Replies to This Discussion

Permalink Reply by Smitty on May 17, 2011 at 6:45am

Jeff,

 

My honest opinion?  It's a marketing ploy to get agents to bring Andrew sales to negotiate.  This site is ripe with agents so why not boast your talents.  That said, a contract in Massachusetts is NOT BINDING until both parties sign.  The standard offer to purchase in Massachusetts IS a binding agreement and is signed before the purchase contract.  It usually stipulates things like when the inspection needs to be done, the purchase price, what will or will not stay with the home, who holds the deposit, how it's held, contingencies, etc.  Now I'm not saying you cannot submit an offer to purchase to a lender, but technically NOTHING in the purchase contract would be executed because it's not signed.  Andrew is right in everything he writes, but it doesn't mean it's the best way to do it.  The purchase contract in Massachusetts gives you a more in depth agreement.  It gives many details that the offer doesn't. 

Look at it this way...I've gotten approvals where the lender only gave 10 days to close.  I actually had an Ocwen property last month that was approved and they only gave us two weeks to get it done and told us they were letting it go to foreclosure if we couldn't close in those two weeks.  IT WAS A FINANCED OFFER not cash.  So let's say we utilized Andrew's method and at approval had two lawyers involved reviewing the final purchase and sale so all parties could sign and then the lawyers didn't agree to anything, and the buyer now is pushed out because they don't have an executed contract to give to their mortgage lender....guess what?!?!  Property goes to foreclosure. 

 

In short sales, you should not waste time or ever hold things up.  When that approval comes in, you better be ready to close.  I actually AGREE wholeheartedly with Andrew and we also demand inspections are done within 5-7 days of signing the offer to purchase.  The same scenario holds true.  What if at approval, you get an inspection and there is something structrually unsound with the property.  It's unlikely you'll get that rectified before closing. 

 

I also don't like that he's verbally saying that the homeowner agrees not to accept any other offers.  He exclaims it saves time on the front end but it actually could kill your deal on the back end if the lawyers don't agree for some reason.  I'd rather do ALL my homework up front rather than have loose ends.

 

I'm not saying what Andrew is doing is wrong.  If it works for him great, but there isn't an attorney in Massachusetts that would tell you the puchase contract is legal if it's unsigned.  I also don't know an attorney that wants to turn away business.  If you tell them you need help with a P&S, believe me, they'll help. 

 

It's hard enough to keep all parties in the sale even WITH a signed purchase contract.  I would never leave it just to an offer. 

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Permalink Reply by Jeff Payne on May 17, 2011 at 7:18am

Smitty,  is the offer to purchase and the purchase contract 2 different animals in MASS?

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Permalink Reply by Smitty on May 17, 2011 at 7:19am

Yes.  The offer is typically the first thing a buyer and seller sign and then after a purchase contract is executed which outlines in detail the terms of the sale.

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Permalink Reply by Jeff Payne on May 17, 2011 at 7:25am

Thanks Smitty, that is different than we have here in Florida.  We have a purchase agreement that is signed by both buyer and seller.  Now I can understand Andrews point better

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Permalink Reply by Andrew Coppo on May 17, 2011 at 7:51am

Harry: 

 

I am the sole broker/owner of GBSS, LLC. I never claimed to be an attorney nor would I purport to give legal advice. I was merely pointing out a (potential) solution to the problem in Massachusetts whereby attorneys don't like to work for free. I appreciate the feedback, and I assure you that this is not a marketing ploy to get agents from this site to work with me.I enjoy this site because it allows for me to become a better short sale negotiator. I have not, and will not solicit business from anyone on this site.  I currently work with a number of local agents here in Massachusetts who prefer to not handle the short sale negotiations. I feel that I am pretty good at getting short sales approved and this arrangement allows the brokers with whom I work to spend time getting more listings. I apologize if my post came off as a marketing ploy. 

 

Smitty: 

With regard to the signed offer, it is my understanding (and I am pretty sure you agreed) that this IS a contract in Massachusetts because it is signed by both parties and recites consideration. I don't believe I ever implied that the contract would be valid if it wasn't signed by BOTH the buyer and seller. To be clear, my offers are signed by all parties prior to lender submission. The reason why the short sale offer addendum states that the seller will refrain from accepting any offers is that, upon submission of the SIGNED offer to the lender, the agents could potentially avail themselves to liability in the event a subsequent, higher offer is received. Consider the following: 

 

If buyer and seller have entered into a binding contract, and the real estate agent submits a subsequent “highest and best” offer to the servicer, followed by the servicer disapproving the first contract, then the agent may be liable to the buyer for interfering with the buyer’s contract. Moreover, the agent likely has violated their fiduciary duty to the seller by causing the first contract to be breached. What happens if the bank does not approve (or withdraws approval of) the first contract and the subsequent offer does not result in a contract or doesn’t close? Let’s further assume no other, or no higher, offers are received and the property goes to foreclosure.Do the seller and the buyer now have actions against the lien holders for unlawful interference with a contract and for damage to the seller’s credit? Does the seller have a cause of action against the listing agent for violating their fiduciary duty to the seller to get a deal that will close and avoid a foreclosure? Is the listing agent now liable to the seller because they switched their allegiance to the bank which resulted in a foreclosure that severely damaged the seller; or, even worse, acted as a non-disclosed and non-approved dual agent?

 

Perhaps I am receiving poor legal advice but these are the things I am concerned with as a business owner. Again, this may not be the best method for everyone. If I were able to get the parties to go straight to P&S, I would. But until I find local attorneys who are willing to do the P&S work for free, this is the most efficient method for me and my short sale agents. I appreciate the feedback, both positive and negative. I am always looking to improve my short sale negotiations. 

