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Short Sale Offer Instructions
The Myers Team has closed more short sale listings than any other Realtor in Las Vegas.* We are able to obtain these approvals due to the fact that we have developed a specific process; recognized by most large banking institutions and their investors. Since bank investors require offers which meet specific guidelines, we only submit offers to the bank(s) which comply with these guidelines. Therefore, we ask that you review these instructions with your buyer(s). This will allow us to quickly submit your buyers' offer for presentation and gives you a better chance of having your offer accepted by the seller's lender.
NRS 645.254 requires a licensee to "present all offers made to or by the client as soon as practicable," however, this duty may be waived by the client. All Myers Team clients have "waived this right" and have instructed us to ONLY present offers which meet the guidelines below. Recent GLVAR statistics show that less than fifty percent of all short sale escrows in Las Vegas actually close, however The Myers Team has closed more than 97% of all listings taken.* We urge Buyer(s) agents to explain the short sale process to their clients to minimize frustrations and concerns. Most short sale listing agents do NOT require all of the items mentioned below, however, most short sale listing agents are never able to obtain an approval. We wish to thank you for your time and consideration and look forward to working with you and your buyer.
What Happens If The Seller Accepts My Offer?
Your offer shall be placed into "C" status within 24 hours once the Buyer and Seller have executed the contract, and the full earnest money has been deposited into escrow. Once your offer has been accepted, then your offer shall be the ONLY offer submitted to the bank. Any new offers shall be kept as "Back-Up Offers" only, and they will NOT be presented to the Seller nor the Bank unless the current buyer should default.
PLEASE SEND ALL OFFERS TO: Please email all offers to the email address listed in the MLS. Be sure to state the property address in the subject line of the email message. Only documents that are emailed in PDF format will be accepted. Other offers cannot be submitted. Offers may also be faxed to the fax number listed in the MLS. Please include a cover sheet with the following information: ATTN: The Myers Team - Short Sale Division. All offers shall be responded to within 1-3 business days.
Communicating With The Myers Team
Due to the nature of short sales, the Myers Team spend most of their day on the phone with banks, therefore, email is the fastest and most effective way for us to communicate. If you are a Realtor, and wish to speak with The Myers Team, please contact their office via email at HELP@NevadaShortSaleInfo.com Your email will be returned within one business day.
If you have a question regarding a Myers Team property, please email your question to HELP@NevadaShortSaleInfo.com Be sure to include the property address. We will do our best to answer all questions within one business day.
Earnest Money:
The Seller will ONLY consider offers where the buyer agrees to deposit the required earnest money funds into escrow upon buyer and seller execution of the purchase agreement. A short sale escrow is the same as a traditional escrow, however, with a contingency. ANY OFFER WHICH STIPULATES THAT THE BUYER SHALL NOT DEPOSIT THEIR EARNEST MONEY INTO ESCROW UNTIL AFTER THE BANKS FINAL WRITTEN APPROVAL SHALL NOT BE PRESENTED TO THE SELLER.
GLVAR Purchase Agreement:
All offers MUST be submitted on the GLVAR Residential Purchase Agreement form.
Seller Workout Packages:
Please do not call or email The Myers Team to ask "Where we are at with the short sale?" Myers Team listings are NOT placed into the MLS until the Seller(s) have provided us with a complete workout package. All Myers Team listings are approved contingent upon final investor written approval. Final investor written approval cannot be obtained without a fully executed purchase agreement.
Loan Pre-Approval:
PREQUALIFICATION IS MANDATORY ON EVERY TRANSACTION, REGARDLESS OF WHERE THE BUYER INTENDS TO GET THEIR LOAN. Before an offer can be submitted, the buyers must contact a lender of their choice and obtain preapproval for a loan. ALL prospective buyers must provide a written confirmation of preapproval. Your buyer may choose any loan officer, however, not all loan officers are familiar with the short sale process, nor qualified for this area of specialization. Buyers who use loan officers that are inexperienced with the short sale process will be at a disadvantage over buyers who use lenders experienced with short sales. YOUR OFFER WILL NOT BE PRESENTED TO THE SELLER WITHOUT A PRE-APPROVAL LETTER AND A LENDER GOOD FAITH ESTIMATE.
