Presenting Multiple Offers to the Lender for Short Sale Approval

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Real Estate Agent with www.AtHomesCharlotte.com | Savvy + Company Real Estate 228209

Presenting Multiple Offers to the Lender for Short Sale Approval

Questions and more questions!While visiting at the NAR site regarding the new short sale designation and visiting the 'discussions'  link, I found several questions relating to short sales and one, in particular caught my eye.  

"Can multiple offers be submitted to the lender without seller signatures or can only one offer be negotiated at a time?  Can the seller sign multiple offers to submit to the bank?"

Ahh, the question of the year!  In Broker Bryant and Wendy Rulnick's classes (visit www.ShortSaleSuperstars.com) on short sales, we learned that we only submit one offer at a time.  Numerous articles and webinars that I've seen during the last year also instruct agents to submit only one offer at a time.  However, repeatedly, this question arises in our day-to-day business.  Just yesterday, a client of mine who is selling a beach property informed me that it's been months and they have heard nothing from the bank--he said that they just could not understand because they had presented several GOOD offers to the bank!  When I questioned him further, he explained that his agent had informed them that this is he way that she was supposed to handle this but, cannot tell him why the BPO has not been ordered or the bank has not responded.  He asked me my opinion.

Short Sale or ForeclosureHere is my best understanding of this process:

A foreclosure property is owned by the bank, therefore, just as any client, we are required to present all offers to the bank for their evaluation, review and subsequent acceptance.

A short sale property is still owned by the homeowner or said owner of record, NOT the bank.  If we receive multiple offers for a short sale:

  • We present them all to the SELLER
  • We review each of them with the SELLER
  • We assist the SELLER in determining which Offer carries more weight--
    • Is the buyer prepared for the lengthy short sale process?
    • Is the agent willing to work with us during this long process?
    • How qualified is the buyer--if the bank were to counter this Offer, would they qualify for a higher mortgage or is the buyer at their maximum?
    • How 'clean' is the Offer?
  • Evaluate all aspects of the Offers and compare them, selecting the strongest
  • Remember that the strongest Offer does not always mean the highest sales price!
  • Keep the cleanest & best Offer and have the sellers sign and return copy to the buyer
  • NOW, submit the entire package including hardship letter, financials, comparables, etc. with THIS ONE ratified Contract to the Lender for their approval.
  • Begin the waiting short sale process.

Sensory OVERLOAD!Once again, this is only MY understanding but, I have not spoken to one short sale expert who submits multiple offers.  Instead, it has been my experience that if multiple, unsigned (by the seller) offers are submitted to the bank, nothing is ever done with them and this is a sure sign that the property will be foreclosed upon if the seller is unable to make their mortgage payments.  

I would love your opinion as I know that many areas of the country have done far more short sales than we have here in Charlotte NC and I value your knowledge and expertise.  

One thing that I know for sure with regards to the agents questions is that you don't submit multiple SIGNED offers (by the Seller) to the bank--you can't be 'under Contract' with multiple, independent buyers at once!  The other part of the question, I get weekly from someone and would like to be able to confidently answer as to, "Can you submit multiple, unsigned Offers to the lenders for approval on short sales?"

What say YOU?

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  1. Joe Niece 11/05/2009 10:50 PM
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Valerie:  Thanks!  The bank's approach is that if the BPO comes back higher, then the bank will counter and if the buyer still wants the property, then they'll respond accordingly.  If they walk, then the next offer will be submitted and the seller/listing agent will let the replacement buyer know the bank's BPO results and work from there.

Debe in Charlotte

October 09, 2009 10:24 AM #93
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Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Selling Daytona paradise for heavenly good prices

Debe,

With 93 comments, I did not read them, so forgive me if I duplicate the comments already there.

You answered your question nicely. It is a lazy agent policy to submit all offers to the Lender and let them decide. They are not there to decide, the Sellers are. They Lenders are to see if they can accept the offer, or not.

Now, look at it this way. We get multiple offers, and give them to Seller to sign (it says that it is contingent on the third party approval, so there is no risk signing several offers). But in reality it is wrong. There is only one property and the Seller should not sign more than one offer. Imagine if you submit 5 offers, and the bank sends you an e-mail and says that they do not care, and you have to choose which one you want them to consider.

Now you have 4 unlucky customers with signed contracts, that can sue the Seller for specific performance (attorneys can explain it better, of course).

I think it is simple. One property - one signed offer.

October 10, 2009 04:22 PM #94
Rainmaker
15,035
Vicki Workman
Keller Williams Consultants Realty - Marysville, OH
ABR, CRS, E-Pro, GRI, SFR

I agree with Jon 100% - and again, not sure if it was said here, the goal is to keep your seller from foreclosure and get them thru the process.  Multiple offers seem to muddy the waters for the bank negotiators (especially with the large banks with long waiting lines to even get to the negotiator) and upset the buyers as well.  If you have a dedicated buyer who is ready to go and the offer looks like it will be within guidelines on what is owed, stick to it and get the job done.  Getting a few thousand more is not going to make any difference at all to the sellers as long as they get the sale done and overwith. 

