If you were the seller, which offer would you submit?

Short Sale listed at 515k.  Two offers on the table:

 

499k cash, close in 14 days

 

525k conventional.

 

1st loan: Nationstar

 

2nd loan: GreenTree

 

Which would you choose if you were the seller?

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Lower offer, with buyer agreeing to cash contribution to GT to buy out deficiency.

I'd shoot myself because Greentree is the 2nd.

 

Just kidding...^^what Joseph said...as long as you can defend the value and you disclose the contribution on the MLS when it closes. This way, appraisers can know the true cost paid by the buyer.

 

Will the 1st lien holder even allow a cash contribution to the 2nd lien holder?  If not, then it is a moot point as to whether the buyer is willing to do that.  All cash contributions at closing need to be on the HUD1 due to RESPA unless it is a cash sale.  However, even with a cash sale, the 1st lien holder requires that all fees, contributions, etc. be on the HUD1 so to not disclose it could be fraud.  If the 2nd wants more than the 1st will allow and you can get a written approval on the 1st and the 2nd for the amounts they will want and will allow, you can get the cash buyer to make a pre-closing cash contribution to the 2nd and then get a revised approval letter showing the lower amount due at closing and then put that on the HUD1.

The tax issue is moot if the mortgage loans were acquisition debt - there is no tax due through the end of 2012.

Thanks Joseph and Edwin, your input is much appreciated.  Sellers chose the cash offer and buyer is willing to contribute extra toward deficiency if needed.  Excellent advice!  Wendy

Yes, it does sound like good advice and I this the seller made an appropriate decision.  However, I am sure that you are handling the multible offer situation correctly, but many realtors do not.  You should make it clear that an offer is an offer until accepted by the seller and then. unless there is clear language otherwise, it becomes a contract.  Multible contracts should not be submitted, again unless all of the interested Parties acknowledge and agree.  I think this point should be clear, so that multible contracts are not being submitted.  I had this very situation with a well known broker in my area of Florida, and she was very mistaken about these issues.  Thanks,   Paul

It would depend on whether the conventional party was willing to put up more cash to pay for possible second loan payments or not. Cash is King because it has no contingencies (other than inspection) and I would make sure I took a sizable down payment. You also don't mention the balances on each mortgage. Rule of thumb is that seconds will release liens for 10% of loan balance so it would depend on how much that 10% is and which party, cash or conventional, was willing to pay that.

Submit both to lender - but take 1 as back up offer.

Not in Florida.  A backup offer is held until rejection of the contract. 

In my world, it is not the "title holders" choice.  The seller is ultimately the bank.  Although, my input is a little late, there is really not sufficient information to make a real clear decision.  If the conventional was greater than 20% down, the decision is easy, take the higher offer to minimize tax liability to seller for deficiency while maximizing return to your end client, the bank.  However, in CA it is first in gets first shot as I do not know many brokers who sit on a short sale offer.

 

I would accept the offer that makes it easiest; if buyer wishes to contribute! If I had a choice between the investor or first time buyer, the latter would be my preference.

Cash is king. Submit that.

Whichever offer is the most committed and as long as both are within range of approval (usually 88% of fmv).  Both of those lenders take their sweet time on short sales so the highest offer may not necessarily be the best if they are also looking at other properties.  The lenders will allow 30 days to close regardless of cash or loan and a cash offer usually will not speed up the short sale process. 

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