Karla Leahy started an interesting discussion on www.ShortSaleSuperstars.com. She asked "Do you inform the short sale lender when you no longer have an offer?"
From what I’ve seen the thought process behind not divulging the buyer walked is:
1. The lender will complete an appraisal or BPO that will speed up the next approval
2. The seller’s pre-qualification may be completed and ready for the next attempt
3. With some lenders, you can sneak in a substitute buyer
Bottom line, it “saves time” for the next buyer, the one you hope closes.
BUT-- IS IT RIGHT TO NOT DISCLOSE THE BUYER WALKED? Why should the short sale system be clogged because you are trying to speed up your next offer? Is it right to allow the lender to continue to work on an approval when there is no longer a contract? Sometimes there is another twist on trying to speed up an approval. “Fake” or “starter” offers are sent in to the lenders to get an appraisal ordered, when the “buyer” has no intention of closing. The “buyer” might even be the real estate agent.
Some of the lenders have a few hundred thousand offers in process. HOW MANY ARE LEGITIMATE OFFERS? The “real” buyers (and the sellers) suffer through longer wait times because others have tried to game the system, "dead" deals are being processed or offers with no hope for approval have been submitted. If lenders were only processing contracts that could actually close, all short sales would be speeded up, right?
So, I ask "Would YOU call the short sale lender and tell them to stop working on the sale if your buyer walked?"
It's Wendy!
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Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.
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Hi Rob, I never even thought about people (or agents) putting in fake bids. What a shame. We really don't need any more delays in the short sale process. The last time that happened to me the buyer had to walk after 3 months and the bank finally called me at month 4 1/2 and I told them the buyer had to go elsewhere. But in my case, I kept telling the bank that the buyer could not wait any longer starting in month 1, so I did tell them, kind of to get them to give me an answer, but it obviously didn't work.
If the banks would simply use the billions in TARP funds to streamline their process (similar to how they handle the REOs), the short sale process would be much quicker. By playing these games, the banks are simply deteriorating the market for their properties even more.
Hi Rob, I saw this post yesterday and read the various responses to it. My feeling is that if short sales were more streamlined and some of them didn't take forever, then this wouldn't even be a question. But some lenders drag them out forever. So, once you have the momentum going, you almost hate to say anything to hold up the process for what could be the next buyer. I suppose it depends on where you are in the short sale process.