October 14, 2009 09:51 AM #95
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Jon!  Someone did mention that they did that and I'd hate to see their E&O insurance bill!!  My question to you--Is it laziness or ignorance?!  Hmmm...perhaps a little of both?! 

Vicki:  EXACTLY my point!  You put it better than I did!  I don't think that many agents don't know what to do with these and this is a HUGE liability to them! 

Debe in Charlotte

October 15, 2009 03:13 AM #96
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October 22, 2009 05:43 AM #97
Rainer
40,904
Victoria Frieberg
Rush Point Realty LLC, Victoria Frieberg, broker - Rush City, MN
Realtor, Broker,CDPE, SFR,TRC

ok, short sale listed several months ago, high priced.  no lookers, finally in Dec. a very low cash offer.  presented to bank with NO sellers signatures, they do not like the low offer, but want to get the process rolling...two days ago, 1st lien negotiator acknowledges receipt of all form, and will begin to negotiate with investor.  MLS noted that offer has been submitted.  Buyer calls me to see..dual agent...proper disclosures made to buyer and seller.  Buyer believes they will make an offer Monday..cash also.  In the meantime, short sale addendum has been allowed to go beyond expiration date declared to make contract moot with buyer one.  I told them to submit an extension amendment, not done.  I actually made one up for them to extend their date, and the closing date as the bank was taking so long.  Not returned yet, or signed by buyer or seller.  We have been communicating in good faith, I have kept buyers agent abreast of file as it moves through the process with lien holder 1.  I did not have the seller sign, they did not want to commit to the offer if a higher was to come in, but did not want to reject in case it was the only offer.  So...any words of wisdom before Monday!

February 06, 2010 03:20 PM #98
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Victoria - I would not have presented the first one with no signatures but, because that is the way that it was handled, you truly do not have a CONTRACT at this point--with anyone.  What I would do is instruct both buyers to present their highest and best and have your seller sign the best one--make it a win/win for everyone.

The other buyer, who would not sign the extension, could have just lost out on this deal!  HOWEVER, in NC, a Short Sale Addendum is an addendum to a Contract and you have no Contract.  So, I don't think the Addendum would have been legal here without referencing a Contract anyway.

Again, I would ask both parties for Highest and Best and present the best one, signed by the buyer AND the seller! 

Note that my advice is purely my subjective opinion and you would be better advised seeking the advice of a real estate attorney.  Hope this helps!

February 06, 2010 10:15 PM #99
Rainmaker
908,726
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Debe I wrote a lengthy post on this subject that you would probably enjoy. The article talks about presenting multiple unsigned offers to a lender and other foolish things that some Realtors that don't know the process do with short sales.

July 19, 2010 03:04 PM #100
Anonymous
Anonymous
Dennis Walker

Many who post act as if the bank has no interest in multiple offers.  Do not understand this thinking.  The bank is the one who is losing the money, and the seller is taking a walk.  The bank has every interest in receiving multiple offers.  Realtor be damn if I am a lender.  How do you feel folks, protecting people who are walking on their obligations?  Ethics anyone?  

September 27, 2010 08:52 PM #101
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Those in loss mitigation do not WANT more than one Offer--they demand that we provide them with the best Offer which becomes an executed Contract and hold the rest.  Agents who don't know how the loss mitigation department works, present multiple Offers with no signed Contract which only delays the process.  The bank then sits on the Offers because they don't want the responsibility of reviewing them, awaiting a signed Contract.  Sometimes when this happens, the foreclosure department winds up foreclosing on the property because the other department (loss mitigation) did not respond to the Offers as such.  

We are working for the sellers here and the sellers have done everything that they can do to get their loans modified with the banks; they stay and some even make repairs; they don't WANT to give up their homes to short sales but, the banks are not helping them get out from under their inflated mortgages which they can no longer afford, thus forcing them into short sale.  These are not homeowners who are simply walking away, they're homeowners who stay and see this through until the end. 

Those who leave the keys and walk away are a WHOLE other story!

Those who represent the banks in foreclosed properties, yet another story--they DO present multiple Offers as the foreclosure departments DO want them presented in that fashion.  They're accustomed to handling and interpreting Offers from all 50 states (which are ALL different).  Loss mitigation does not have the bandwidth for that training.

September 28, 2010 12:20 AM #102
Anonymous
Anonymous
Maria (buyer)

I contacted the listing agent to make an offer on a house.   I placed a cash offer and I am not getting much transperancy from the listing agent.  He told me that there were two offers but mine was the highest.  I do have a seller singed as is contact but I think the listing agent  submitted both offers (I am having doubts on weather my offer was submitted to the bank).  Even though I offered to put a deposit on the offer he said that it was not necessary because the bank did not require it.  My question is would it be better for me to put a deposit down?  Why would the listing agent discourage me from having to put a deposit?

