Short Sale, Terrmites, Call their bluff?

[urbanrealtor]

[quote=yellow8yellowm]Thanks for all the great advice…here are some responses to your questions, etc:

1. We are “kind of” calling their bluff. There is NO WAY we will let this issue lose us the house. All we have done at this point is ask the bank to reconsider their offer to pay up to $75 for the repairs (why not just offer $0?).

2. The banks still has not actually approved the sale. It has all been verbal at this point and even though we are in escrow there has been no paperwork from the bank saying that they have accepted the deal. Either way, it has been since mid July that we’ve been waiting since the seller’s signed the offer, took it off the MLS and started negotiating with the bank.

3. We are actually locked in for 60 days with Navy Federal (check out their rates!) for “free” so we have a few weeks to dilly dally before losing out on our great interest rate.[/quote]

Well this info actually changes how I would consider this transaction. My response to your points follows:

1: The 75$ is probably something the bank always offers so they can say they are covering the cost of inspection (which is often about that much). Asking them to reconsider is reasonable but may be have less merit than you realize (see below).

2: I feel that it was a bad idea to proceed with an escrow without lender approval. Currently there is not a regulation or rule (or really even a standard of practice I am aware of) on this, however, most short sale listing agents I have seen (myself included) will leave a property active until there is full bank approval. Again, sometimes the banks do not want to approve a short or for some reason cannot do so in a timely manner. If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world. However, I think you should also be looking elsewhere as an alternative to an exercise in potential futility.

3: You should be consulting with other lending institutions and discussing the implications of the lock with the CU. If the lender takes 90 days to approve (a very real possibility) you may lose your lock or get a penalty for extending it.

Sorry to be a party pooper. I feel you should have information on this.

[yellow8yellowm]

[quote=urbanrealtor]2: I feel that it was a bad idea to proceed with an escrow without lender approval…If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world.
[/quote]

We are in escrow but our small good faith deposit has not been cashed and is not in the hands of the escrow agent. We have told that the escrow agent that we will not be proceeding until we get lender approval and the escrow agent agrees that this is fair. Whether this is possible is another thing and whether the bank agrees is another as well. So maybe technically we still aren’t in escrow.

[yellow8yellowm]

[quote=urbanrealtor]2: I feel that it was a bad idea to proceed with an escrow without lender approval…If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world.
[/quote]

We are in escrow but our small good faith deposit has not been cashed and is not in the hands of the escrow agent. We have told that the escrow agent that we will not be proceeding until we get lender approval and the escrow agent agrees that this is fair. Whether this is possible is another thing and whether the bank agrees is another as well. So maybe technically we still aren’t in escrow.

[yellow8yellowm]

[quote=urbanrealtor]2: I feel that it was a bad idea to proceed with an escrow without lender approval…If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world.
[/quote]

We are in escrow but our small good faith deposit has not been cashed and is not in the hands of the escrow agent. We have told that the escrow agent that we will not be proceeding until we get lender approval and the escrow agent agrees that this is fair. Whether this is possible is another thing and whether the bank agrees is another as well. So maybe technically we still aren’t in escrow.

[yellow8yellowm]

[quote=urbanrealtor]2: I feel that it was a bad idea to proceed with an escrow without lender approval…If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world.
[/quote]

We are in escrow but our small good faith deposit has not been cashed and is not in the hands of the escrow agent. We have told that the escrow agent that we will not be proceeding until we get lender approval and the escrow agent agrees that this is fair. Whether this is possible is another thing and whether the bank agrees is another as well. So maybe technically we still aren’t in escrow.

[yellow8yellowm]

[quote=urbanrealtor]2: I feel that it was a bad idea to proceed with an escrow without lender approval…If you have a deposit already in escrow, and you would not otherwise be using the money, then its not the end of the world.
[/quote]

We are in escrow but our small good faith deposit has not been cashed and is not in the hands of the escrow agent. We have told that the escrow agent that we will not be proceeding until we get lender approval and the escrow agent agrees that this is fair. Whether this is possible is another thing and whether the bank agrees is another as well. So maybe technically we still aren’t in escrow.

[Fearful]

Speaking of termites, there is a nice little swarm in one room of this rental house. I wonder if I should tell the owner there are a bunch of funny little winged insects. I only hope they are not in my furniture – that would really suck. Hahahaha!

[Fearful]

Speaking of termites, there is a nice little swarm in one room of this rental house. I wonder if I should tell the owner there are a bunch of funny little winged insects. I only hope they are not in my furniture – that would really suck. Hahahaha!

[Fearful]

Speaking of termites, there is a nice little swarm in one room of this rental house. I wonder if I should tell the owner there are a bunch of funny little winged insects. I only hope they are not in my furniture – that would really suck. Hahahaha!

[Fearful]

Speaking of termites, there is a nice little swarm in one room of this rental house. I wonder if I should tell the owner there are a bunch of funny little winged insects. I only hope they are not in my furniture – that would really suck. Hahahaha!

