Posted by Debe Maxwell on October 17, 2009 at 5:30pm
I originally wrote this post on Active Rain, "Presenting Multiple Offers to the Lender for Short Sale Approval" and was reminded today that there are still MANY out there who don't understand the difference between a short sale and a foreclosure! I actually heard on a local radio show, the commentor, who is a real estate agent, proclaim something like this, "And, YES, we present ALL offers to the bank and let them decide which one you (the seller) will work with!" Unfortunately, I could not call in to the show to clarify but, I have spoken with our NC REC attorney who agrees with 1-contract submitted to the lender, seller holds the back-ups. PERIOD!Questions and more questions! While visiting at the NAR site regarding the new short sale designation and visiting the 'discussions' link, I found several questions relating to short sales and one, in particular caught my eye."Can multiple offers be submitted to the lender without seller signatures or can only one offer be negotiated at a time? Can the seller sign multiple offers to submit to the bank?"Ahh, the question of the year! In Broker Bryant and Wendy Rulnick's classes (visit www.ShortSaleSuperstars.com) on short sales, we learned that we only submit one offer at a time. Numerous articles and webinars that I've seen during the last year also instruct agents to submit only one offer at a time. However, repeatedly, this question arises in our day-to-day business. Just yesterday, a client of mine who is selling a beach property informed me that it's been months and they have heard nothing from the bank--he said that they just could not understand because they had presented several GOOD offers to the bank! When I questioned him further, he explained that his agent had informed them that this is he way that she was supposed to handle this but, cannot tell him why the BPO has not been ordered or the bank has not responded. He asked me my opinion.Short Sale or ForeclosureHere is my best understanding of this process:A foreclosure property is owned by the bank, therefore, just as any client, we are required to present all offers to the bank for their evaluation, review and subsequent acceptance.A short sale property is still owned by the homeowner or said owner of record, NOT the bank. If we receive multiple offers for a short sale:* We present them all to the SELLER* We review each of them with the SELLER* We assist the SELLER in determining which Offer carries more weight--o Is the buyer prepared for the lengthy short sale process?o Is the agent willing to work with us during this long process?o How qualified is the buyer--if the bank were to counter this Offer, would they qualify for a higher mortgage or is the buyer at their maximum?o How 'clean' is the Offer?* Evaluate all aspects of the Offers and compare them, selecting the strongest* Remember that the strongest Offer does not always mean the highest sales price!* Keep the cleanest & best Offer and have the sellers sign and return copy to the buyer* NOW, submit the entire package including hardship letter, financials, comparables, etc. with THIS ONE ratified Contract to the Lender for their approval.* Begin the waiting short sale process.Sensory OVERLOAD!Once again, this is only MY understanding but, I have not spoken to one short sale expert who submits multiple offers. Instead, it has been my experience that if multiple, unsigned (by the seller) offers are submitted to the bank, nothing is ever done with them and this is a sure sign that the property will be foreclosed upon if the seller is unable to make their mortgage payments.I would love your opinion as I know that many areas of the country have done far more short sales than we have here in Charlotte NC and I value your knowledge and expertise.One thing that I know for sure with regards to the agents questions is that you don't submit multiple SIGNED offers (by the Seller) to the bank--you can't be 'under Contract' with multiple, independent buyers at once! The other part of the question, I get weekly from someone and would like to be able to confidently answer as to, "Can you submit multiple, unsigned Offers to the lenders for approval on short sales?"What say YOU?Debe in Charlotte
Tom - This should be either in Bank of America or Equator group. You should enter point of contact for access to the property (normally the listing agent).
Hi Debe, Thanks for bringing this discussion over to ShortSaleSuperStars. In my opinion this topic and the folks that don;t understand it is one the biggest reason why the short sale process is so screwed up. Well done.
Allen, That's exactly what I've heard--I've not experienced that but, have heard that's what will happen. Like you said, not a good way to go about it if your seller is nearing foreclosure.
Hi Sherry! Glad it helped! After representing two buyers with the same circumstances, and watching two homes foreclosed upon as a result of those listing agents' mistakes, I was prompted to share this with the world! I took the NAR SFR designation course yesterday and during the course, the instructor asked two of the participants to name the ONE thing that they wish all agents knew about short sales and this was not one of them! I was rather surprised that the length of time the process takes was one of their answers and the other was to do a title search prior to listing all short sales. I got that one but, what about the offer(s) vs. contract submission?!!
OH, I apologize, Clayton! I wondered why you were even on this site if you didn't LOVE short sales!! Funny thing but, I was in the new NAR's Short Sales & Foreclosures (SFA designation) class today and the instructor attempted to make an argument for submitting multiple but, those who do these things routinely in class 'rebelled!' I had a buyer a few months ago who was the PERFECT short sale buyer--no rush, no funky financing, good, clean Offer and we waited and waited to receive the signed, ratified Contract back from the listing agent. Finally, after about 20 emails and phone calls over the course of a couple of weeks, we were told that the offers had been 'countered' by the bank. My buyer knew the market stats and countered back minimally and we started the waiting game again. After a VERY long time of waiting, we withdrew her Offer due to 'no response' from the seller. Shortly thereafter, the property went into foreclosure--DUH! Who would have thought?! The seller came after me for allowing my buyer to walk and when our attorney explained to her about the multiple offers submitted and how you are NOT supposed do this, she then went after the REAL guilty party--the listing agent who didn't know what he was doing!
I tell that story to share with you my passion about ONE Contract and back up offers--NOT multiple offer submission! Thanks for clarifying your earlier answer!
Debe
I am sorry for not being clearer, you misunderstood me. I love short sales. I agree with your blog 100%.... Meaning, do not let the listing agent submit multiple offers and require them to sign the contract and remove the listing from active status. In Florida, our short sale addendum allows for multiple offers; therefore, I always strike the multple offer wording in our addendum to prevent this from happening. I write in that any other offers will be held back up position, the seller will sign the contract, and the property will be changed to "contingent" on the MLS. I learned this the hard way and hope this will help other agents.
Clayton
Clayton--I'm not sure what you're striking on your FL addendum or if you mean that you don't do short sales at all but, if your buyer wants to purchase a particular property and it happens to be a short sale, I would not discourage it at all. Your buyers will have to wait longer than a normal re-sale but, the amount of savings is generally WELL worth the wait and short sales are not unethical at all--in fact, you're doing the sellers a HUGE favor by keeping them from foreclosure proceedings. You just have to be sure that the listing agent on the property is not submitting multiple offers to the bank, rather ONE signed contract (your buyers, you hope)! If you want your buyers to succeed, by all means, show them the property that is best suited for them and confirm with the LA that he/she is working the short sale in the proper manner. If you're representing many buyers at all, you're eventually going to be faced with one who wants to purchase a short sale property--best of luck with it!
I advise my buyers to avoid these short sales. It really does not seem ethical and it is not in the best interest of the buyer. I also strike the multiple offer wording in our Florida short sale addendum and require sellers to sign the contract and make the property "contingent" in our MLS. I want my buyers to succeed.
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Tom - This should be either in Bank of America or Equator group. You should enter point of contact for access to the property (normally the listing agent).
Question, could not find the right forum. BOA Equator system asks for the 'valuation' contact info. Do I select the BPO agent?
Debe
Have a great weekend!
Debe
I tell that story to share with you my passion about ONE Contract and back up offers--NOT multiple offer submission! Thanks for clarifying your earlier answer!
Debe
Clayton
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