All Forum Posts by: Bill Patterson

I guess Will is right.....we will just have to agree to disagree on this subject. Jackie & I are BP members to offer input based on our experience and knowledge, to receive the same from other BP members and to gain productive business connections. We'll continue to do what works for us and our clients. As Forrest Gump said..."That's all I have to say about that."

We also enjoy your questions and insight from the buyers perspective. Everything we do is subject to change. And we are changing every day to adjust to the market and lender requirements!

What we strive for is a WIN/WIN for everyone. If I were working with a buyer with your track record of closing sales, your language would not be such a problem. It is the normal offer that we get, not knowing the buyer, is what makes us cautious. We see no benefit to accepting offers from an investor that makes several offers and plans on only closing on one of them. We do allow buyers to wait for the approval letter to spend money on their appraisal and if they want a home inspection, that can happen after the approval, too. They are aware that the sale is "as is" and that the seller (or lender) will not make any repairs. This way if a major issue arises, they can evaluate if they should continue with the purchase. Most investors do their own inspections, so their costs are mostly their time so this is not as much of an issue. Also, the investor's offer usually reflects his inspection of the property.

If I'm correct, your reason for due diligence after approval is to avoid spending time ($$$) on an offer that may not be accepted. I can understand that, since we are on the other side of that fence, not wanting to spend a lot of time on an offer that is not an informed and committed offer.

To answer your questions...
1. We only ask for a reasonable time to obtain approval. Make your offer contingent on getting approval in say..60 or 90 days. If it takes longer you can decide then if you want to extend your offer. By then, we will at least have an idea of where the lender is and how much longer it may take.

2. We are really more concerned with the buyer's commitment up to the point of getting approval. Most buyers put $500 or $1,000 as an earnest deposit. That being said, I would suggest that you keep doing it as you normally do in your market where you are known. It is working for you, so why change a good thing?! If the deposit is an issue on an offer you are making, I would think that a small deposit would be the way to go when you put in an offer.

Bill

I see everyone's points and can understand where they are coming from. I'm just saying what works for us and how we approach the question in this thread. There are lots of business models that can be followed. If it is working for you...Great! If not, then there is no shortage of options to consider on BP! That is what makes Bigger Pockets such a valuable site!

That's what I was saying about the debate on what type or when a lie is appropriate. To answer your questions.........

Yes, I would lie to the serial killer to save my family.....long enough to pull my S&W from my back and shoot him. No moral dilemma here. Self defense of your self or others is a reason that concealed carry has gotten so "main stream" of late. But.....that is another topic for a different forum!

Jon,
We seldom have an issue with finding a buyer. Sure, a few of them fall out, usually because their agent did not advise them of a reasonable time frame for closing. The reason that the buyer is considering a short sale in the first place is to get a better than "retail market" value. If they want a great price, they will have to wait for the process.

We require earnest money to be deposited. We will accept a reasonable timeframe for short sale approval and if that is reached and the buyer walks, they get there deposit back. If they wait until we get an approval letter and then change their minds, they likely will not. 30 days is not a reasonable time to get approval but 60 or 90 days is possible, especially if it is a HAFA.

The reason that so many short sales do not close is usually due to inexperienced negotiation or non committed buyers. I guess it's who you are working with that has the most effect on your success rate.

I'm sorry, but we would not accept that language. The due diligence would need to be completed before the approval letter. We would be happy to take an inspection/ verification of condition so that you could verify that the property is in the same condition. You would not misuse that clause, but there are many potential buyers that would (as evidenced by this topic).

If the buyer walks after the short sale is approved, we only have a maximum of 30 days on the approval. Take out the due diligence period and that gets less. Many approval letters are for a specific purchaser, so although we know the lender has approved the price, we still need to start all over with a new offer and complete short sale submission package. It can take just as long or longer than the original approval. That doubles the amount of work that we have to do to achieve a sale. Even if it is an open approval, unless we can find a cash buyer (usually an investor), we can't get it closed without an extension.

That is not at all what Jackie is saying. Most of the buyers for the short sales we are involved with are homeowners that will live in the house. We also do them for investors as buy & hold as well as rehab and flip. Also, we have a very high success rate and if we accept an offer that we think is likely to be countered by the lender, we will tell the buyer up front. There is a lot of work in completing a successful short sale and we don't want to waste our time with an uncommitted buyer. We have declined offers if the buyer has not been inside the property. We require that the inspection periods be completed before the approval is received. Of course, any buyer can verify that before closing, the property is in the same condition as when the offer was submitted. In return, the buyer gets the best chance for a great deal that much more often than not, will close. If you can't wait for the short sale to be negotiated, buy an REO.

What everyone here is forgetting is the property owner. When you are putting in multiple offers on short sales, knowing that you will only close on one of them, you are not just wasting the agent's, sellers and negotiator's time. You are taking the homeowner one more step closer to foreclosure. Lenders will only extend approvals so long and postpone foreclosure sale for so long. While you are tying up a property you are stopping it from being put under contract by a legitimate, committed buyer. All the time the seller is getting closer to having a foreclosure on their credit history.

Yes, it is important to consider and be aware of. If I had a dollar for each time I have been lied to by an agent, seller, buyer, lender...you name it, I'd have a lot more time to relax! I've kept quiet on a few issues that I have known about (and the other party should have been able to obtain with normal due diligence), but I can't remember lying about a material fact. In real estate, "Puffing" has been a fact of life for at least the 30 + years I have been involved in it. There has been a lot of press on the issue of lying lately and the context of and reason for the lie is used to justify it. In some cases it may be and in some it is not.

Kel...this is how the game is played. Do your own due diligence and base your actions on it. BTW....have you purchased a new or used car lately? Did you believe everything you were told by the salesman?

Originally Posted by J Scott

You make it sound like the agent is doing a bad thing by trying to get a higher offer. It's not just the agent's job to get the highest price for their client, it's their legal/fiduciary responsibility to try to get the highest price.

I have a feeling that if you were the seller as opposed to the buyer, you'd have more appreciation for the agent's efforts and tactics. Btw, most REO agents I know are now calling for highest and best regardless of whether there are multiple offers. In many cases, they don't even mention multiple offers, as it just doesn't matter.

I usually agree with your responses, but the agent not only has a fiduciary duty to get the best deal for his client, but under the Realtor Code of Ethics, they cannot also give false information to another agent or party to the transaction. It is always ok to ask for the "highest and best" or to counter an offer. They just shouldn't say there are multiple offers if there are not.

Kel...good luck. You will find out soon enough if yours is the best (or only) offer!

Hi Linda,
There sounds like a good possibility for a short sale. There are many things to consider, but for someone not experienced with short sale negotiation, to try to do this yourself would be a disservice to the property owner. If you like the house and are willing to wait for the short sale approval, I would suggest working through a Realtor that is experienced with short sale negotiation or through a third party company that can structure, manage and negotiate the approval from the lender. Short sales are a great source of inventory for investors!
Bill