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I am attempting to do a short sale on a property that has negative equity.
The question is... should I negotiate with the lenders to get an idea of what, or if, they would short their position BEFORE I sign any agreement withe the current owners OR do I need to sign a P&S with the current owners and make it contingent on a successful short with the lender??
It seems to me if I sign an agreement with the current owners and THEN negotiate with the lenders...I'll need to go back and revise my ofering price if I can't get the lender to accept the price I stated to the current sellers. On the other hand, I also am not thrilled about negotiating a short with the lender, possibly doing a title search and then finding out after that the seller has no interest in working with me.
I'm a little stumped which comes first....do you sign a P&S and then negotiate with the lenders...OR..do you negotiate with the lenders and then sign an agreement with the owners??
I have done one where there was positive equity and it was a matter of simply negotiating with the owners on what they would take for their equity..but this one is a different animal...
I always get a contract with the seller prior to starting working the short sale. This ensures that you have the contract. What I have done to get around the issue of the initial price changing with the neogiations is to get multiple signed copies from the seller so that you can send in an updated contract as needed.
In most cases if you explain the process of working the short sale to the homeowner they understand what is needed and will do what they can to help it happen.
What's a P & S?
I am not quite sure what exactly P and S stand for in this case. The advice from Stefanie is correct in this case though. You want to get a purchase contract with the seller signed first and also get a letter stating that you can talk to the bank about the seller's account. Then go to the bank and inform them of the increadibly terrible situation that they are in with this particular property and offer to bail them out.
Yuo can also use a special addendum that gives you the right to re-sumbit higher offers without new contracts. Check out Ron Ballard, Short Sales Attorney, and his site [LINK REMOVED]
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