Be aware that the seller need not be in default -- to have stopped making mortgage payments -- before a lender will consider a short sale. A lender may consider a short sale if the seller is current with mortgage payments but the value has fallen. The seller may have over-extended, owe more money than the home is really worth, so a discounted price might bring the price in line with market value, not below it.
If there are two loans, you could have a problem. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. If a seller owes $160,000 on the first and $40,000 on the second, offering $160,000 leaves nothing for the second. The first will need to give something to the second to gain its cooperation.
NOTE:
After you contract an Outer
Banks short sale property with a Seller, the lender of the loan will
review and accept/reject any and all offers. If the lender accepts
a contract between a buyer/seller and approve the short sale, the
lenders will often times offer much less than the total real estate fees
indicated in the Sellers's listing agreement. This is an awkward
position for a distressed Seller to be in. As a MLS listing, the Sellers
are legally responsible for paying the agreed fees upon sale of the
property....but can't or won't. They're broke, and rarely have a
dime to bring to the table. The lender doesn't own the property,
so they are not legally obligated to pay what the Sellers have legally
agreed in their North Carolina listing agreement. So there starts
the game.
Again, it's the Sellers
legal responsibility to honor the listing agreement and provide
clear title to the property. That is clearly indicated in the North
Carolina Residential Listing Agreement, and the property contract the
Sellers now have in place with the Buyers.
Now if the lender approves a short sale, and will only honor half
of the real estate fees as stated in the listing agreement...am I
influenced as a Buyer's agent? Do I potentially take a position of
becoming part of the contract?
You would think so. Maybe I don't want my commission
reduced, but now have to sue a distressed Seller who is in default of a
mortgage and now their listing agreement? Now if I demand my
commission from the Seller or even the listing agent, and the deals
blows up for my buyers...did I represent my buyers legally? Of
course I didn't. Ultimately, the system allows the banks and
sellers to steal from the real estate companies who are bringing the
Buyers and Sellers together under legal listing agreements and contracts
to make theses transaction possible.
Unless a Realtor can
successfully sue a Seller (who is in financial distress), the buyers and
real estate companies representing buyers, are really left in the dark
up until the day of closing to what the terms are in the contract and
listing agreement. Another example is a lien or other "clouds" on
title placed on a property (sometimes after short sale approval).
If a lien comes to light towards closing day and the Seller/lender
cannot or will not clear title, why would a Buyer want to pay to clear
it up? More importantly, why would a bank expect the buyer to
accept anything other than the terms originally agreed between the
Seller and the Buyer? Good question.
Why would they?...because they can! Because they KNOW that
real estate companies more often than not will "buck up" and make
closings work if the Buyers or Sellers will not.
Real estate companies, like buyers, want to know what they are
getting involved with BEFORE a short sale is reviewed...and certainly
before an approval is communicated. As an agent, working towards a
short sale closing can cost overly taxing time and money (it has on
every short sale of mine that wasn't a Fannie Mae or Freddie Mac loan).
Realtors work on commissions set by the Seller's legally binding listing
agreement. It must be understood that real estate agents work on
this fee structure in the listing agreement, and that the agent's time
and resources are not well spent on closing real estate transactions
that potentially have little or no return. It should be
embarrassing that there are still big lenders out there who are dumb
enough to detract the real estate industry (Realtors who make these
transaction possible) from selling the lender’s own property! I
guess they will see it how they want. I call it ignorance and
sheer stupidity! Fannie Mae and Freddie Mac didn't just change
their guidelines out of good will. They understood that they could
benefit greatly from keeping listing agreements intact and limiting
the resistance in getting their properties sold in the least amount
of time, and for the highest market value.
Short sales are quantified
today on many factors surrounding the property including: who the
bank is! It is to everyone’s interest in adopting new
legislation requiring lenders to accept, within reason, all the terms of
a legally binding listing agreement (that includes clear title), or not
accept the offer at all. Fannie Mae and Freddie Mac already have
agreed not to negotiate the terms of the listing agreement, and provide
clear title. It's a start, but the big lenders like Bank of
America are still "exploiting" the system on short sales at their own
expense.
If you are interested in
buying Outer Banks real estate, you will know what the Buyer's agent fee
is upfront on a prospective property. If a lender approves a short
sale with anything less than the listed amount of realtor fees for the
Buyer's Agent, the buyer shall compensate the Buyer's Agent the
difference for his/her services as referenced in their Buyer Agency
Agreement. At this time there is no other way for an agent
or a buyer to gauge the unknowns and justify the time and resources
required to successfully close short sale real estate on
the Outer Banks.
Keep in mind there are
plenty of foreclosures and other properties on the market for sale that
are not short sales. Most properties on the Outer Banks are not
distressed. The ones that are short sales have rules of their own
and require a greater understanding of what to expect prior to making
offers, or working with a real estate agents.
If you are not aware of these
facts, make sure your agent does.
VIEW ALL OUTER BANKS SHORT SALES HERE
VIEW ALL OUTER BANKS FORECOSURES HERE