Short Sale Tip of The Week 5-6-09

Posted on 06. May, 2009 by ctlms in Short Sale, foreclosure

Offers & Backup Offers....What to Send to the Lender?

The lender can say they want to see all offers, but the seller has the final call on what is sent in for approval. The seller "owns" the house, not the lender.  Your client, the seller, decides what is sent to the lender for approval.  Your "fiduciary duty" is to your client not the bank.

So what to do if you receive a higher offer after you have already submitted one to the lender?

Well it depends on the lender.  Some lenders will not allow you to just replace the offer that is under review and they will make you start the whole process over again.  If your seller is in foreclosure, they may not have time to do that and it may be best to proceed with the current offer.  If it gets approved, the bank will postpone the foreclosure if necessary.  If it is denied, they may be more inclined to review a new offer without starting over.

Other lenders will allow you to just provide the new offer.  However, your client cannot sign two offers.  The first offer is still valid until rejected by the lender.  So don't make the mistake of having your seller sign the second contract.  It can usually be submitted unsigned for review at that point.

But remember, a higher offer is not necessarily a better offer.  The buyer will need to close within 30 days of written approval from the lender.  So an FHA or CHFA buyer may not be a good buyer because of the time it takes to get loan commitment.  Now if that is the only offer you have, then submit it.  But if it is a backup and the first offer is lower but has easier financing, that is a conversation to have with your seller.

The banks like easy financing too.  They don't want to be waiting around after they have approved the deal.  Often in order to get an extension, the bank will charge the buyer whatever the per diem interest is in the loan that is not being paid.

And remember a new offer needs a new estimated HUD-1 too.

Often, all negotiations come down to the rapport between the lenders negotiator and the person negotiating on behalf of the homeowner.  Frankly, many loss mitigators don't really like working with real estate agents that they need to hand hold through the process.

The "average" loss mitigator at a major lender right now has at least 300 files they have to work on at any one time.  That is a lot of work to do and they are definitely over worked and under paid.

Also the mitigator is only a "middle man" and usually has to send the file for management approval anyway. If the file has PMI insurance, they may need to approve the deal as well.

Give us a chance to prove to you how easy and profitable short sales can be for you.

Have an awesome day and look out for future tips from us.

Sincerely,

Sean Wilder
Loss Mit Services
sean@ctlms.com

PS check out our online short sale processing system at www.CTLMS.com that keeps you, and anyone else you choose, up to date instantly, whenever there is a change to your short sale file.

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