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In a short sale is it the bank or the current owners that approve a offer on home?

  • April 29 2009 - Upland
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Answers (14)

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The owner is the one listed on the deed and the lender is the one who holds the note. If the offer never gets past the owner (for whatever reason), the bank can't negotiate or approve a short sale. When the bank owns the home after a owner has defaulted, it is called a foreclosure.

  • November 01 2009
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The short answer is both, but the bank has the final say as to how much of a hit that they want to take.
  • November 01 2009
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No I am not confused, at all. You are typical of a type of agent, that runs around answering things they don't know anything about.

the owner has to sell the home. period. Show me a single short sale that sells with out the owner agreeing to sell it. You can't because that is impossible. [and yes I said owner. that is what the person is, that is how they are labeled on the sales contract, that is what the bank will refer to them as, the homeowner, that is what the law calls them]

If you buy a home with a mortgage, you own the home, you have the bundle of rights associated with ownership. If you have a mortgage, or a deed of trust you give certain rights away, rights I might add, that only the owner can give away.

The owner sells the home, if it is a short sale, the bank approves of the shortage in an addendum. If the owner doesn't sign the sales contract, the home isn't selling...
  • November 01 2009
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do you know what an owner is? if you "own" a home means you have free and clear title. If you have free and clear title you can not do a "short sale" since there would be no lender. You seem a little confused. Show me an upside down borrower that is approving short sales on behalf of the lender?
How do you have the power to sell what you do not own?
  • November 01 2009
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Johny, you seem confused. Saying the owner is not in a position to approve anything is about as wrong as you could be. Until the foreclosure has happened, the owner of record still has 100% of his/her ownership rights. Unless the owner signs a sale contract, everything else is meaningless.

Now, after the owner has signed a sales contract, the bank will have to approve the sale, since the bank is not getting all of their money back, they will have to approve the transaction as well.

But make no mistake, the owner owns the home, and has all the power in the world to sell it, or not sell it.
  • November 01 2009
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The lender approves the offer, the current owner does not own the property outright in a short sale or have the equity to pay of the mortgage in full so they are not in a position to approve anything.
  • November 01 2009
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this discussion is seven months old. thankyou for your timely contribution!
  • October 29 2009
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in a short sale the Lender or servicer (bank) reviews the your loan for the following:

 1- the Asset (home, building or...) according to condition, market value and appraisal

2- The Borrower`s( your Seller) Financial to determine hard ship and inability to pay. Current Owner has to be willing to go through the short sale and cooperate with the bank to get the Short sale done. NO SELLER COOPERATION, NO DEAL. 

try www.ShortSaleFiling.com for info
  • October 29 2009
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As mentioned the seller accepts the offer but you must read the short sale addendum ......The seller and the bank can continue to receive offers up to the sellers lender accepting the short sale...Now we look for the highest and best offer , sometimes it is a lower offer with better financing terms...as a listing agent our fiduciary respnsibility is to diminish as much as possible our sellers deficit...Do we submit all offers to bank? No, but the sellers are aware of all offers...On occasion some banks have required that we submit all offers......Frankly most of the banks are so disorganized and the confusion it would cause to send all offers would bring would cause more harm to our client. Most just want the best and highest offer.  If we submit an offer and then another one comes in that is substantially higher than what was submitted that would decrease our sellers liability it cannot be ignored.. we always go back to the original offer and apprise them of such as a courtesy if they can up the ante.....We have had occasions where the bank does not want to look at any other offers depending on where they are in the process as a higher offer may not offset their penalties and loss for closing at a later date.

  • May 03 2009
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I have purchased a short sale myself last fall and did very well with it. I would be careful to search for agents who call themselves "experts" in this field. The listing agent for my property had called her self a short-sale expert on her website though she had not much of an idea of what she was doing.
In a short sale only one offer at a time. Many agents are not aware of this, though it is a regulation.
To your question: the owner can agree or disagree to submit the offer to the bank. If I was a buyer I would definatly put a clause in the contract that the owner has to give a response back in couple of days. So in case he/she is not going to submit the offer to the bank I can ove on.

Let me know if you have more questions about short sales. I am happy to answer them

  • April 30 2009
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Yes - there are many agents who have special training in short sales and REO's, and who have negotiation teams in place to work with the banks on a continuing basis.   A short-sale agent will make sure your seller package is complete and done properly, and that the buyer submittal has all the requisite information for  a quick (if that term can be used in a short sale!) response.  There are a lot of pitfalls in a short sale; an agent who knows this end of the business is just mandatory to complete one of these transactions successfully!
  • April 30 2009
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That explains why short sales take a while.  So, best advice is get an agent who is familiar with short sales?

  • April 29 2009
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And it's not uncommon for the owners to hang on to an offer without presenting it to the bank, in hopes of receiving a better offer.  If the owner submits two or three offers, the bank will not choose the best one; they will likely toss them all out.  Some agents who are not familiar with the process will keep submitting offers; this results in no decision by the bank.  It's important to submit your best offer to the seller is the hope that that will be the one submitted to the bank.
  • April 29 2009
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Both - first the homeowner must accept your offer.  Then, the signed offer is presented to the bank with a bunch of other required paperwork and the bank takes it from there.  The bank will investigate the market value of the house (appraisal or brokers' price opinion BPO) and then compare the offer on the table, applying its own metrics.  Finally, if the bank considers the offer viable, they must obtain the approval of the investor(s) behind the mortgage note.
  • April 29 2009
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