 

Smitty said:

Jeff,

 

My honest opinion?  It's a marketing ploy to get agents to bring Andrew sales to negotiate.  This site is ripe with agents so why not boast your talents.  That said, a contract in Massachusetts is NOT BINDING until both parties sign.  The standard offer to purchase in Massachusetts IS a binding agreement and is signed before the purchase contract.  It usually stipulates things like when the inspection needs to be done, the purchase price, what will or will not stay with the home, who holds the deposit, how it's held, contingencies, etc.  Now I'm not saying you cannot submit an offer to purchase to a lender, but technically NOTHING in the purchase contract would be executed because it's not signed.  Andrew is right in everything he writes, but it doesn't mean it's the best way to do it.  The purchase contract in Massachusetts gives you a more in depth agreement.  It gives many details that the offer doesn't. 

Look at it this way...I've gotten approvals where the lender only gave 10 days to close.  I actually had an Ocwen property last month that was approved and they only gave us two weeks to get it done and told us they were letting it go to foreclosure if we couldn't close in those two weeks.  IT WAS A FINANCED OFFER not cash.  So let's say we utilized Andrew's method and at approval had two lawyers involved reviewing the final purchase and sale so all parties could sign and then the lawyers didn't agree to anything, and the buyer now is pushed out because they don't have an executed contract to give to their mortgage lender....guess what?!?!  Property goes to foreclosure. 

 

In short sales, you should not waste time or ever hold things up.  When that approval comes in, you better be ready to close.  I actually AGREE wholeheartedly with Andrew and we also demand inspections are done within 5-7 days of signing the offer to purchase.  The same scenario holds true.  What if at approval, you get an inspection and there is something structrually unsound with the property.  It's unlikely you'll get that rectified before closing. 

 

I also don't like that he's verbally saying that the homeowner agrees not to accept any other offers.  He exclaims it saves time on the front end but it actually could kill your deal on the back end if the lawyers don't agree for some reason.  I'd rather do ALL my homework up front rather than have loose ends.

 

I'm not saying what Andrew is doing is wrong.  If it works for him great, but there isn't an attorney in Massachusetts that would tell you the puchase contract is legal if it's unsigned.  I also don't know an attorney that wants to turn away business.  If you tell them you need help with a P&S, believe me, they'll help. 

 

It's hard enough to keep all parties in the sale even WITH a signed purchase contract.  I would never leave it just to an offer. 

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Permalink Reply by Jeff Payne on May 17, 2011 at 8:29am

Having to use an attorney to write the purchase agreement would SUCK big time.  One more thing to delay the process. Who pays the attorney fees typically and how much do they normally charge to do this? Do they also close the transaction?

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Permalink Reply by Smitty on May 17, 2011 at 9:04am

Andrew,

 

I'm not saying you're doing anything wrong, but merely for the reasons I pointed out, I would rather do my homework up front, than take a chance that I couldn't get an extension should two lawyers not agree to the terms of the purchase contract.  Your method works for you and that's great, but I have had those 10 day approvals and literally had the Ocwen approval last month that only gave my seller and buyer two weeks to close and the financing still needed approval.  Imagine if I had to wait a week for two lawyers iron it out, and then go forward to get financing?

An agent that takes a higher offer after a previous offer has been executed risks huge liability.  I agree.  I follow Mr. Ballard and think he's the most cutting edge short sale attorney I've seen.  He's not scared to stand up to the big guys.  I do think you should edit your post and put a crediting link to his site though...

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Permalink Reply by Janice MacMillan on May 17, 2011 at 9:06am

Jeff,

I had not thought of making the EMD non-refundable. That is quite frankly a brilliant idea! I have only had a couple of buyers walk, and they did early right after the 30 day mark. I try to make it very clear that in most short sales it is going to take 60-90 days to get approval.

I do blame part of it on the buyers agent who has not properly informed their buyers of the process.

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Permalink Reply by Jeff Payne on May 17, 2011 at 9:08am

Janice, we also have an document that is uploaded to MLS that explains the short sale and what it entails and that it can take 90 to 120 days to close it.  The buyer has to acknowledge it which means the buyers agent had to explain it to them instead of glossing over the fact that it can take some time to close 

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Permalink Reply by Andrew Coppo on May 17, 2011 at 9:33am

Smitty:

 

You're right, I should clarify that the legal advice to which I was referring in the italicized excerpt was that of California Attorney Ron Ballard. If I could edit a "comment", I would and if I quoted him in my "Blog",  I most certainly would credit my source. 

Smitty said:

Andrew,

 

I'm not saying you're doing anything wrong, but merely for the reasons I pointed out, I would rather do my homework up front, than take a chance that I couldn't get an extension should two lawyers not agree to the terms of the purchase contract.  Your method works for you and that's great, but I have had those 10 day approvals and literally had the Ocwen approval last month that only gave my seller and buyer two weeks to close and the financing still needed approval.  Imagine if I had to wait a week for two lawyers iron it out, and then go forward to get financing?

An agent that takes a higher offer after a previous offer has been executed risks huge liability.  I agree.  I follow Mr. Ballard and think he's the most cutting edge short sale attorney I've seen.  He's not scared to stand up to the big guys.  I do think you should edit your post and put a crediting link to his site though...

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Permalink Reply by Janice MacMillan on May 17, 2011 at 12:50pm

Jeff,

This document you have explaining the short sale process, is this a Florida form or something you created? Mind sharing?

If you will can you email me a copy at [email protected]

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Permalink Reply by Darlene Krause on May 18, 2011 at 8:07am

I wouldn't start working on a short sale without a signed contract.  Further, the lenders we deal with require a signed contract as part of the short sale package.  If it takes 7 days to get a contract signed, then it takes seven days.  That seven days is not going to make or break the timeframe on a short sale. 

 

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