1. 3. Counseling Buyers In this chapter: Ideal buyers for short sales
Questions to ask listing agents
Writing the offer
Contract acceptance
Common results of short sales 49

2. Not All Buyers Ideal for Short Sales
Assess buyers position during counseling
Use worksheet and checklist in Figures 3.1 and 3.2
Must understand issues or they are wasting time
Sellers
Theirs
Agents 49

3. Questions to Ask Listing Agents
1. “Is the short-sale package ready for submission to lender?”
2. “How many liens are on property?”
3. “If more than one lien, what are they?”
4. “What is plan to satisfy all lien holders?” 52

4. BOTH AGENTS HAVE A DUTY TO
Negotiate best price and terms for their clients BEFORE THE CONTRACT GOES TO THE LENDER FOR APPROVAL 52

5. Timing: Lender Approval
No specific time frame for approval
30 days up to 6 months or longer
If unrealistic, it weakens buyer’s offer
Property could go down in value – update CMA for buyer throughout process
One of the things the lender looks at to gauge if this transaction has a “reasonable chance of closing” 52

6. Timing: Earnest Money Due according to terms of contract
At time seller signs in most states
If buyer wants it later – must stipulate
Issues if not deposited until after lender approval:
Broker liability if personal check too near closing
Buyer commitment to transaction
Must be deposited as state law requires 53

7. Timing: Home Inspection
Inspections to be done within “?” days from acceptance – not from lender approval
Little chance for buyer to negotiate repairs if done after lender approval
Most short sales are ‘as-is’ and there is NO negotiating repairs – either before or after approval 53

8. Timing: Home Inspection After Lender Approval
Seller will have house tied up for months with buyer’s having ability to back out after lender approves
Why would buyer want to be tied into a transaction on a property he or she doesn’t want?
Short time between approval by lender and closing date may not allow for due diligence
‘Reasonable chance of closing’ factor 54

9. Mortgage Application
Quick turnaround from lender approval to closing – buyer may not have time to get mortgage if he doesn’t apply until after lender approval
Needs to be working with a lender who understands the timing on purchase of a short sale 54

10. Low Interest Rate in the Offer
Seller Concerns
If rate goes higher than what is in contract buyer has an out
Buyer Concerns
Costs money upfront to lock
Float may increase the rate
Buyer’s lender needs to understand short-sale purchases 54

11. “Reasonable chance of closing” factor
Price
Seller Concerns
Lender might not approve
Possible deficiency pay-back
Buyer Concerns
Too low – lender might not approve
Wasted time and possibly money
Definitely a
“Reasonable chance of closing” factor 55

12. Win-Win The Buyer: Offers the seller a fair price
Allows for reasonable time for lender approval 
Tenders earnest money with the offer
Completes all inspections
Applies for mortgage after acceptance by seller 55

13. Win–Win
Not unreasonable for buyer to ask seller not to entertain subsequent offers
If seller agrees - the appropriate language would be needed in the sales contract addendum
Listing agent needs seller’s written direction to suspend his obligation to submit all offers
Code requires all offers be presented to sellers
Does not require all offers be presented to lender 55

14. Contract Acceptance
• Contract is signed by buyer and seller— lender approves short sale – not contract
Either party can back out if not signed
• The fact that seller accepts offer contingent on bank approval does NOT guarantee bank approval 56

15. Subsequent Offers
• If contract between buyer and seller allows for subsequent offers listing agent must submit to seller all the way to closing
Must disclose existence of accepted contract to brokers seeking cooperation
Must report to MLS as required
Determine lender’s protocol on subsequent offers 57

16. Goal for Seller Release and forgive remaining debt
Common Results
Release lien – remaining debt on payments
Release lien – liquidate assets to pay deficiency
Release lien – forgive remaining debt
Goal for Seller Release and forgive remaining debt 57