Re: Short Sales Question! (need help fast) - Posted by Carmen_FL
Posted by Carmen_FL on July 10, 2002 at 10:12:57:
I may phrase it more like “contract price contingent on third party approval (mortgagee). Seller hereby gives permission to Buyer to negotiate with the lender in this process” or something like that.
What usually happens in a short sale is, the bank will expect to get a firm offer with a number on it. They may go up from there, if they don’t think they’re getting enough, but guaranteed they won’t go down, so make sure you know all the numbers (including closing costs, etc - the bank will be expecting to hear what THEIR NET is going to be; I usually submit a Net Sheet or a preliminary HUD-1 to them; they always request one and sometimes red-line it and cut out some things as unallowable expenses - e.g. HOA fees; liens, etc.). A short sale situation is just another negotiation. What you should do is give your lowest offer; if the bank counters, then you’ll be able to negotiate.
The Seller has nothing more to lose, really; they’re not getting any money anyway, so such a clause should not be a problem. Then you and/or the realtor (you did say one was involved, right?) can work with the bank - I like to control my deals, but if the Realtor has more experience they may be the logial choice for the negotiation with the bank. In addition, the Realtor will have to include his/her commission in the numbers submitted to the bank. Technically, the “seller” is paying for it (on the HUD-1 as commission); but the banks will have to agree to the percentage commission they will give the agent on a short sale too (they sometimes will cut it down) so the Agent has a vested interest in remaining in the loop, as you can imagine.