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We found a home we really love about 20 min. away from our current home. Our goal was to get a bigger home and move closer to town (we live very rural area right now). We put in a full price offer Oct. 10th (no contingencies)and it is due to go into foreclosure Wednesday, Dec. 19. What we were not aware of is that when it goes to foreclosure it actually goes to auction for a cash buyer. If no one bids and gets the house the bank owns it and begins foreclosure process which could take up to 6 months to get back on the market. What I don't get is that we made a full price offer - exactly what the auction price would be. You would think it in the banks best interest to continue the short sale process with us. A lot of folks will be out of commissions (realtors/title company/attorneys involved, etc) and the sellers will have a foreclosed property on their credit. Bad all the way around. Is this really what banks are doing right now? And people wonder why the housing market isn't picking up? I don't know, there is still a chance they can extend the foreclosure date, but looks doubtful. It's so frustrating because we really want this house, but there's no way I'm going after a house if it falls into foreclosure and sits vacant for another 6 months - it's already been about that long.

Anyone deal with this kind of stuff? Any words of wisdom?

Hi Christy, I don't know where you are - but it is a shame this is happening. I had buyers once who lost a condo due to the ineptitude of the listing agent trying to do a short sale.

If you have your financing in place - talk to your agent about the rules to purchase at your local foreclosure sale. Many times banks will bid against you if they think it is going too cheap.

Did the bank work with you in good faith? Did they acknowledge your offer, request the arms length transaction paperwork, counter your offer or any response?

It could have been the owners were not qualified for a short sale, they could have made payments and chose not to. It could have been listed as a short sale but not have the bank's approval. Sometimes there are multiple banks involved and the bank in the 2nd position might not have been satisfied with the offer.

Please get a full explanation of what is going on from your agent.

Did the seller sign the contract?
Was the contract submitted to the lender, by the listing agent, by email or overnight mail? Was it acknowledged as being receipted? Did the listing agent verify that the seller sent their financial package into the lender to qualify for the "short Sale"? The seller also has to qualify for the short sale. Call your agent and get answers.Often times if the agent can't get through to the lender, a title co. can.

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All paperwork seemed to be in order. The bank did acknowledge the paperwork and offer and asked for additional financial paperwork from the seller. There has been communication, however, no word on the offer made and the banks appraiser has not been out either. I'm not sure how necessary that is, but we were told that should happen.

Do you mean the bank had not obtained a BPO?

christyinco, I'm very sorry but it sounds like this property never qualified as a short sale regardless of what was published or what your agent may have implied - why? Because, according to you, it has now gone into foreclosure.

If you really want to buy this house, I would suggest getting a new agent who is conversant re foreclosures and consider making the top bid st the "token" auction for the foreclosure. No six months to wait for the bank to re-cycle the property and list it again. BUT, be very careful, hire an attorney familiar with foreclosures, find out what other encumbrances might be against the title, and then walk away if the amounts exceed what you were willing to pay as I'm sure they will be.....

Unfortunately, "short sales" are all too often just "pie in the sky" and unrealistic from the beginning ~ find out the actual facts and figures and, then, decide if you are still interested.

Charming - correct, no BPO was done. Not good.

Idaho Resident - you know, it's all a mystery to me. Got an email from our agent yesterday saying she contact the sellers agent and he called the bank yesterday to get information and we should know more today. In any event, I'm not holding my breath and have emotionally moved on. I think it's a crime that these short sales even happen, given the number that actually go through. It's no wonder there are so many foreclosure properties out there. Again, just very disappointing, but a real learning experience.

I should mention that we are doing a VA loan for the house, so I'm not sure if a BPO is used still.

IR - Unfortunately, short sales frequently end up in foreclosure. Often through no fault of the buyer's agent but due to banks short sale/workout department not communicating with the bank's foreclosure department. There are programs being tested to help prevent this in the future.

Sometimes it is the ineptitude of a listing agent not being as versed in short sales as they claim to be. An experienced short sale listing agent is invaluable.

Other times - there are multiple mortgages and not all lenders are willing to go along.

