I have long admired your wisdom and educated response to investors questions, however I have to respectfully disagree with your response!
The writer of the original posting Hansleyward, did not state in writing as to the state he invests in, however for example; Arizona has a foreclosure process that includes a 90 default period and a minimum 90 day foreclosure period and normally upwards of 120 days to carry out a foreclosure, requiring filing and publishing for 4 consecutive weeks and a property posting at least 20 days prior to a trustee sale. Trustee sale must take place within 10 days of the last publication.
Now, every US state has different foreclosure statutes and different periods of time available to work out a short sale offer. Now in a state for example like Arizona the original owner can redeem up to 5 days prior to trustee sale.
Now here in Arizona a foreclosure filing is pretty standardly made prior to lenders excepting a “Short Sale” package, and most lenders I have worked with have rejected the short sale package if the foreclosure filing has not been recorded. Now virtually every short sale I have ever done in Arizona I have never been requested to ask the seller to list there property.
If my offer price is within exceptable limits for our market, provided an offer is made with a contract (rather than a POA - Purchase Option Agreement), it is accompanied by a reasonable earnest money check (Payable to a local title company) and a LSR (Loan Status Report), a Transitional Funding Approval Letter or my Banks Letter of Credit for cash purchase and a legitimate closing date and minimum or no contingencies then most lenders will not request any listing and there is plenty of data readily available to know what the general consensus of market discounts has been being excepted by competing lenders for that zip code and market. (For Arizona lenders have been excepting about a 20 to 30% discount on a pristine property from fair market value.
The last time I heard of an investor who was asked to have the seller call the lender and lender requested a listing on the property, the owner (seller in default) signed the listing agreement and the investor who I knew nothing about, I guess thought he had the right to buy the property and was upset when there were four offers and the price was bid by contract offer up by $45k dollars and sellers agent finally told the guy he had to submit a new contract or he was not in the running, this guy stood around for almost 3 months thinking he bought the property when all along his original offer had been rejected!
I think you presumable misunderstood the original post as there is the original owner (Selling Party in Default) and the investor (Who originally made the POA Offer and put together a Hardship Package) now as a Licensed Real Estate Broker in California I am sure you were not encouraging someone to sign a legal listing contract when they do not have a legal position to the property? The lender is certain in this situation to want a copy of the listing agreement for disclosure. (Parties to the listing contract must write legible in order for agencies to recieve commissions and title to transfer to buyer.)
It is probable the lender rejected the offer because of the POA - Purchase Option Agreement (If the offer was made as a straight purchase agreement with all the acompanying buyers documents and check the outcome would be different) and depending on how long the foreclosure period is time is probable of the essence.
I have never had a lender willing to help me when I intend to make a profit at there expense! (Shortsale) If you know of lenders willing to help us make a profit at there expense and with the lenders help please let me know, because I sure haven’t found one and I have never had a lender tell me (Buying Investor) to list the property to find a buyer to help me flip the property and make a profit?
Have a great weekend Michael.