Hello everyone. Mine will probably be a quite different blog from what you are used to seeing. I am a first time short sale buyer - not an agent, not a seller, and not an investor (per se), although this will be an investment property. I have purchased a property (completed foreclosure) via auction.com previously. Same seller (BoA). Start to finish we closed in less than 45 days with that transaction. I have read many of the comments on the various blogs, and, as a buyer (or even if I was a seller), I find the general "attitude" of most Agents to be less than desireable. Here's "my story" (the short version):
Purchased a short sale property through auction.com. Auction ended Janaury 12, 2013. Was listed as "Bank Approved Short Sale" which tells the Buyer "hey, they already looked at this" and I can close this thing in about 60 days (or less). Estimated closing date was 2/26/13. All documents say transaction will close within 45-60 days. Today was day 54, and I don't even have a bid confirmation, much less Lender's approval. It should be noted that my agent is also the listing agent - but from what I have found, the listing agent does most of the document and information input anyway (via Equator), so I am "at that agent's mercy" either way. To me, the additional commission should be an added incentive to get the deal closed as quickly as possible. "Dual agent" also reduces some back and forth and the good old "he said - she said" "excuse(s)".
January 17th agent tells me "I have provided everything they have asked for, and we are waiting on the bank". That sounds pretty good, but the reality is contract was due on January 14th, and we were 3 days late from the start. Not to mention the agent had not yet even asked me for my information (first 5 of ssn etc.). Agent called and obtained this information from me on or about 02/17/13. Numerous e-mails from me to my agent, reminding agent of dates, holidays (non-business days) etc., and requesting to know the transaction status etc. goes on through the date bid confirmation was to be provided (02/04/13 - 15 business days from end of auction). Same old same old - we are waiting on Bank - no new tasks in Equator blah blah blah. "Be Patient" and "it can take months for a short sale" is what I hear all the time.
Original closing date nears, and I, the Buyer, prepare an extension. That's right, I "had" to do it myself, or risk the closing date just passing by, and everything going down the drain. On 02/25/13 my agent re-does the extension, and we extend closing date to 04/11/13. As of today, the agents fee is not even right on the estimated HUD1. Now, if "you" cannot get any other number right on the HUD1, "you" should be able to get "your" fee amount right, right? Agent either cannot or will not provide the Equator status to me (one of the six), which tells me we have oodles of problems still. Agents response on phone tonight was "I will wait for someone to tell me it is wrong, and if not, it must be right" (or pretty close to that - regarding their commission/ fee) So for those of you who do not know, so you will know - the allowable commission is 6% of the BID PRICE - not the Total Purchase Price. We also "thought" last night it might be a flat fee - at more than double that 6%. It seems that "discrepancy" got fixed this afternoon. Like the Bank and/or Lenders are going to have more than 30% of the purchase price "ate up" in commissions/fees!
I found and have read the BoA Equator agent reference guide. It says all over the place - deadlines and accuracy are critical. My guess is that the Equator system serves as a check and balances for all the numbers (offer amount, commissions, fees and closing costs). Some or all of those are input via other agreement(s) (listing agreement etc.). If/when they do not match, the system kicks it out, and corrections need to be made. As a buyer, I do not have access to the Equator system, although I did register an account with them. I can look at properties for sale, like I want to do this again! I would also think it tracks the documents and dates. I had to resubmit my proof of funds, since it was more than 30 days.
So, my question to "you" superstars is: Why is this? Why does it seem that deadlines are treated as "purely mythical", and accuracy seems to be the least of an agent's concern? I have seen comments that pretty much flat out say these things. I have also had agent(s) tell me this is how they view short sale(s). Why do agents continue to tell buyers (and wholeheartedly believe and expect) a short sale will take months, when the bank says it will take 45-60 days? (Keep in mind in this case, I beleive the BPO was done prior to the auction, so a valuation dispute is not (currently anyway) in any way an issue). As far as I know, the Lender has not even seen this stuff yet. Perhaps BoA has not seen it either.
Thanks in advance for your insights and responses.
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Hi Gregory:
I'm inclined to agree with Bryan in saying that making a "pest" of yourself can create a lot of havoc in a short sale situation. One thing that most short sale buyers fail to understand is that each step of the process can involve an entirely different department (i.e. marketing, review, closing, etc.) in the lending institution. Additionally, the first level Negotiator seldom has the sole authority in deciding whether or not to approve the short sale. Most often, they will have a basic level approval criteria that has been set by the Investor (entity that actually owns the mortgage note), but will still have to submit everything to the Investor for final approval...AND if there's MI involved, that's yet another level of review that the file must undergo. In your defense, it's been my opinion that some agents have been a little loose with the term "approved short sale" (not saying that this is the case in your situation). Also, keep in mind that lenders tend to order multiple BPO's at various stages of the process (if the previous one becomes dated). Hope that this has been helpful and good luck!
