I am currently negotiating a short sale with Midfirst Bank. Current
loan balance is $82,000 and our initial offer is $36,000 (needs alot
of work). After we submitted the short sale package, the lender is
now requesting a real estate listing agreement.
what should we list the house for? what else do I need to know about this?
This could be an FHA insured loan. If so, you are sunk. Unless you can find a realtor to work in cahoots with you. I wouldn’t do it. You are screwing with the gov’t now.
EH
could you elaborate please. how am I sunk?
On FHA insured loans the lender is required to list the property for sale with a realtor when the owner desires a short sale. I believe the listing period is 4 or 6 months. So you as a investor can only make an offer after it has been listed.
The property is supposed to be offered for sale as a listing to all buyers. Now, I have heard of some investors that work with the listing agent to provide an offer where the agt has an interest. It’s called a “tainted” DEAL. Not good. You don’t want to mess with HUD. Do so at your own risk.
EH
I don’t think all is lost. I assume that you got an RE Agent to provide you comps. Your comps should be on the low end, i.e., based on distressed properties in the area. The Agent can list the house based on your repair estimate and the distressed comps. You then put in an offer for 90% of the listing price simultaneously. HUD regulations state that houses should sell w/in 90% of the listing price. If it is w/in that %, then my understanding is the lender doesn’t have to wait 4-6 months. And, by the way, this should not be tainted deal, b/c everything was done legitimately.
I am in the same situation with Midfirst bank/Midland Mortgage. Yes my client’s loan is FHA. This is my first short sale and I have completed a thorough ss packet with every possible thing the bank could need and/or want. Now I am frustrated that they have told me HUD requires the house to be agressively marketed by a RE Agent. Has anyone who has done a FHA short sale come across this obsticle before? If so what did you do? Please Help
I am also a RE Agent and I am thinking of getting an agent friend to list the property once the BPO is done. Then immediately submit my offer and have the sellers accept. What do yall think?
Cajun Investor, How did your deal work out?
just gotta go thru the motions. Its all formalities that makes FHA feel like the lender is doing their best to mitigate the loan and not say “eff it, who cares its FHA insured, they’ll make up the diff”. FHA just got PO’d at the “eff it” attitude and said “you gotta make an effort”, RE listing is one of those lame “efforts”
One fact about loans backed by FHA/VA, they will take offer no less than 82% of BPO and no less than 63% of outstanding loan.
Do the math, .63 *82k = $52K or more needs (or needed) to be your offer. I believe the RE listing is to prove its worth less than 52K since your initial failed the litmus test miserably.
Once you learn how to do em and r patient SS on FHA/VA loans is a slam dunkeroo
Most of the shorts I have worked on wanted a listing agreement. I have been able to get by with some by just telling them the owner has a for sale sign in the yard, others that did not fly with. I agree with rgchamb when he says to list it and then immediately submit an offer that is 10% less than listing price.
The agent and seller must be on your side. Meaning the agent will not present other offers to the seller( though it is his/her job) behind your back. As the foreclosure date looms the seller gets nervous and either on their own or with the realtor tells the lender that they have a higher offer on the table. The lender then rejects your offer and goes another direction.
A similar happened to me last summer. The r.e. broker gave the seller an offer for 40k more than mine, the seller knowing basic math signed off on that contract and the broker submitted it, or I think it was in that order. 2 days later a called in to check the status of my short sale and was informed that they(Chase) had an offer for more and were going in that direction. Funny thing is that that sale did not work out because the buyer could not get financing because of all of the work needed. She managed to tie the property up for 3 months before bailing. It did sell less than 1 month later to her lawyers assistant for 15k less than what she was offering.
In conclusion make sure seller and agent are with you. Inform them of your plans as much as possible. Its not fair to tie up someone’s property with unreasonably low offers to the lender, hoping and praying that the lender will accept your 100k offer on a 500k property with only 7 days to auction. You get my meaning.
I have one question about the listing: if you have it listed by your agent and then that same day of the listing you get a signed contract from the home owner, that should take the house off the market as far as the agents are concerned shouldn’t it? As I understand it the owner can only sign one contract at a time so he/she would be obligated to you.
Any thoughts on that?
Keith
Good question WaInvestor. I thought the same as you as far thinking the lsting should be listed as pending(off market). When I found out another had come in and stolen my deal I was livid.
I wanted to snap that brokers neck. He told me that since this was a short sale and the lender had final approval he was now working for the lender.
I guess I see the point, the lender pays his commission not the seller. Remember the seller gets nothing in a short. I have always felt this was wrong but had no recourse.
this is great info…Just wondering how do you know this ?