Short Sale Tip 7-5-10

Posted on 05. Jul, 2010 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale, foreclosure

Does the seller sign the contract before bank approval?

I have heard this question a ton of times and have seen agents argue over it.

The answer is always YES!

Let's look at the issue.

1. There is no Contract until the Offer is signed.  So if the buyer's offer is never signed, there is no binding contract holding the buyer to the purchase or the seller to the sale.  This means the buyer has not deposited an earnest money check and can walk at any point.  This also means the seller is free to accept any other offers that come in without first having to be released from the original buyer.  Not a smart thing for either party.

2. More importantly, most lenders will not accept an offer.  There must be a fully executed contract.  Many of the larger lenders such as Wells Fargo and Bank of America even require closing date extensions and other addenda to the contract and the dates must always be current.  So if something expires, it must be updated with an addendum or the short sale review stops.  Going even further, some lenders even want to see a copy of the earnest money check.  The requirements are getting more and more thorough.

In summary, Yes the contract must be signed.  It makes sense for both the seller and the buyer and with very few exceptions, the lender will require it anyway.

Sean Wilder

Short Sale Update 7-2-10

Posted on 02. Jul, 2010 by ctlms in Foreclosures, My Blog, News, Real Estate, Short Sale

The Good the Bad and the Holiday

In this issue I have a few industry updates.

The Good

1. President Obama today signed into law the extension to the closing deadline for the first time home buyer tax credit extending the deadline to the end of Sept that were under contract by 4/31/10.  According to NAR this will save nearly 180,000 buyers from the losing the credit due to financing and short sale review delays.

1. Short sales still prove to be a better alternative to foreclosure for the lenders bottom line.  According to a resent RealtyTrac report Short Sales net and average 19% higher return to the lender than foreclosure.  Short sales averaged sales prices of 15% below market value while foreclosures net 34% below market value usually due to the deteriorated condition of the property after it has been foreclosed and vacant for some time.

The Bad

1. Pending home sale tumble 30% in May.  That's right, in the month after the first time home buyer credit expired, pending home sales dropped 30%.  This shows just how important this incentive has been to the real estate market.  Keep in mind though that some of May's sales we stolen by April by buyers trying to meet the deadline.

2. So far we have seen virtually no change from the implementation of the HAFA short sale process.  In fact of the 70 short sales we are current negotiating, only 2 qualify for HAFA.  The biggest reason is that FHA, VA and until just a couple weeks ago, Fannie Mae and Freddie Mac loans did not qualify.  Fannie and Freddie do now participate in their own version of the HAFA program but their servicers do not have to begin accepting those applications until 8/1/10.  Also the 2 short sales that we are working through this program have already shown to be taking longer than that lenders normal short sale review process.  One of the biggest selling features of this new program was supposed to be the reduced review time they take.  NOT!

The Holiday

Enjoy it.  Take a break.  Relax.  I have no choice in the matter, as Bank Holidays are my holidays, for the most part.  I have some paperwork to do on Monday to prepare for the short week.

Remember to thank your service members.

Have a great Independence Day!

Sean Wilder