Auction.com would work well for REOs. I see zero advantage to using it for Short sales as the lender still has to approve the short sale. My concern is putting my seller at risk by losing control of the offer/acceptance part of the short sale. The lender has ZERO authority to accept a contract on behalf of the seller.
In the busy market s like Florida finding a buyer for a short sale at a good strong price takes about a week. Buyers are scrambling to find properties to buy. Auction.com will limit the buyer pool as many buyers and their agents will not want to get caught up with an auction.
Equator has different timelines and different requirements depending on the lender and investor. I have found that calling in once a week is adequate. Calling in more than that (except when needed) can cause delays. As long as the file is moving forward there is no need to call in more often.
We need to be diligent but not be a pest. Pestering the lender when things are already moving forward is a sure fire way of getting your file placed at the bottom of the stack. Agents have a tendency of escalating too soon and too often. This is a mistake.
A weekly comprehensive update to all parties is a must.
by the way I shared your article on our Facebook page at https://www.facebook.com/shortsalesuperstars
Thank you for the information Bryant. You raised a valid point about the Lenders and their time-lines in Equator, something I had not taken into consideration. You also helped me think of another point about Real Estate transactions in general - and I think a huge problem in short sales - lack of communication. Too many people involved and not near enough communication. One thing I do, and would like to see more agents do, is keep everyone in the loop with e-mails. I add all addressees, or at least cc them on nearly every e-mail. This includes the agent (listing and buyers), the auction company, the escrow agent and the lenders servicer (in the case NDS). I have noticed that nearly every response from any of the foregoing is only addressed to me. Thiese short sales (and all transactions) take working together and a lot of communication.
The attraction to "most" buyers in auction.com is the timing factor. 45 days for most closings. And no counter offers etc. You bid up to what you are willing and able to pay, and it is over within a few days. The auction process is not really confusing at all, and neither is the post auction process (closing). They do have some very short deadlines (2 hours for Buyer to sign and return documents on auction end date).
Calling in once a week seems a bit too little really. I am going on the "asumption" the Equator system is set up for the same 30-45 days overall? I would think anything that expires within that 30-45 days would automatically need to be re-input (i.e. proof of funds letter, new paystubs for borrower, draft HUD1 etc.). I suppose IF I were the Agent, and knowing how it currently operates, I would be calling every day, or perhaps twice a day (first thing in the morning and last thing at night, and be following up Equator e-mails - if for no other reason to ultimately save myself some aggravation. If it were me, I would be doing e-mails as above, and have documentaion of "who did what, where, when" etc.
Thanks again for your input.
hi Gregory. Thanks for sharing your experience from the buyer's perspective. I too tell my buyers and sellers that it will take 3-4 months to get a response form the lender. The reality is that no matter how long the lender states it should take it rarely get's done in 3-45 days..
As a listing broker it's imperative that I set realistic expectations. I'd much rather have the buyer prepared for a 4 month wait and get it done in 2 than tell them 2 and take 4.
Equator is an automatic system that is "tasked" based. Tasks have to be completed in a timely fashion by the lender and the agent or the file could be shut down. The listing agent can see the deadline for the agent tasks but cannot see the tasks outstanding for the lender. This is why the agent should call in once a week to make sure the lender is moving forward on their end.
Auction.com is a 3rd party vendor that some lenders recommend. Personally I see no value in auction.com and most of my sellers just opt out. In my opinion all auction.com does is take the control of the transaction away form the agent. And the buyer premium can be prohibitive for some buyers. Not to mention the entire auction.com process is confusing and adds another layer of complications to an already complicated transaction.
The listing agents main job with a short sale is to keep things moving forward. If we don't continually push the lenders the short sale will die on the vine.
We teach agents to update their sellers and buyers at least once a week. Keeping a buyer or seller in the dark during a short sale is a sure way to failure.
So to answer your question: Why is this? Why does it seem that deadlines are treated as "purely mythical", and accuracy seems to be the least of an agent's concern?
I cannot relate to this at all as I am constantly reminding the lenders of the deadlines on the contract. Timelines do matter to the agents. It's the lenders that will get to it when they get to it.
The other answer is that some agents just suck. And some shouldn't be doing short sales at all.
Hopefully you are finding this site helpful. Be sure your agent joins of he hasn't already.
I hope this helps.