THIS WEEK'S QUESTION AND RESPONSE
Hi Broker Bryant,
Thank you for the sample short sale submission letter, I found it to be very helpful. I am currently closing on a short sale and picking up a couple more tomorrow.
I have a couple of questions .... You stated... "Just remember, you are submitting a fully signed and accepted contract and asking the lender to remove the 3rd party approval. You are not asking them to accept the offer. The lender is not a party to the contract."
My questions are:
1. What is the 3rd party approval on a short sale purchase agreement?
2. Why is the lender not a party to the contract when the sellers need the banks approval to pass clear title?
Hi there,
A purchase contract is between the buyer and the owner of the property. Unless the property has already been foreclosed on then the lender is not the owner of the property. They have a lien on the property. No different than if there were an equity line or tax lien on the property. The mortgage is a lien that has to be cleared off at time of closing.
BUT since there will not be enough money left over at closing, to pay the lien in full, the owner of the property is asking the lien holder (lender) to accept less than what is owed (short) and remove the lien so they can provide the buyer clear title. This is a contingency (3rd party) in the contract. Simply put, the lender (lien holder) is a 3rd party who has to agree to accept less money, remove the lien and allow the transaction to close.
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*****I am NOT an attorney and this is not legal advice. I am also a Florida Broker and I'm basing my opinion on Florida laws. Please check with your own State's laws and get legal advice from an attorney in your state. This response is my opinion only.*****
Do NOT be foreclosed on! Avoid foreclosure. Short Sales DO close.
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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.
Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales, Orlando Florida Short Sales, Celebration Florida Short Sales, Winderemere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.
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Reserved Parking For "The Lovely Wife"...TLW...ROAR! :)
Great explanation of 3rd party approval. Thanks for setting us all straight.
Broker Bryant... you're so smart. :) Kidding aside, this is a great series. I run into folks every day that wonder about these things but feel embarassed to ask.
BB--I can't believe that Jesse stole my comment--you're just SOOO smart! (TLW was right--brawn AND brains!) I'm sticking around for the next answer--I may just be able to avoid that short sale class that I was planning to take the first of the year! Thanks for sharing your knowledge and expertise so freely.
oops...perhaps you shouldn't tell her that I told you that...TLW may not want you to know that she said it!! ;-)
Bryant,
Excellent to a typo. "Unless the property has already been foreclosed on then the lender is not the owner of the property."Once it has been foreclosed upon, it becomes an "REO" real estate owned. When an REO is sold it is not a short sale no matter what the bank has into it.
I haven't been commenting, but your short sale sears is exceptional.
Bill
BB,
I sometimes wonder if some people really understand it.
BB- you are a very smart man. And hey, I'm glad someone has the understanding of all of this. I did one short sale recently and really hope I don't have ANY more.
Most agents think that the bank can only accept or reject the proposal. If they don't want to take the loss they can ask to have it modified. I don't have a problem with that but do it in a speedy fashion so we don't do all the work and then the buyer walks before they can even give us an answer.
Bryant- Your series is very good. Right to the point and on target. I get so many calls from agents who make offers on our listings and think the bank is a party to the contract.
OK BB, when are you going to publish your book giving advice to short sale agents and buyers? This is all such good stuff and you write so clearly that it helps me to explain things to my clients in a succinct way.
Bryant = Great explanation of something that very few of us have had to deal with yet. But it's going to happen. It's just a matter of when, and how often.
I am glad the buyers and sellers out there have your experience to count on.... thanks for sharing
Bryant, This is a great 'ASK A BROKER' series. I am thinking we should start a "ASK A NEW YORK BROKER" series on our end...!