Question regarding the short sales process?

Question

Hi, I put an offer in on a short sale 2 months ago. The owners accepted right away but we are still waiting to hear from the bank for approval. The offer we made was a very strong offer so I cant imagine they wouldnt accept? There were 3 banks involved-we were just advised by our relator earlier this week that Countrywide has contacted the Selling agent to start the Negotiation process and that this was a huge step...I am hoping this means we should have an answer soon? I really dont understand what this means and my patience is running really thin, can anyone help?

Answer 1

The big problem is that the banks have to OK the sale. In this case there are 3 banks involved and any one of them can shoot down  any deal.  If there is indeed a second and even a third lender in the mix both of them are probably going to be wiped out by any sale so both of them really have no incentive to agree to anything.

Also, how do you know you made a "very strong offer"?  Any lender that will be wiped out would not agree with that statement.  I will bet your realtor said that as a way to help keep you interested in the purchase.  As for the owners accepting--of course they will accept!  They usually have nothing or very little to lose.

Short sales are notoriously slow and three lenders make it slower yet.  All you can do is wait.  Perhaps you should start looking further--that would certainly make your realtor nervous!  Other than that you can't do anything to speed the process.  Good luck!!!!

Answer 2

I understand that you think you made a strong offer.  Bear in mind that NO offer is considered strong by a lender(s) when it entails one or more lenders losing money, and that is what a short sale means.

If there are THREE banks involved, this could be messy.  Needless to say, that means that there are first, second, and third mortgages.  The negotiation process will be amongst the three banks involved.  As well understand that CW is in the process of being acquired by BOA, and that may further slow the process.

Answer 3

First of all if your agent has suggested to you that this is an easy or quick deal with three lenders involved, you need to talk to the agent, for you could easily be talking six months or more before you even know if all three will agree to your offer.

In general only a minority of short sales actually comes threw, versus foreclosure, and that percentage of chance gets even slimmer with the more lenders that must approve the sell. In your case three is an extremely high number; I would not assume your first offer will even be accepted by all three.

That said to better judge your chances some questions: Your offer versus the total loan amount, next how much on the dollar are you asking the second and third lender to take? Then take that number and compared it to what the Real estate agents are getting on the deal, if you are asking the two lenders to take a loss greater or equal to the agents commission good chance the deal will not go threw.

also if the seller has other assets like savings accounts etc the banks may not approve either