[Fearful]

Speaking of termites, there is a nice little swarm in one room of this rental house. I wonder if I should tell the owner there are a bunch of funny little winged insects. I only hope they are not in my furniture – that would really suck. Hahahaha!

[SD Realtor]

Hi Yellow –

Okay let’s make sure we all agree on terminology. What you have submitted is an offer to purchase. It is not yet a contract unless it is accepted and confirmed by all parties. So until the seller and the lender agree to the terms of the offer, nobody has an obligation to pay for or do anything.

Now, if you have not reached the stage where there is universal acceptance by all parties then everything is still up for grabs. You can ask, they can counter, you guys can go back and forth. This is standard procedure for resale homes. HOWEVER…let’s look at the practical nature of short sales…. this is where having an agent who has more experience with some short sales under thier belt is crucial.

Getting through the short sale process is a b-tch. The last thing you want to do, and I have said that ad nauseum, is to go back and forth with the negotiator. Each time you do that you may be costing yourselves weeks. Call me pessimistic but your rate lock will more then likely expire prior to this escrow closing. Good that it was no cost to you but it did involve them running a credit check on you which kind of sucks.

Okay so yeah what I am saying is that the way to go about short sales is to make an estimate of what you will need to rehab up front and put it in the purchase agreement. Total it all up and say buyers request a credit at close of escrow for $x for non recurring and recurring closing costs, repairs, and/or remediation. That way there is no renegotiation necessary. So yes in your purchase OFFER (notice I did not use the words contract) section 1 repairs may be covered. However, when the short sale negotiator sits down to see if they will accept the sale, they will look at the estimated HUD to see what they will net. They don’t build in a few thousand bucks here or there for repairs or remediation. They look at the numbers and if they work then at that time they go, okay I will accept it. Let’s roll. Similarly they may also come back and say we accept but will not pay for repairs or any remediation. You never know.

Okay so right now you have an offer submitted. Did the sellers accept your offer yet? Obviously the lender did not. Now if both the seller AND the lender accept the contract, and neither of them counters the section 1 request you made, then yes at THAT time, one of them is contractually obligated to pay that fee.

***********

As for the property being in escrow, from a practical nature indeed, that does benefit you as long as you did not give them a deposit. Why? Because they will not submit additional offers to the lender. Of course this is only true if the sellers actually accepted your offer contingent on lenders acceptance and they are not marketing the property.

Did the listing agent actually move the property into pending status on the MLS?

While an escrow may have been opened you technically do not have a contract in place yet so there is no obligation by either party to either party. I would agree with ur in the sense that if I was the listing agent I definitely would not have gone through the execise of opening escrow and I surely would not have moved the property into pending status.

[SD Realtor]

Hi Yellow –

Okay let’s make sure we all agree on terminology. What you have submitted is an offer to purchase. It is not yet a contract unless it is accepted and confirmed by all parties. So until the seller and the lender agree to the terms of the offer, nobody has an obligation to pay for or do anything.

Now, if you have not reached the stage where there is universal acceptance by all parties then everything is still up for grabs. You can ask, they can counter, you guys can go back and forth. This is standard procedure for resale homes. HOWEVER…let’s look at the practical nature of short sales…. this is where having an agent who has more experience with some short sales under thier belt is crucial.

Getting through the short sale process is a b-tch. The last thing you want to do, and I have said that ad nauseum, is to go back and forth with the negotiator. Each time you do that you may be costing yourselves weeks. Call me pessimistic but your rate lock will more then likely expire prior to this escrow closing. Good that it was no cost to you but it did involve them running a credit check on you which kind of sucks.

Okay so yeah what I am saying is that the way to go about short sales is to make an estimate of what you will need to rehab up front and put it in the purchase agreement. Total it all up and say buyers request a credit at close of escrow for $x for non recurring and recurring closing costs, repairs, and/or remediation. That way there is no renegotiation necessary. So yes in your purchase OFFER (notice I did not use the words contract) section 1 repairs may be covered. However, when the short sale negotiator sits down to see if they will accept the sale, they will look at the estimated HUD to see what they will net. They don’t build in a few thousand bucks here or there for repairs or remediation. They look at the numbers and if they work then at that time they go, okay I will accept it. Let’s roll. Similarly they may also come back and say we accept but will not pay for repairs or any remediation. You never know.

Okay so right now you have an offer submitted. Did the sellers accept your offer yet? Obviously the lender did not. Now if both the seller AND the lender accept the contract, and neither of them counters the section 1 request you made, then yes at THAT time, one of them is contractually obligated to pay that fee.

***********

As for the property being in escrow, from a practical nature indeed, that does benefit you as long as you did not give them a deposit. Why? Because they will not submit additional offers to the lender. Of course this is only true if the sellers actually accepted your offer contingent on lenders acceptance and they are not marketing the property.

Did the listing agent actually move the property into pending status on the MLS?

While an escrow may have been opened you technically do not have a contract in place yet so there is no obligation by either party to either party. I would agree with ur in the sense that if I was the listing agent I definitely would not have gone through the execise of opening escrow and I surely would not have moved the property into pending status.