Cash Transactions:
Any proposed purchaser who intends to pay cash for the property will be required to provide proof of funds to close. The proof may be in the form of a current bank statement or letter of funds verification from their bank. PROOF OF FUNDS WILL BE REQUIRED PRIOR TO ANY OFFER SUBMISSION. YOUR OFFER WILL NOT BE PRESENTED TO THE SELLER WITHOUT A PROOF OF FUNDS VERIFICATION LETTER.
FHA Financing:
If the buyer is obtaining FHA financing, then your offer must be submitted with the following documentation:
1) Full copy of the FHA Automated Underwriter Response
2) Buyers Good Faith Estimate
3) Lender pre-approval letter with lender contact information (i.e. email address, direct phone line, etc.) YOUR FHA OFFER WILL NOT BE PRESENTED TO THE SELLER WITHOUT THE ABOVE DOCUMENTATION.
Escrow Company:
The title and escrow company and escrow officer used by The Myers Team is Michelle Hinkle with Nevada Title. Our preferred escrow companies have been approved by the Bank(s) involved to facilitate this Short Sale escrow work. A Short Sale escrow is more involved than a traditional escrow; therefore, the bank, and the seller have the right to choose experts in this field.
Miscellaneous Items:
In order for the seller to be approved for a short sale, they must be able to prove to their bank that a documented hardship exists. The Seller(s) will be receiving “NO CASH” from this transaction. Any additional funds usually due to the Seller(s) from escrow accounts or from prorations will be paid to the bank(s) which are being affected by this short sale. The Seller(s) have no additional cash, and have provided required documentation to the Lender(s) whom are being affected by this short sale. Therefore, the Seller will NOT be allowed to pay for any reports, treatments, inspections, appraisals and or repair items. Buyers are required to pay for any and all inspections, and or certifications to satisfy due diligence.
As Is/Where Is:
The seller cannot pay for any repairs in a short sale transaction. Buyer understands that in the event that an appraiser should include appraisal conditions which must be addressed before the close of escrow, that buyer shall be responsible for completing and paying for any required repairs and/or items mentioned by appraiser required to close the transaction. Part of the reason that the property is being sold in the proposed price range is due to the condition of the home, taking into consideration the existing repairs needed. YOUR OFFER WILL NOT BE PRESENTED TO THE SELLER IF YOU ASK EITHER THE SELLER OR SELLER(S) LENDER TO PAY FOR ANY REPAIRS.
Appraisals:
Buyer to pay for appraisal. Neither bank nor seller will pay for appraisal or reimburse appraisal expense. YOUR OFFER WILL NOT BE PRESENTED TO THE SELLER IF YOU ASK EITHER THE SELLER OR SELLER(S) LENDER TO PAY FOR APPRAISAL EXPENSES.
Home Warranty:
Buyer to pay for home warranty. Neither bank nor seller will pay for a requested home warranty. YOUR OFFER WILL NOT BE PRESENTED TO THE SELLER IF YOU ASK EITHER THE SELLER OR SELLER(S) LENDER TO PAY FOR A HOME WARRANTY.
Buyer-Licensees:
If you are both the buyer and you are the agent, married to the buyer and you are the agent, owner/part owner of the corporation or LLC purchasing the property and you are the agent, you will NOT be paid a commission. The lender(s) involved often treat these as they do the REO's and reduce the commission by the amount paid to the buyer's "Agent" when the buyer is also the licensee. Find another agent to write it up and have a referral agreement between the two of you.
Contract Assignment:
The seller will NOT be allowed to accept any offers that are designated "And/Or Assignee." PLEASE DO NOT WRITE OFFERS IN THIS MANNER AS THEY WILL BE REJECTED IMMEDIATELY WITHOUT REVIEW.
Bona Fide Offers:
Once an offer has been submitted to The Myers Team that meets ALL of the above criteria, the Buyer's Agent shall be forwarded the required addendum. Once this addendum has been signed by the buyer, the offer shall be considered "Bonafide" and will be presented to the seller.
