Real Estate Advice: Backup Offer in a Short Sale

If the bank does not approve the contract, and submits a counter, and the buyer subsequently walks, then the seller will not necessarily have to relist the property. Once the current contract is canceled, the seller can accept the new offer and it will be submitted to the bank for approval. The good news is that at this point, the listing agent should know what terms are required to get an approval from the bank. And you can submit your offer with those terms in place, if both you and the seller agree to them. From this point forward what happens will really depend on who the lender is. Some lenders will be able to approve the short sale relatively quickly because the “investors” have already stipulated their terms and they are already far along in the short sale process. However, some lenders start from the beginning because it’s a new buyer.
Your agent should be able to ask these questions of the listing agent so that you will know what to expect.

Bank of America Offers Huge Money for Relocation Assistance on Some Short Sales

Bank of America has announced that it will provide up to $30,000 in relocation assistance to delinquent borrowers who cooperate with the bank in obtaining a preapproved short-sale price prior to submitting an accepted offer.

The qualifying short sales must be initiated before the end of 2012 and close by Sept. 26, 2013 in order to be eligible for the payments  at the close of escrow. According to Bank 0f America, payments can be anywhere from $2,500 to $30,000 and will be determined by using a calculation that includes the value of the home, the amount owed on the loan, and some other variables.

To find out if you’re eligible for Bank of America’s short-sale relocation assistance program, you can call a program specialist at (877) 459-2852. Qualifying short sales that have already started but have not closed may still be eligible for the program.

If you need any assistance in putting your home on the market and negotiating this short sale, please call me at 310.542.9054.

(Info regarding this relocation assistance program was reported by Inman News.)

CalHFA and Short Sales

I wanted to share some thoughts on CalHFA short sales. They are different from other lenders, and are very strict on how the calculate hardships. I’ve heard, time and time again, from colleagues, that CalHFA never approves short sales. If a borrower’s income has not been effected, they will most likely not grant a short sale. It’s very black & white. But it appears that this is slowly changing. I’m in the middle of negotiating a short sale with them now and my client and I have gotten past their front lines: the Collections Department. Now we are in talks with the short sale department and even though my client has not suffered from a loss in income, we have demonstrated that her increased mortgage payment along with her other expenses far outweighs her income. If the investors approve this short sale, it will be a sign that they are slowly changing their position and will be more amenable to work with financially challeneged borrowers.

Backup Offers on Short Sales

Someone asked me today if it made sense to make a back up offer on a short sale. I think it’s a good idea. Short sales can take an average of 4 to 6 months to get lender approval. Several lenders are currently rolling out new systems in hopes of delivering short sale approvals on a more expedited schedule, but until this happens, you should expect a long waiting period. Because it can take a great deal of time, it’s not uncommon for the buyer to walk before the lender makes their decision. Many buyers will find alternate properties while waiting for the bank. So in this scenario, a back up offer would be able to step up and enter into a contract with the seller. Now, don’t get any silly ideas that the process would move more smoothly because the lender has already approved the short sale. If you have ever seen any lender approval letters, you would notice that the lender stipulates that the approval is granted only for this particular buyer. If a new buyer comes into play, the lender will take a few steps back and start much of the process all over again. It could still be several months before you receive your approval letter and are able to open escrow. I did encounter this situation recently. I had clients who made an offer in June 2009. They were not the accepted offer, but we let the listing agent know that we would like to be a back up. In the mean time, my clients continued to look for another property. In October 2009, the short sale approval came through, but the seller had lost their buyer. My clients were next in line. They entered into contract with the seller, and then they waited and waited… until finally we received written short sale approval in the beginning of March 2010. We were able to close escrow in the first week of April, nine months after they submitted their original offer! It always seemed like a long shot and something just sitting there on the backburner, but it turned about to be the best move. My clients have a new home that they love.