Northern Virginia Short Sale Contracts: Who is the Seller?

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Real Estate Agent with Long & Foster REALTORS®, Gainesville, VA VA License # 0225089470

Northern Virginia Short Sale Contracts:  Who is the Seller?

Northern Virginia short sale contracts can certainly be confusing, but one thing is clear:  The sellers are the invididuals listed on the Deed.  This is not a foreclosure sale.  It is, often times, a pre-foreclosure sale.  However, the bank has not repossessed the property through foreclosure.

It's not at all unheard of for buyers and sellers to not understand this, but when a member of the Northern Virginia real estate community gets confused...well...let's just say that we can have problems. 

I recently represented home owners who were selling their property in a short sale.  The buyer patiently waited for the bank to provide short sale appproval.  After several months, the bank did!  However, the short sale approval letter did not meet the definition of short sale approval in the Northern Virginia Regional Sales Contract.  Therefore, the sellers (who were being asked to contribute cash at closing, and being told that their lien holder would pursue a deficiency if the short sale closed), were able to provide notice to the buyer that the short sale approval was not gained.

This whole series of events must have short circuited the brain of the buyer's agent.  He spouted off information as fact, that was nowhere in the Regional Sales Contract.  He told me that the lien holder was now the seller in the contract and that the home owners had to comply with whatever terms were brought forth from the lien holders.  This buyer's agent is now instructing his client to speak with an attorney to sue the lien holder for not performing under the terms of the contract. 

This buyer's agent has not yet bothered to read the terms of the contract to his client that pertain to this situation.

As with any contract for the purchase of real estate, all the terms must be in writing and agreed to by the parties involved.  Nowhere in our contract was the lien holder mentioned as a seller, nor did they assume the duties of the seller. What was negotiated between the seller and their lien holder was between those two parties.   The lien holder is no more a party to this real estate contract than a home inspector, or appraiser would be.  Those are also folks that are involved in contingencies to the contract, but are not parties to the contract themselves.

When buying or selling a short sale, it is of the utmost importance that your Realtor first, and foremost, understand the contract that will be the instrument of your purchase or sale.  Without that vital bank of knowledge, your Realtor is not giving you accurate information on which you can rely.  However, they do provide those of us that know better, with great blog post material.

 

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  1. Cindy Jones 10/03/2009 11:55 AM
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Topic:
Home Selling
Location:
Virginia Prince William County
Groups:
America's Best Agents
Diary of a Realtor
Realtors®
Short Sale REALTORS®
Short Sale Support Group
Tags:
short sale sellers
who is a short sale sellers
short sale contracts

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Rainmaker
559,993
Corinne Guest
Barrington's Country Suburban Home Matchmaker
Barrington Realty Company

I am having a hard time getting a buyer to understand this as well. He thinks the seller should just send our contract up to the bank. I keep pointing out the seller has every right to negotiate the contract first as he is the legal owner of the property. Nice post.

October 02, 2009 08:57 AM
Rainmaker
124,931
Steve Combs
NMLS: 381933
Peoples Home Mortgage

sounds like that agent is reeeeaching! good post!

October 02, 2009 09:02 AM
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Jim Crawford
Jim Crawford Atlanta Realtor - Atlanta Real Estate
RE/MAX Paramount Properties

Agents can be scary and so are many of these short sales.  I am hearing some new nonsense like this everyday.

October 02, 2009 09:08 AM
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Melissa Zavala
Broker, Escondido Real Estate, San Diego County
Broadpoint Properties

I think that in all transactions it is vital that the real estate agent have a little bit on contract knowledge. It's scary, isn't it? 

October 02, 2009 09:57 AM
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Joe Pryor
REALTOR® - Oklahoma Investment Properties
The Virtual Real Estate Team

When ego overcomes good sense it should be a crime.

