Once you have listed your home for Short Sale, you have agreed to let the bank/your lender decide the ultimate “Terms” on which the home will be sold.
A Short Sale is unique. Although you are the homeowner according to the note & or deed recorded when you purchased your home…because the home is selling for “Less” than that original note, the lender/bank now has to approve the terms of the sale and will decide howmuch of a reduced price will be accepted for the property. With that, the bank will also decide if they are going to offer money towards closing costs, home warranty, termite…fees etc.
When you are asked to sign a purchase offer, the buyer may ask the “seller” to pay closing costs. Remember, the bank holding the title has ultimate say on what will be paid in the transaction. These fees or costs will be paid from the proceeds of the sale. If approved…the closing costs will be paid from the proceeds. You as the seller, will not be responsible to pay for the closing costs at close of escrow. This is also true of real estate broker commissions. Commissions are negotiated by the broker and are also paid from the proceeds. Again, you will not be responsible to pay commissions.
Another very important thing to be aware of as the homeowner-
When you list your home for Short Sale, in most states (California) you will be asked to sign a Short Sale Listing Addendum. This form explains the Short Sale process and ultimately allows you to cancel the sale at anytime, for any reason.
What does this mean for you?
If you are not comfortable with the terms the lender has offered as an approval, CANCEL the sale. You are in complete control. Do remember that you will have to deal with the possibility of Foreclosure if you refuse the terms as agreed by the bank.
Make sure you have an experienced and trained Short Sale Agent represent you through the sale. Experienced? 5+ closed short sales. Ask to see previous clients Approved short sales.
We have never had a sale approved that the homeowners were not thrilled with. This equals ZERO dollars to sell the property.
I’m not familiar with MLS regulations in Texas, but here in California when a home is a Short Sale it is listed that way in MLS. I do understand your frustration with wasting time. Here, an agent is supposed to put a property on back-up when an offer has been selected and sent to the lender for approval. This means that offers are still accepted, but your offer is not the primary offer submitted for approval. Often times in Short Sales, buyers lose interest due to the lengthy process times or find other properties during the approval. Back up offers are then contacted to find out if they are still interested in the property. When we are working with buyers interested in Short Sale homes, we ask the selling agent a lot of questions before placing an offer. One of the questions is how many back-up offers are in front of us? This helps the buyer decide if it’s worth the wait or a waist of time to write “another offer” that won’t be considered.
I searched for a home in Texas and found one that I liked. Sent in an offer for the house to learn that because the house was up for short sale my offer was not accepted. Had i known beforehand i would never had sent in that offer. Should the house been listed as such rather than to waste my time and effort only to learn later that the house was a short sale home. To my idea of thinking, this was very deceptive. What do you think?
Hi, cool post. I have been wondering about this topic,so thanks for writing.