Is bank or owner the seller in a short sale? - Posted by Kristine-CA

Real Estate Investing
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Posted by ken in sc on July 16, 2003 at 12:44:20:

I have heard it said by certain female short sale “Gurus” that an assignment fee cannot be on the HUD-1 as the lender does not want to see anyone else make money while they take a loss. While this is understandable, I have done exactly that several times and noone said anything about it. Other times I have paid the assignment fee to the person who brought me the deal outside of closing.

Ken

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Is bank or owner the seller in a short sale? - Posted by Kristine-CA

Posted by Kristine-CA on July 16, 2003 at 10:01:21:

Who is the seller in a short sale? The bank or the owner? Do the banks get a deed (quit claim? in lieu of?) from the borrowers before selling. Or are the owners selling with bank agreeing to the discount?

I’ve never gotten this far in a short sale.

If the owner is selling, doesn’t that give the buyer more control over the purchase contract?

Thanks for any ideas or experience here. Sincerely, Kristine

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Re: Is bank or owner the seller in a short sale? - Posted by Rob FL

Posted by Rob FL on July 16, 2003 at 10:17:33:

When property is in pre-foreclosure and you are doing a short sale, the seller is the homeowner not the foreclosing bank. If the bank owned the property it would be an REO and most likely listed with a real estate broker.

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Re: Is bank or owner the seller in a short sale? - Posted by Kristine-CA

Posted by Kristine-CA on July 16, 2003 at 10:23:45:

Rob FL: thanks for your reply. Since the homeowner is the seller in a short sale, then the contract is between the buyer and seller, not the bank right? So, the buyer can use the contract of their choice to tie up their interest? I suppose the bank has to approve the contract. But still, am I correct in thinking that the bank is not a principal in the contract?

Thanks, Kristine

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Re: Is bank or owner the seller in a short sale? - Posted by ken in sc

Posted by ken in sc on July 16, 2003 at 11:50:20:

Hey Kristine-

The seller is the seller and the bank agrees to take less than what is owed as payoff (why they call it “short” sale). Yes, you typically use your own contract and thus the lender will want a net sheet showing how much actual cash they will receive. The lender is not a principle and does not care about the contract. They keep control by needing “approval” of the HUD-1, and putting a time limit on that short payoff being good.

Ken

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Re: Is bank or owner the seller in a short sale? - Posted by Kristine-CA

Posted by Kristine-CA on July 16, 2003 at 11:59:41:

Thanks Ken. So, technically, a buyer could assign or double close on their contract with the seller. Very interesting.

I’ve never gotten farther than having sellers that were interested and looking at a couple of short sale packages. It seems like a lot of work…and a lot of luck. At least with large institutional lenders.

Now, with private party lenders, I can see the pay off. And there are more options. Like buying their paper, etc.

Just don’t want to be left behind in all this short sale mania. Thanks again. Kristine