In summary, the Seller(s) have agreed (in writing) that only Bonafide offers shall be presented to the Seller. A Bonafide offer includes the following:
1. Offer to Purchase Agreement (GLVAR form only)
2. Agency Confirmation completed on page 11 of the GLVAR Purchase Agreement.
3. Agent signature under the Earnest Money Receipt as having received it (Page 11)
4. Copy of the Earnest Money check payable to Nevada Title.
5. Duties Owed with Buyer's Agent name, and signed by the Buyer.
6. Loan Pre-Approval Letter and Lender Good Faith Estimate (For New Loans)
7. Written and Verifiable Proof of Funds (Cash Transactions Only)
8. Offer must follow ALL of the above guidelines and criteria mentioned in this web site.
9. Buyer Signed Addendum - This will be sent to buyer's Agent once a Bonafide offer has been received.
If your offer is not Bonafide, you will NOT receive an email requesting the missing documentation. It is your obligation to ensure that your buyer's offer is Bonafide.
What To Expect - Step by Step Process:
Step 1: Complete and email your offer and paperwork to HELP@NevadaShortSaleInfo.com or fax to (702) 946-1217
Step 2: The Myers Team prepares paperwork for the seller and submits with our recommendations within 1-2 business days of receipt of a "Bonafide Offer." If your offer is not a "Bonafide Offer" (see above criteria) then the Seller has authorized us NOT to present the offer.
Step 3: The Seller reviews the offer(s) and our recommendations. This takes anywhere from 2-3 business days depending on the Seller's availability.
Step 4: The Myers Team receives an email from the Seller with a rejection or counter offer.
Rejection: If your offer is rejected, you will be sent an email from The Myers Team informing you of the rejection. Once again, the Seller has authorized us to only submit "Bonafide" offers. If your offer does not fit the criteria of a "Bonafide" offer, it will not be presented to the Seller, nor will you get a Seller signed rejection.
Step 5: If the Seller accepts your offer, then you must deposit the earnest money into escrow within 24 hours. No offer is considered executed until the earnest money funds have been deposited. Once the deposit of the earnest money has been verified, property shall be placed into "C" status in the MLS. Your offer shall be submitted to the bank within 24-48 hours after execution.
Step 6: With 3-5 business days, we will confirm with the Sellers Lender(s) that the offer has been received (imaged) into the system. The Myers Team does NOT work with negotiators. Due to the large volume of short sales files that we handle, most major banks have assigned us a "contact person" who handles all of our files with that particular bank.
Step 7: We will confirm within 30 days that the BPO/Appraisal has been ordered. Please be advised that certain investors (such as Fannie Mae) require multiple appraisals in order to grant a short sale approval. You are welcome to email The Myers Team office for updates, however, you will be provided with updates once we receive them. Please do not call the Myers Team office for updates.
Step 8: Once we have received the final investor written approval, you shall be contacted within 24 hours. Escrow shall be provided with a copy of the written approval, and you will be notified via email. Once you have been notified by email that final written approval has been provided to escrow, the due diligence period shall officially begin (based upon date and time of the email)
Thank you for taking the time to read and follow these simple instructions. Short sales are frustrating to many because they do not understand the approval process. The Myers Team are experts in the short sale approval process, and look forward to working with you and your buyer. Please scroll down to read more information regarding short sales.
WARNING: If you place an offer on a short sale listing where the listing agent is inexperienced with the short sale process, or specific investor approval criteria, then it is highly unlikely that your short sale will ever be approved. You will waste your time, and your buyer may become frustrated with YOU. While many Realtors claim to be "Short Sale Experts" or "Short Sale Specialists" we at the Myers Team are experts at SHORT SALE CLOSINGS. If you have any questions about our closings, please have your Broker verify our number of closings in the MLS. The proof is in the results.
What is a short sale?
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.
In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department and the actual investor of the loan. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan. The lender has the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.
A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure. A bank will typically determine the amount of equity (or lack of), by determining the probable selling price from a Broker Price Opinion, BPO (also known as a Broker Opinion of Value, BOV) or through a valuation of an appraisal. For the home owner, advantages include avoidance of a foreclosure on their credit history and avoiding being sued by the bank for the deficiency amount. A short sale is typically faster and less expensive than a foreclosure.
What is the difference between buying a short sale vs. a foreclosure?
A short sale is a pre-foreclosure sale. The current owner is still in possession of the property, and attempting to sell the home with lender cooperation to avoid a foreclosure. A "foreclosure" home is a "bank-owned" sale, meaning that the bank has already foreclosed, and taken possession of the property.
