....

Let me know what other issues i need to be careful of?

Thx
 
octrends said:
Thanks IR,

My intention to start this thread was, to understand the short sale process, during this, came to know about the contingencies issues. I am wondering what other contingencies i will come across once a home inspection is done. I do have some Q's like how to check whether is there any lien on the title etc.....

Let me know what other issues i need to be careful of?

Thx
Click to expand...
guava said:
Lots of buyers like short-sale property because it comes with discount on price tag.

To close a short-sale , it need following elements
Compromise, and patient.

I have purchased a short-sale home in Irvine.
Irvine offer very limited supplies, if you insist to buy one or two models.
It would take forever, because the model you like may not be on the market at all.
So the first thing is to compromise on what you like.
This will broaden the potential pool of the houses.
After compromise , now you can make multi-offers to many short sales all at same time.
Personally, I made 15+ offers in NW, WB, WP before I nailed one.

You need to be patient. It takes me 8 months wait to get banks approval.
You also need a patient buyer agents such as USC or IR2.
As you know, 8 months is such long time.
If you don't have a patient buyer agents.
Some aggressive agents might urge you to buy regular-sale property.
So they can earn commission sooner, and spare their time to work with next buyer.

If you move-up buyer, there is another trick.
Re-finance your current house, convert equity into cash.
Use cash or big down to get privileges.
Cash is always welcome by trustee banks.
After short-sale close, sell your 1st house right away to reduce debts

I have purchased a short-sale home through my own buyer agent.

I agree IR2  there are (84.8%) used different agents to represent the buyer and seller.
Click to expand...
Thanks for the info, i am also expecting it to take long time, therefore wanted to learn everything possible. if things works out to be fine, it's good else will move on to the next prop. lets see how it goes.
 
octrends said:
Since experts r busy, i did a google about various Contingencies, found an interesting link, talking about all kinds of contingencies
Hope it will help everybody
http://homebuying.about.com/od/buyingahome/qt/011508_Contingt.htm
Click to expand...
Sorry about that, many of my buyers were in a mad scramble to see if they could find a home to get that Federal tax credit.  There are two more contingencies that the link doesn't include...Reports & Disclosures and Insurability. 
 
Regarding the short sale i am pursing, as per my agent, bank has asked for the latest financial docs of mine as well as seller to run the final audit before apporving the short sale.  initially they had approved the sale price only and what they will pay etc....
Also it seems that it will take atleast 3-4 weeks,is this the right way????
 
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
 
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
 
octrends said:
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
Click to expand...
So they are asking for proof of funds...that's something standard buyers provide to sellers to show their down payment funds.  I have no idea on the timing of the short sale.  A lot of times it's like a black hole...a good listing agent will make all the difference in the world.  I would call the listing agent to get an update on a weekly basis.  Btw, what bank/s are the loans with?
 
octrends said:
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
Click to expand...

Everything is up to the discretion of the lender(s) until they send a short-pay agreement letter.  This letter will specify how much the lender will settle for and how long the offer is good for.  Once you have a payoff and a date from all lenders (and possibly other lien-holders like HOAs), only then will you know how much longer it will take, if you still decide to proceed.

I'll edit and post a copy of an ever-so-elusive "short amount" approval here later.

Good luck,
-IrvineRealtor
 
usctrojancpa said:
octrends said:
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
Click to expand...
So they are asking for proof of funds...that's something standard buyers provide to sellers to show their down payment funds.  I have no idea on the timing of the short sale.  A lot of times it's like a black hole...a good listing agent will make all the difference in the world.  I would call the listing agent to get an update on a weekly basis.  Btw, what bank/s are the loans with?
Click to expand...
i am calling him every other day because as per one of my friend, final audit is usually the last step before the final short sale approval and it usually takes 1-2 weeks since short sale price is approved. bank name starts with W, one of the top 3.
 
IrvineRealtor said:
octrends said:
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
Click to expand...

Everything is up to the discretion of the lender(s) until they send a short-pay agreement letter.  This letter will specify how much the lender will settle for and how long the offer is good for.  Once you have a payoff and a date from all lenders (and possibly other lien-holders like HOAs), only then will you know how much longer it will take, if you still decide to proceed.

I'll edit and post a copy of an ever-so-elusive "short amount" approval here later.

Good luck,
-IrvineRealtor
Click to expand...
thx, as per my knowledge there's only 1 lien and i believe that should shorten the process to get the short sale approval. lets see how it goes, i am not in hurry but wants to make sure i am ready for the next thing before i get any request as well as has a complete details of these things.
 
octrends said:
usctrojancpa said:
octrends said:
usctrojancpa said:
I understand them asking for the seller's financials to prove hardship, but they are asking you for your financials?  Many if you told the bank that if they approve the short sale you'll get the loan through them (if they have a competitive interest rate).  You're making progress, albeit slow progress.
Click to expand...
thx, as per agent, they wants to make sure that buyer has enough liquid funds to close. at this rate, what do u think how long it will take? any other step or process must be completed before closing can happen or there are still more surprises to come.
Click to expand...
So they are asking for proof of funds...that's something standard buyers provide to sellers to show their down payment funds.  I have no idea on the timing of the short sale.  A lot of times it's like a black hole...a good listing agent will make all the difference in the world.  I would call the listing agent to get an update on a weekly basis.  Btw, what bank/s are the loans with?
Click to expand...
i am calling him every other day because as per one of my friend, final audit is usually the last step before the final short sale approval and it usually takes 1-2 weeks since short sale price is approved. bank name starts with W, one of the top 3.
Click to expand...
If it was Wachovia you'd be in for a shorter wait, but it sounds like it's Wells which drag their feet a bit (even though it's the same bank now).
 
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