Damion - Thanks for your comments. It seems that the timing also depends a good bit on the particular bank. I have seen some here that are moving quickly and others where the bank either is in no rush, can't decide, is overloaded, has a change in staff, etc. (in one case there are offers that have been on the table for a month). The recommendation I have had from several agents is that here in CA we need to plan on 45 - 60 days unles it is a cash buyer. But like anything else there are exceptions. Your last paragraph makes an excellent point.

Deneen - thanks fro your comments. Feel free to share anything you learn. This is new for many folks.

Jason - thanks. Sounds like you have had some good experiences with them.

Jeff

Damion - many thanks for your continued comments and education. Very helpful

George - Thanks. That is why I wrote this. We certainly are seeing many of these in my area

Marchel - good luck. I understand your frustration. Damion's comments are well taken.

Jeff

Hi Christine:

I don't know where you are. so there could be specific things that you need to do there. Generally negotiations on repairs don't occur until after there is an accepted offer. In my experience, though, because there is a hardship the bank MAY direct that the home is to be sold AS IS and the seller will not do repairs. You will still be advised to do your own inspection so you know what you are getting into.

Also, it seems that the lender will usually do their own appraisal up front, so if that says the house is worth X, then no matter what the seller wants the lender will not approve until it is in the range they find acceptable. Make sense?

I don't know your market so cannot comment any on market value, etc. If you would like to talk personally, don't hesitate to give me a call (760-840-1360)

Thanks for stopping by. Good luck!

Jeff

Christine:

Thanks for your note back. I wanted to give this some thought.

Since I am not involved (boo hoo) it is harder to assess the overall situation and make a recommendation. I don't know that specific market, nor you, and without knowing the nature of the repairs it is hard to say how significant all that is. I also don't know who you are dealing with at the other end - I assume the bank itself?

Anyhow, at this point, it may be best to simply wait for their response. You don't know what it will be so why play your cards if you don't need to. If they come back with a different $ you can provide a detailed rationale, based on a review of the comps and the extent of the repairs. If you can get some estimates of the cost for the significant repairs that will help you build your case, rather than simply pulling a number out of the sky. Replacing a broken furnace is very different than repairing lots of holes in the walls.

Bottom line... they may still feel they need to get a certain number to cut their losses, based on their appraisal. Take a close look at all the recent sales, and perhaps call those listing agents to get a feel for the condition of those homes.

Good luck and please keep me posted.

Cheers,

Jeff

Well, I think you can approach it either way. It might have been best to submit the repairs WITH the actual offer, but now that they have it it may not make a difference. It certainly can't hurt to submit a letter staring your rationale for the offer. As you probably know the bank will  not likely authorize any repairs to be done - these homes, at least in my area, are all sold AS IS. I think the seller would normally submit the repairs list along with their full package so the bank knows the condition of the home, but the bank probably doesn't care, since they will base their price on an appraisal. Their price is AS IS and I doubt they would then subtract from that because of repairs you feel are needed. But I am learning that each bank and situation is different. Some are more hard-nosed - they could say $X is the price and that's it, no negotiation. Not sure I am really being terribly helpful here, but I don't think there is a right or wrong answer with these houses. The other question might be to find out if the appraiser went in the house or was it simply a drive by and pulled comps from the MLS. If the latter, knowing the repairs would have more impact since the appraiser might not be aware.

Jeff

Kim:

It sounds to me, without knowing the whole story, that there are some issues here.

Are you a buyer who is seeking to buy short sales and are you, as a result, completing the appropriate paperwork  to do so? It is also not clear to me whether you are dealing directly with a listing agent, or whether the person you refer to is a buyer's agent who should be representing your interests,

And are you getting a signed contract or not? If there is nothing in writing then you do not have a legitimate, binding contract to buy a short sale. and the seller has no obligation to you either. But if there is a signed agreement you may have recourse (see an attorney's help on this).

If there are actual purchase contracts that are executed by both buyer and seller (you should be getting a copy of anything you sign) you need to investigate who is handling the actual transaction (e.g., an escrow company or an attorney). They should be able to tell you who is doing what, the progress of the transaction, and the details needed for the funds to get wired. That is not the agent's role since s/he does not handle the funds at closing. The agent who handles the closing would be responsible for wiring funds to the appropriate account.

Again, it sounds to me as if you need an attorney to assist you in this process. It is not clear that you are getting the representation as a buyer (or a seller) that you should be getting. There appears to be much more going on here.