While short sale homes and foreclosure properties are typically priced the same, there are significant advantages of purchasing a short sale home versus purchasing a foreclosure.
It is a sad truth that many foreclosure properties have been vandalized. Read Story When you purchase a short sale home, Federal and State laws require a seller to make certain disclosures to a prospective purchaser. Buyers of short sale homes will be provided with seller signed disclosures, such as the Seller's Real Property Disclosure. Buyers of short sale homes will know exactly what damage, if any, has happened to the home (i.e., roof leaks, plumbing issues, home owner insurance claims, etc.)
Purchasing a bank owned property is the exact opposite. Banks will require you to sign a NRS 113 waiver, which essentially allows banks to sell homes without disclosing defects. Since banks typically do not disclose any defects, this creates a very risky and potentially costly situation for home buyers.
How long will the process take to purchase a short sale property?
Many buyers have become apprehensive about purchasing a "short sale" home due to the perception that the process takes a very long time. Much of this perception is due to the fact that there are many inexperienced Realtors attempting to do short sales, and have no idea how to get them approved. Many "experienced" Realtors, well known in their communities, are trying to do short sale transactions, yet they have little or no experience with these type of sales, and as a result, buyers become frustrated due to the inability to get the bank approval.
The length of a short sale transaction is dependent upon many factors. The most important factor which can determine the length of a short sale escrow is determining who the investor of the loan is. Many banks simply "service" a loan for the actual investor, or benefactor. Most banks must obtain permission from the investor to approve a short sale. Many homeowners who have their loans with banks such as Countrywide, are unaware that Countrywide may simply be servicing their loan. The actual investor of the loan could be Fannie Mae, Freddy Mac, Chase or even Wells Fargo. Many Realtors who take short sale listings have no idea who the actual investor of the loan is, and they wait months and months for an approval with little or no results. We, at The Myers Team, have developed relationships with most major banks. Additionally, we have our own contacts with investors such as Fannie Mae and Freddy Mac. This enables us to communicate directly with the actual investor of the loan, and expedite the approval process faster than other Realtors.
Once escrow has been opened, final investor approval takes approximately 4-12 weeks. Due to the large amount of requests for short sale approvals, banks and their investors are busier than ever, hence the waiting period. If we do not receive ongoing communication from banks regarding the approval process, we have the ability to speak directly with the investor and follow up on the bank.
What happens after my offer is written?
Your offer will be reviewed by the seller, however, only the highest and best offer will be executed by the seller and sent to the bank. Please be advised that the price of the property has been carefully determined based upon recent comps and current market value. If your offer is under the list price, please expect the seller to counter. In order to receive final investor approval, we must be able to justify the price of the offer based upon recent closed and recorded properties. Banks will do their own appraisal and have access to the Multiple Listing Service. The seller of the property will ONLY agree to execute a contract and take their home off the market if the value of the offer can be justified by recent comps, and the buyer is willing to open escrow and deposit the requested earnest money funds upon contract execution between buyer and seller. Lowball offers are a waste of time for all parties. Offers which we receive under comp value will be countered or rejected.
Multiple Offers
Some short sale properties will have multiple offers. You should prepare your buyers for the possibility that their offer will be one of many, and buyers should make their highest and best offer up front. As the buyer's agent, you have the right to inquire whether or not there are other offers on the property, however, the listing agent may or may not have authority from the client to disclose the existence of multiple unaccepted offers. The listing agent may or may not disclose the number of other offers, their terms or conditions.
In many situations, the seller will make multiple counteroffers and/or a request for the buyers' "highest and best" offers. It is each buyer's option to respond to such a request: the buyer should only offer what they feel comfortable with and are qualified to purchase.
Counteroffers and Addenda
In every short sale transaction, you can expect a form counteroffer (sometimes styled as an "addendum" but serving the function of a counteroffer nonetheless) which overwrites numerous provisions of the buyer's offer (purchase agreement) and inserts new provisions not addressed in the purchase agreement. The addendum has been prepared to make your offer fit the approval criteria of most bank investors. There is no point submitting your offer to a bank if it does not fit the short sale approval guidelines set forth by Fannie Mae, Freddy Mac, or other investors. Please prepare your buyer and make sure that they understand the purpose of the addendum. Seller cannot approve the terms of the purchase agreement without investor approval. This is the sole function of the addendum. Both the agent and the buyer should carefully read and understand every provision of the addendum.
