Short Sale CASE STUDY: 003

Ready! Set! Go!

The listing went active and we received an offer on the same day!  I guess we are off to the races.  I wold have liked to have had more time to get the process moving through Wells Fargo so that our buyer doesn’t get impatient.  The buyer, however is an investor using an LLC so I think he will be willing to wait.

Analyzing The Offer AND Buyer

Having an investor as the buyer is great for a few reasons:

 

  • They are usually purchasing with cash or hard money
  • They are not frightened by home inspections or repairs
  • They are willing to wait a long time for an approval

There are a few challenges with investors how ever. For one, many investors want to re-sell the property quickly for a profit.  This used to be common place with short sales but lenders have been putting clauses in their approval letters that restrict the transferring of title for 30-90 days after closing.

Investors also like to purchase properties under the protection of an LLC.  This requires having the Operating Agreement or Articles of Organization that show who actually owns the property.  Some investors are reluctant to provide this information.

Another drawback to having an investor as the buyer is that they are looking for a deal.  They will often write an offer site unseen and try to tie up the property up for much lower than Fair Market Value.  I don’t mind processing a lowball offer if it allows me to obtain the minimum net that the lender will accept.  Armed with that information we can re-market the property later at an “approved” price.

After Further Review…

I have completed the review of the new offer and emailed the listing agent to provide me with some additional information before I can submit a full packet to Wells Fargo for review.  Remember that Wells Fargo uses the Gatekeeper approach in that they won’t assign a negotiator until every document has been received and scrutinized.  Here is what I need to move the file forward at this point:

  • I need the Operating Agreement to show that the person that made the offer is in fact a member of the LLC and has the authority to sign on the LLC’s behalf.
  • The Short Sale Addendum that was used has a box in the lower right hand corner for the Principal Broker to sign off on when they process the file.  Wells Fargo requires the initials to be in place.
  • The buyer is also a licensed agent.  This complicates the Affidavit that Wells Fargo requires of every short sale.  Does he need to sign both as the buyers agent and the buyer?  He has only signed as the buyer leaving the buyers agent slot blank.  My experience tells me that the “Gatekeeper” is going to reject this document if there is no buyers agent signature, or they are not going to allow a buyers agent commission to be paid. (Since it would be a credit back to the buyer essentially.)  I’m not sure how this will play out at this point.

Off To The Races…

So just like that we are off and running on this short sale transaction.  I have most of the documents I need to submit a full packet for review and we already have an offer.  I have opened escrow and am awaiting the Preliminary Title Report (Prelim) so that I can ensure there are no other liens that I will need to negotiate.  It shouldn’t be much longer and we will have the file over to Wells Fargo for review. The short sale has been initiated in Equator so that I can get my authorization cleared and we can get a Broker Price Opinion (BPO) ordered. This should start moving quickly now.

Until then, make sure you subscribe to the RSS Feed on the right hand side of this page so you can follow along.  You can also use the share button to tell your friends a colleagues if you know someone that might be interested.

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