Jeff

Foreclosure.com provides information but I can't swear as to the accuracy of the data nor how up to date it is.

You can also look at Realty Trac as well as the real estate listings on Yahoo, for example.

If you are interested in working with an agent, s/he can search the MLS for listings that are listed as being short sales or pre-foreclosures.

Jeff

CheL - the best advice I can give you is to be in touch with the person who actually is in a position to make a decision. There is likely a committee that meets to discuss the portfolio and activity on any offers.

Unfortunately I am hearing more and more about banks who are not taking action on short sale homes and are letting things go to a trustee sale (or however it happens in your area), and the homes end up in foreclosure. I would also send a letter and a copy via fax. You might even drop in, if it is a local bank and see if you can have a discussion with the right person to get a feel for what is happening and how you can facilitate them getting this property off their books. They may be overwhelmed with inventory, or at the other end, have no clue what they are doing. For many this is a pretty new experience and it may not be a priority.

Not sure this helps, but your story is one I have hard numerous times.

Jeff

Kelly:I would guess that you could unless there is some sort of contractual obligation that prevents you from doing so. But the lender is the one who has to approve the SS and they would likely decide who gets to represent the sale. I am not sure that answers your question - hope so.

Jeff

Many people assume that they will be able to get a short sale at a great price, but I can't say that that is what I am seeing, at least in my area. The banks want to get as much for the house as possible and will generally do an appraisal. So based on market value they will approve an offer or not. So it is not likely that you will get it for much less than the comparables, but there are exceptions.

Plus there is typically competition so the price gets driven up by competing offers - everyone wants a good deal these days. It is possible to get a fixer and after putting money into repairs, to sell at a profit. But with the market (most areas) your profit will not likely be in the short term. The days of buying and flipping, in most areas, no longer exist. Your profit will depend on appreciation, and, of course, how much money you need to put into the house to fix it. Some SS properties are in very nice shape and some need thousands of dollars of cosmetics and repairs.

Hope that helps.

Jeff

Erin:

Well, in my experience there is not much you can do. Unfortunately I hear this sort of thing all the time. Some banks move quickly, others do not. It could be who is handling the process, the volume they are dealing with, changes in staff or other factors. I am a little surprised with Wells Fargo given the size, but I also know that they have a huge volume of these properties in our area adn perhaps elsewhere.

You could let the agent know in writing that you need to have a response in writing by a certain date (e.g., a week from now) provided you are willing to walk if a response does not come. It may or may not have an impact, especially in the case of other offers. If you are missing homes that suit your needs by waiting, then IMO you need to decide how important this one house is to you. I feel for you - it is very frustrating. You need to keep focused on your personal situation - if you can afford to wait, despite being frustrated, then great. But if it really become a burden, then a decision must be made. I would think that if the offer was not acceptable that they would have countered, even at full price, but that lack of response could be part of the overall manner in which they are handling things.

Good luck! Let me know what happens. These experiences are helpful to share with other buyers.

Jeff

AZ Buyer - I would check the contract to see what it says. Was there an expiration date for the offer? If there was, then if that date has passed the offer has expired. Or there may be a default date (In CA it is 3 days if there is not specific expiration date put in the offer by the buyer)/ If not it will depend on what your contract says. Do you have an agent who helped you with the offer?

If you need assistance with finding a home, or perhaps want to talk to an agent who can perhaps give you some advice in AZ, let me know - I know a number of people there. I cannot be sure since I am not licensed there so my advice is really based on CA contracts. If there is a doubt about being able to get it back you might want to consult a real estate attorney.

Jeff

SCB - thanks for stopping by. You raise some good questions and concerns.

Keep in mind that a contract must be in writing in order for it to be legally binding. While you appear to have verbal approval by the bank, unless you have a signed copy of the accepted offer in your possession yo do not have a binding contract. In that event other offers could be submitted to the bank and one accepted.

Offers that are submitted may be kept as back-up offers if yours has been accepted and is in writing. The bank can accept back-up offers until the time of closing. You need to obtain a copy of the offer signed by the bank, if in fact it has been, or get clarification on where things stand.

Good luck

Jeff

Frustrated:

I can understand your pain. But with a short sale it's all about the money, IMO. The bank wants to recoup as much as it can, or rather to approve a sale for an amount as close to the amount owed as possible so they don't have to forgive a large portion of the loan. They will look at an appraisal and the market value and that will likely determine what they, and the asset manager, wiill approve. And there is a significant difference between what you are offering and the other offer.