Closing Costs
There is no one standard for allowable closing costs in short sale transactions. Fannie Mae and Freddy Mac have different allowables, which can very greatly from property to property. Please be advised that our properties are already priced within BPO guidelines. It is recommended that closing costs, if needed, be added to the list price. This should be taken into consideration when writing the initial offer and reviewing any counteroffer or addendum.
Once we have written bank approval, how much time will the bank give us to close escrow?
Typically 30 days. It is critical for buyers to have their financing ready to go and all loan conditions met, (with the exception of appraisal and the preliminary title report) before writing the offer on a short sale. All offers must be submitted to the bank with a buyers' "pre-approval letter." The pre-approval letter should specify that the buyers have already filled out a loan application, and that their credit information has been obtained. (Middle FICO score, DTI information, etc.) Banks are NOT interested in buyers who unable to close escrow within 30 days of receiving the written short sale approval letter. It is recommended to use lenders who are well versed with the short sale process, and who don't wait to start working on the loan until they receive an executed contract in their possession.
Will a cash offer make the short sale process go faster?
Cash offers are only good, if they are "the right amount of cash." Cash offers are stronger, due to the fact that once written bank approval is received, the buyer can close quickly, however, lowball cash offers are NOT strong offers, and will be countered. The bank will still need to perform their due diligence, regardless if the offer is cash, or involves lender financing. Expect a waiting period of 4-12 weeks, even with cash offers.
Communicating with The Myers Team
In order to facilitate short sale approvals, the staff of The Myers Team spends most of their time on the phone with banks and bank investors. Please do not call the Myers Team for updates, for this slows the process. Please communicate via email and direct all emails to HELP@NevadaShortSaleInfo.com You will be contacted as updates become available. It is not uncommon to go several weeks with no news; however, rest assured that your file is being followed up on.
What if the bank does not cooperate?
Due to the large volume of short sale files handled by The Myers Team, we have many loss mitigation contacts with most major banks and their investors. Banks are overwhelmed in this unprecedented foreclosure crisis, so it is critical that files are followed up on. Many bank negotiators are handling up to 500 files each. They are minimally trained, and will not be able to help you beyond what is on their "script." There are also many negotiators who are competent and very effective. While the short sale process is not a fast process, there are certain steps which we follow up on, to ensure that our files are being handled properly, and not getting lost in the shuffle. In the event that the bank fails to keep us informed, there are a variety of procedures which we employ to escalate the situation and ensure that our file is being handled in a professional and expedient manner.
1) If the servicer is not communicating in a manner to which we feel is acceptable, we have the ability to contact the "Beneficiary" of the loan directly. While some investors have given the servicer the full authority to negotiate on their behalf, others do not. We will not hesitate to call or email the investor to see how far our offer has gotten in the maze.
2) Most banks have "escalation" teams who handle "difficult files" and "difficult Realtors." We have the ability to contact the managers of the "escalation teams" of most major banks, should we determine that our file is n ot being handled properly.
3) If negotiators do not answer legitimate questions, or return our phone calls or emails, we will contact the loss mitigation manager or their VP directly.
4) Most banks are motivated to cooperate with the short sale, however, the key is making sure that the right people are handling your file. If we determine that our file is being handled with incompetence, we will be forced to choose one or more of the above options.
Is it harder to do a short sale if there are 2 loans on a home, versus 1 loan?
Yes. There are more steps when two separate banks are involved, however, we deal with this situation every day. Sometimes, it is actually easier to get the approval from the second lien holder than the first. Remember, if the second lien holder does not agree to take a payoff from the first, then they will be wiped out through foreclosure and receive nothing. We have found that lien holders in second position are very cooperative.
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* The Myers Team has closed more than 97% of all listings taken, however, this statistic does not include listings where the seller failed to cooperate by providing the workout package requested by the bank. Effective January 1, 2010, The Myers Team will no longer place properties into the MLS without a complete workout package provided by the seller.