[SD Realtor]

Hi Yellow –

Okay let’s make sure we all agree on terminology. What you have submitted is an offer to purchase. It is not yet a contract unless it is accepted and confirmed by all parties. So until the seller and the lender agree to the terms of the offer, nobody has an obligation to pay for or do anything.

Now, if you have not reached the stage where there is universal acceptance by all parties then everything is still up for grabs. You can ask, they can counter, you guys can go back and forth. This is standard procedure for resale homes. HOWEVER…let’s look at the practical nature of short sales…. this is where having an agent who has more experience with some short sales under thier belt is crucial.

Getting through the short sale process is a b-tch. The last thing you want to do, and I have said that ad nauseum, is to go back and forth with the negotiator. Each time you do that you may be costing yourselves weeks. Call me pessimistic but your rate lock will more then likely expire prior to this escrow closing. Good that it was no cost to you but it did involve them running a credit check on you which kind of sucks.

Okay so yeah what I am saying is that the way to go about short sales is to make an estimate of what you will need to rehab up front and put it in the purchase agreement. Total it all up and say buyers request a credit at close of escrow for $x for non recurring and recurring closing costs, repairs, and/or remediation. That way there is no renegotiation necessary. So yes in your purchase OFFER (notice I did not use the words contract) section 1 repairs may be covered. However, when the short sale negotiator sits down to see if they will accept the sale, they will look at the estimated HUD to see what they will net. They don’t build in a few thousand bucks here or there for repairs or remediation. They look at the numbers and if they work then at that time they go, okay I will accept it. Let’s roll. Similarly they may also come back and say we accept but will not pay for repairs or any remediation. You never know.

Okay so right now you have an offer submitted. Did the sellers accept your offer yet? Obviously the lender did not. Now if both the seller AND the lender accept the contract, and neither of them counters the section 1 request you made, then yes at THAT time, one of them is contractually obligated to pay that fee.

***********

As for the property being in escrow, from a practical nature indeed, that does benefit you as long as you did not give them a deposit. Why? Because they will not submit additional offers to the lender. Of course this is only true if the sellers actually accepted your offer contingent on lenders acceptance and they are not marketing the property.

Did the listing agent actually move the property into pending status on the MLS?

While an escrow may have been opened you technically do not have a contract in place yet so there is no obligation by either party to either party. I would agree with ur in the sense that if I was the listing agent I definitely would not have gone through the execise of opening escrow and I surely would not have moved the property into pending status.

[SD Realtor]

Hi Yellow –

Okay let’s make sure we all agree on terminology. What you have submitted is an offer to purchase. It is not yet a contract unless it is accepted and confirmed by all parties. So until the seller and the lender agree to the terms of the offer, nobody has an obligation to pay for or do anything.

Now, if you have not reached the stage where there is universal acceptance by all parties then everything is still up for grabs. You can ask, they can counter, you guys can go back and forth. This is standard procedure for resale homes. HOWEVER…let’s look at the practical nature of short sales…. this is where having an agent who has more experience with some short sales under thier belt is crucial.

Getting through the short sale process is a b-tch. The last thing you want to do, and I have said that ad nauseum, is to go back and forth with the negotiator. Each time you do that you may be costing yourselves weeks. Call me pessimistic but your rate lock will more then likely expire prior to this escrow closing. Good that it was no cost to you but it did involve them running a credit check on you which kind of sucks.

Okay so yeah what I am saying is that the way to go about short sales is to make an estimate of what you will need to rehab up front and put it in the purchase agreement. Total it all up and say buyers request a credit at close of escrow for $x for non recurring and recurring closing costs, repairs, and/or remediation. That way there is no renegotiation necessary. So yes in your purchase OFFER (notice I did not use the words contract) section 1 repairs may be covered. However, when the short sale negotiator sits down to see if they will accept the sale, they will look at the estimated HUD to see what they will net. They don’t build in a few thousand bucks here or there for repairs or remediation. They look at the numbers and if they work then at that time they go, okay I will accept it. Let’s roll. Similarly they may also come back and say we accept but will not pay for repairs or any remediation. You never know.

Okay so right now you have an offer submitted. Did the sellers accept your offer yet? Obviously the lender did not. Now if both the seller AND the lender accept the contract, and neither of them counters the section 1 request you made, then yes at THAT time, one of them is contractually obligated to pay that fee.

***********

As for the property being in escrow, from a practical nature indeed, that does benefit you as long as you did not give them a deposit. Why? Because they will not submit additional offers to the lender. Of course this is only true if the sellers actually accepted your offer contingent on lenders acceptance and they are not marketing the property.

Did the listing agent actually move the property into pending status on the MLS?

While an escrow may have been opened you technically do not have a contract in place yet so there is no obligation by either party to either party. I would agree with ur in the sense that if I was the listing agent I definitely would not have gone through the execise of opening escrow and I surely would not have moved the property into pending status.

[Author]

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