 

Thanks,

Maria

April 28, 2011 11:30 PM #103
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Maria,

If you have a signed, ratified (both parties are in agreement) Contract, then the listing agent most definitely should have presented that to the bank.  If the listing agent is a one-man show (has his own firm), oftentimes they don't have a special bank account for escrow money deposits.  If you don't have an agent, then he has no way to legally hold that money.  That would be the only reason that I could think that he would not take your earnest money.  

Your earnest money deposit should show the bank good faith--the stronger the deposit, the more serious they (the seller and the bank) perceive you as a buyer.  I would think he would want to show that strength, along with a cash Contract, for his seller so that the bank would be more likely to approve. 

Are you in North Carolina? 

April 29, 2011 12:24 AM #104
Rainmaker
996,054
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Debe and Maria:  What happens to the earnest money on a ratified contract can depend on the state in which the contract is written.  In Texas, the earnest money NEVER goes into the Broker's account.  It is made out to the title company, and is given to the title company along with the contract.  That check is then deposited "cashed," and held in the escrow account of the title company.  There are so many differences... and things vary state to state.

PS... I think it is so interesting when a member of the public... this time, a buyer, finds an Active Rain post like this... that is meaningful to them... and then makes a comment, or asks a question.  This post is more than a year and a half old.  Cool.      April 29, 2011

April 29, 2011 12:40 AM #105
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Thanks, Karen Anne!  Yes, that's why I asked what state she was in.  Like you said, many states use Title Companies but, here, it's held in an Escrow account and credited at Closing, generally via the agent commission (whomever is holding the EMD) or that firm issues a check to the attorney who is doing the Closing.  

Still yet, would you NOT take EMD?  If not, for what reason?  I just emailed my favorite short sale attorney to see if he could give me a reason not to take EMD from a ready, willing and able seller!

And, YES, that is super cool, Karen Anne!  I love that we can help the consumer with even year-old articles!

April 29, 2011 12:51 AM #106
Anonymous
Anonymous
Maria

Thank you so much to both of you for your feedback.  

I am in the state of florida and in the contract it states that the deposit will be held in escrow with a lawyer upon acceptance.  The contract has the lawyers name on it.  Another weird thing on the contract is that the seller signed the contract but did put a date next to the signature. 

When I told him that I wanted to give a deposit he said it was not a requirement by the bank.  I should have gone with a separate agent and not the listing agent directly. 

I actually did find this site very interesting.  I think the listing realtor submitted two offers to the bank mine and another who was not a cash sale but the other was higher but at the same time the other buyer wanted a 6% back for closing costs.  So he told me that mine was the highest offer.  This is what he is telling me at least!  In the meantime he never updates me with anything.....I am the one that is always calling him and it takes me a few tries to reach him because he never returns my call.    I am not sure if the other offers that he is talking about is someone that he knows to me there is something shady going on.....!!  Do you think ...I can get a realtor involved on my behalf this far into the process.

 

April 29, 2011 09:26 PM #107
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Maria!  I forwarded this link to a broker/owner in FL who can possibly assist you.  He's the most knowledgeable person I know with regards to short sales--especially in FL!

I cannot answer to whether you can bring in your own agent but, this is definitely one of those times that the lesson learned is quite frustrating.  I truly hate to see consumers taken advantage of and unfortunately, it happens far too often.

I don't think the agent that I contacted for you stays up as late as we do but, hopefully he'll answer your question early in the a.m!  Have a great evening...

April 29, 2011 11:33 PM #109
Rainmaker
1,085,645
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Hi Maria. Deb sent me over here to answer your question since I'm in Florida. It sounds like you may be involved in a transaction where the listing agent does not have experience with short sales.

Only one accepted contract should be submitted to the bank. That's their requirement and it's really the only way to handle it. Escrow should be placed according to the terms of the contract. Right on the front page it will outline when the deposit should be placed in escrow. This will be addressed again in the short sale contingency addendum ot the contract.

My suggestion would be to seek legal advice.

I hope this helps.

April 30, 2011 07:19 AM #110
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Debe Maxwell
www.AtHomesCharlotte.com | Savvy + Company Real Estate - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Thanks, Bryant.  That is what would apply for NC as well but, since I don't know your state laws, I thought someone who did would be more appropriate to answer Maria's question.

Good luck, Maria.

Have a wonderful weekend...

April 30, 2011 09:20 AM #111
Anonymous
Anonymous
Maria

Thanks so much to both of you!!!!  I will have to first of all clarify with him what he did and then I will decide what to do.  Hope you have a wonderful weekend.

April 30, 2011 05:05 PM #112
Anonymous
Anonymous
Tammy

Love this post - so timely for us right now!  I'm wondering what the normal procedure is if there is a signed contract (agreed to between buyer/seller) that is submitted to the bank and the bank rejects the price (assuming they want a higher price).  Is the potential buyer able to negotiate with the bank at that point or are back-up offers now put into place?  Is the original buyer signed contract held up until the point that the buyer walks away if they can't go any higher on price?  Just wanting to understand what the steps will be if we offer / are accepted by buyer and then rejected by bank.  Thanks for all your input!

November 23, 2011 02:05 PM #113
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