Shortsale then Flip , is this allowed ?
I just took a property off the market after receiving an offer , the offer is a low ball but what the heck , I felt at least it will get the ball rolling to submit package to bank since they did not want anything without an offer.
One week later I get a call from another agent that has a buyer that will pay 25K over what we get the home for and wants to get it in writting.
Can this be done ? , do I have an obligation to contact bank and let them know their is another interested party ?
neither offer would be enough to make the bank whole , so the seller could care less , the seller has filed BK and included the note , the BK has been discharged .
I would want to relist the home the same day of closing and re sell it to the new buyer
I feel the bank has had ample to time to do its due deligence and determine the price of this home and if they accept an offer it does not matter if someone comes the next day or the next year and offer more
What do you think ?
Replies to This Discussion
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Permalink Reply by Tara Nagelhout on
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While I am totally aware the bank does not accept the offer, we have so far allowed them to be in charge. In what other situation would be submit a copy of the offer, the HUD, disclose buyer names..? NEVER. But we do it in a short sale. The state has yet to submit their requirements in writing, they are visiting us and having large conferences in which they spell it out. They did have a joint meeting with the Department of Justice for a few hundred Realtors which were able to reserve their seat and there was a slide show, but it didn't have enough details.
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Permalink Reply by The Negotiator on
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If you put the bank in charge, then you must have the homeowner sign a listing agreement with the lender, right? Why would you give power to an entity who only wants what's in their best interests? This is why you as the Realtor are the one who REPRESENTS the homeowner. You take charge ... not the bank.
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Permalink Reply by Jeff Payne on
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Not sure I follow Tara. There is not a state law, just a suggestion? Not sure how giving the bank a copy of the HUD, the offer and the buyers name is allowing them to be in charge. We are asking them to take a lesser amount than the amount they are due so I guess that does make them in charge of most of the process but it does not allow them to tell you how many offers to send in because the seller still owns the property.
Are short sales fairly new in your state? Florida reacted much the same way about 4 years ago when short sales became the market of the moment but once they understood that the bank is only there to release the lien, the process became much more simple.
Again, I would be very careful following your states "suggestion" of sending in all offers. Just the fact that they told you to mail in the package shows their lack of knowledge or their inexperience on the topic. A short sale contract should not be treated any differently than an equity sale contract, there can only be one offer accepted by the seller and that offer is in first position.
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We have been doing shorts as daily norm for maybe four years. My first one, however was nearly nine years ago.
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Why would the state start making silly suggestions like sending all offers to the lender now?
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By your comment saying "some banks have a 90 day hold policy," I suspect that you have not done many short sales. Banks DO NOT have a 90 day hold period. You may be confusing the 90 day thing with the former 90 day no flip rule from FHA, which has nothing to do with this discussion. There is, however, the Bank of America 30 day hold and that's it. Wells Fargo had a stint with a hold time .. but not lately with me ...
Anyway, executing a short sale contract and submitting to the lender is handled like any contract. For example, if you and a"buyer" submitted an offer/contract for a "traditional" sale on a property and the Seller signed it... Would it be OK for the seller to accept a higher offer a week later even though your contract "is" executed and was executed first? I'm sure you said "hell no," right? Wouldn't that piss you off and wouldn't you "report" it? I'm sure you would and I would hope you wouldn't be so mean with short sales.
One contract at a time submitted to the lender and excepting ONLY back-up offers with the terms clearly laid out. Most short sale contract addendum's have check boxes for allowing or not allowing back-up offers. All of mine are NOT allowed. If I submitted another contract to the lender then I would be in BIG trouble for breaking contract law and could be sued!
Flipping is perfectly legal people ... short sales do not change the rules or get special privileges.
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I had one in which I was representing a buyer on a property we didn't realize was a flopper (not a flip, a flop). Wells Fargo was giving her the loan. They wouldn't do the loan because it had recently been a short sale with Wells Fargo. I found this absolutely fascinating since they didn't seem to care when it was being sold, but when my buyer came along and was totally unaware of the prior transaction, they wouldn't give her the loan. It was conventional financing 20% down, so there was nothing else involved. I was livid. Luckily, she just pulled the cash out of the bank and bought it anyway, but come on!
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Tara, my experience with Wells Fargo on their lending side has been very much the same. I haven't had the displeasure in several years but the last time was it for me. I got the feeling that they rely on sheer number of orgininations and only close a small portion of them. I have heard EVERY excuse in the book from their underwriters as to why they can not close the loan or why they can never close one on time.... that is another topic for discussion though
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Negotiator, Spot on my man!!!!
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Permalink Reply by Beverly Cibulsky on -
Here is an interesting article you may all want to read!
http://www.loansafe.org/connecticut-real-estate-agent-sentenced-to-...
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That is totally different in that the Realtors kept the proceeds from the flop. Seru\iously..........how incredibly stupid could two people be?
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Very interesting. I sure would like to see more information on this. One big issue that I see is lack of disclosure, especially of they did not disclose their relationship. Did the higher offer get accepted first and they then drafted a lower offer to submit to the bank in order to pocket the difference.
Did Regions Bank have a duty to verify that the offer they approved was fair market value? The 2 offers were quite far apart and if the property was actually worth the higher offer, how did Regions Bank not know it if they did their due diligence.
I see both parties at fault here with the limited information that we see. Agents did not disclose and may have conspired to send in a lower offer, knowing that they may be able to profit from it. Regions Bank didn't do their homework by finding out what the property is actually worth.
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