October 02, 2009 10:41 AM
Rainmaker
208,465
Jackie Hawley
Southeast Michigan Real Estate
ReMax Encore

What's scary is the lack of understanding of a lot of agents about the basic nuts and bolts of a contract. And that's with both buyer's agents and listing agents. Everything is basically the same as it ever was - just with an additional contingency. It amazes me when a buyer's agent thinks that the seller should take ANY offer even if the listing agent knows it will never fly, and it's just as amazing when a listing agent has their seller sign multiple offers. Everybody just needs to understand that the contract is the same as before short sales became so common; that now there's just an additional contingency (like financing, clean title, etc). If an agent can't understand that, should they be selling real estate at all? 

October 02, 2009 05:26 PM
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Renée Burrows
Las Vegas Real Estate Broker - www.urLVhome.com
Savvy Home Strategies Realty, LLC-REALTOR®-Estate-Probate

Chris Ann, excellent explanation of the contingency.  SAD that the ones that DO not show up are the ones that NEED to show up to your class!

October 02, 2009 05:43 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Corinne:  Short sales are just full of mystery.

Steve:  Reaching is right! 

Jim:  Sounds like we might need to get some back to principals of real estate class.

October 02, 2009 07:23 PM
Rainmaker
63,349
Millie C. Legenhausen
CRS, GRI, CIPS, MBA, Realtor
Calcagni Real Estate, Hamden, Connecticut

Great post. Some agents feel they can get their way by sheer force. Fat chance with short sales. With short sales, there are three contingencies after the seller accepts an offer: inspection, bank approval of the short sale, and the mortgage contingency. Nothing is certain until everyone is one the same page.

October 02, 2009 07:25 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Melissa:  Contract knowledge?  Please!  What good is that?  :)

Joe:  Great way to put it.

Jackie:  You're singing my favorite tune!  I whole heartedly agree.

Renee:  I've done this class for about two years.   I've seen many repeat faces in the crowd.  That's a good thing at least.

October 02, 2009 07:36 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Millie:  Nothing is certain until the settlement has occurred, the deed has been recorded, and the banks have received their funds. 

October 02, 2009 07:40 PM
Rainmaker
180,245
Cameron Wilson
The Short Guy - Murrieta,Temecula,Menifee California
Labrum Real Estate

Excellent post Chris Ann. It amazes me how many agents do not understand that it is a contingency of the sale for the bank to accept a short payoff.

Maybe you should show this post to that agent and invite him to one of your classes.

October 02, 2009 08:31 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Cameron:  No thank you!  I think his own problem will be solved by the "market".  I'm sure his business will slowly dry up and blwo away in the wind.

October 02, 2009 08:33 PM
Anonymous #34
Anonymous
Anonymous

I loved your last line. It is truly amazing where we can get that great blog post material from! LOL

October 02, 2009 08:47 PM
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Gary Woltal
Assoc. Broker Realtor SFR Dallas Ft. Worth
Keller Williams Realty

Chris Ann, contracts are SO important in short sales and other transactions. This is where PAYING ATTENTION and learning is crucial in real estate...

October 02, 2009 10:23 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Russel:  If nothing else, a monetarily fruitless transaction is ripe with AR points.  :)

Gary:  Nice to see you!  I've missed your comments.  Contracts are the basis of our business.  It's amazing that any agent would be so clueless.

October 02, 2009 10:29 PM
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Donna Bigda
Greater New Haven CT Real Estate
RE/MAX Alliance

Chris Ann - This post is priceless from the short circuited agent not understanding the terms of the contract to the wonderful material situations like this make for a gold star feature like yours :)

October 02, 2009 10:53 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Donna:  Thanks!  I had fun writing it. 

October 03, 2009 07:29 AM
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Roland Woodworth
Short Sale and Foreclosure Resource- SFR - Clarksv
Keller Williams Realty

Chris Ann.. Thanks for the comment on my photo. I have gotten lots of great comments for this one.  I was actually suprised. :)

October 05, 2009 11:58 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Roland:  Sometimes it's not so easy for us to see what others see. 

October 09, 2009 08:38 AM
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Chris Ann Cleland

Associate Broker, Northern VA
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