IMHO - if the bank did not do a BPO (thye only way the buyer would know is if the listing agent shared the info if the bank came back with a higher number than the listed amount) then the listing agent and seller did not get the bank's approval for a short sale.

As IR wrote - time to move on.

I bought a short sale, and in Florida there were 2 approvals. First, the acceptance from the seller that they accepted my offer (did you get that), and then the bank/sellers did a somewhat painful dance on actually getting the final approval to even doing a short sale. The process does seem backward to me, but evidently the bank won't start processing it until there is a signed offer on the table - but the only part that was long and communication was hard was when the bank had it and they were doing their internal approval thing. Both agents (mine and seller's) were proactive and knowledgeable about the short sale process, and their agent did spend some time pushing on the bank for feedback. I'm surprised that if you had a contract with the owner's that they stopped the process in the middle without a) rejecting either the seller as a short sale candidate or b) your offer..... But, you have moved on emotionally, and that is probably a good thing.

quote:

Originally posted by DebiinFL:
I'm surprised that if you had a contract with the owner's that they stopped the process in the middle without a) rejecting either the seller as a short sale candidate or b) your offer..... But, you have moved on emotionally, and that is probably a good thing.

I've had it happen. We struggled with the bank for 4 months. We sent form after form to the bank and then when we thought it was smooth sailing the bank sent it to foreclosure. The listing agent was not exactly what you would call proactive.

Talked to our agent and she is pretty upset. I think the listing agent should have been more proactive in dealing with the bank, based on all your comments here. The bank bought it at $16k over our offer. Now they will need to list it, etc. and spend their own money to do it - crazy. I just don't know if I could hold and wait for it to come up on foreclosure and make another offer. I really hate dealing with BofA.

[QUOTE]Originally posted by christyinco:
The bank bought it at $16k over our offer. /QUOTE]

What does that mean? Didn't the bank already own it (for the mortgage balance?) We bought a short sale in 2007...we made the offer the day before the auction notice was placed on the front door. Our offer was accepted but it took nearly three months to close and the sellers had to bring tens of thousands to the table.

Your deal is so typical of today's banking practices...and the reason we're in such a mess. If you think BOA is bad, try GMAC! Oh wait, you can't...they're in bankruptcy!

Christy, I think in your situation the problem was the listing agent and the financial condition of the sellers. If they waited too long to start the process then they might not have been eligible.

Right now - love them or hate them, BOA has one of the better systems for short sales. It is not perfect, but they do have more controls in place if the listing agent knows how to use it.

Belstone - The property went to foreclosure and the bank bought it back.

When it is a short sale - the bank does not have title to the property. What you did in 2007 was not what is considered a short sale. The owners still owned the property and they did not have an agreement with the bank to be forgiven the difference between what was due from the mortgage and the purchase price.

What confuses many people - in a short sale you have to have 2 approvals. First the current owner of the property must accept the offer. Then the offer is submitted to the bank. At this point the bank should know all about the financial situation of the seller and has agreed to work with them. This is where it takes the most time and effort.

The bank is under no requirement to accept any offers. As they have gotten deeper into the short sale market many banks are more aware of the actual comps are and are not as outrageous with their counter offers.

Because of fraud on the part of agents and sellers banks now require the transaction to be completely arms length. The buyer cannot know the seller. In fact the agents should take care to be sure they never meet and form any kind of relationship during the process.

Buyers Agents tell your clients - DO NOT BECOME FACEBOOK FRIENDS WITH THE SELLER!

The bank will then send it through different departments. With luck they have a BPO already on the property (Broker Price Opinion) and can move to counter offer. Sometimes it will be sent to the "negotiator" to reconcile the offer and counter offer. It helps for the buyer to be prepared. We had an appraisal done on a recent short sale I sold. After the appraisal we made it clear to the listing agent - not a dollar more for the house. Not long after that - the 2 banks (1st and 2nd position on the mortgages) came to an agreement. But that doesn't always happen.

This message has been edited. Last edited by: Charming,