Keep in mind that just because you are offering cash does not mean it is a good offer if it is not near or at market value. Would you sell YOUR home for 10% or more below market just because someone gives you cash and does not have to go through an appraisal and loan process? Probably not. 

However, in a situation where there are two similar offers cash may likely be more appealing to a seller.

Hope this helps.

Jeff

Vincent:

Sounds like you have some pretty good experience in your area. Best of luck, and thanks for the support.

Jeff

Frustrated:

Hmmm. Well, these are great questions, and you should discuss with your agent. I don't have any information about the area, your market, the home or anything that would allow me to make any sort of recommendation. And I can't interfere if you are working with another agent with regard to what you should or should not do.

My sense is that conditions vary from location to location and much will depend upon the asset manager involved who can make the decision about what to approve or not. And banks operate in different ways - some seem to counter offer, although that is often at the price they are willing to accept. Or they may simply accept an offer that is close to what they feel is market value. It is difficult because so often it is hard to get specific information about how they work and what they are looking for.

Jeff

Shelly:

Good question. The whole point of a short sale is that the homeowner is in a hardship situation and unable to make the payments. The lender, in order to approve a short sale, will require financial information and documentation around the short sale need. They will not approve a short sale simply because someone wants to get out from under a big mortgage, so the hardship must exist.

You will need to check with your bank. But if there is another property I would think they would look carefully at the overall financial situation to determine if there is, in fact, a hardship. Each case is different so I would start with a conversation with the lender.

Good luck.

Jeff

Hi Georgann - well, those are good questions.

First. a short sale IS when the amount owed is more than the home can be sold for, so, yes, offers will be less. But the lender will decide how much less they are willing to accept, and generally they will look at an appraisal to determine market value. I doubt a bank will accept a short sale offer of only 80% of the amount owed. The asset managers seem to be the ones who makes the decisions.

List price can vary depending on who the listing agent is and what the seller wants to state as the list price. I often see list prices on short sales for lower prices than market, which seems to be to encourage multiple offers. The bank does not have to accept a full price (list price), especially if it is less than the market value. However if the MLS list price is market price there is a better chance that they will accept it. But there are always exceptions.

So often I see sale prices on short sales (and foreclosures) higher than the price that was listed in the MLS. I would advise any buyer in this sort of situation to be working with knowledgeable agent in that market so you can better understand how shorts are being handled, and the market value of comparable recent sales. Also things may be different in your market there than here in California. I can't really advise you any better since I don't know your particular market nor do I want to interfer with any relationship you already might have with an agent.

If you don't have an agent you are working with and need a referral let me know - I know a number of folks there in Denver, Colorado.

Because a short sale represents a hardship for the seller, whether the bank will approve other costs being covered, or repairs, depends on the individual lender. Asking for these costs could make an offer less competitive as compared to a similar offer that does not request any concessions.

Hope this helps.

Jeff

Potential Buyer:

Good question. You can make an offer any time you wish, with or without a contingency. The issue will be is the offer going to be viewed as a competitive one, given there is a contingency. Sellers are typically concerned that the buyer's house will not sell, and they may not want to take their home off the market  with that being a possibility. It may also depend on what is going on in your market. If things are selling quickly it may be less of an issue. I would guess that a bank may be more reluctant to accept a contingency offer, since they generally want as clean an offer as possible. I have been told specifically that they are looking for offers with no contingencies.

Hope that helps.

Jeff

Thanks, Sharon. Seems like the Loss Mitigation Manager is often the person who is involved and can make decsions. Also the Asset Manager.

Jeff

TigerMorris - well I am just guessing here since I do not know the situation. Short sales tend to be rather difficult and that could impact an agent's attitude because of frustration in dealing with the lender or other matters, but as far as knowing if this is the reason, I have no idea.

Just as in any sale, agents vary in terms of their attitude and professional demeanor for a variety of reasons. Obvously  any listing agent will get more if they sell a place than if they don't, but beyond that I cannot really say what the issues might be. Ultimately the decision is up to the bank in terms of accepting the offer adn other terms anbd conditions.Good luck in moving your offer along.

Jeff

TigerMorris - that sounds like a good plan. Good luck. I'm glad to hear you are using an agent - smart thing to do in these situations.

It is not uncommon for short sale deals to fall apart for various reasons and for them to be relisted. It become frustrating for all concerned, including the sellers.

I'm glad you found this helpful. The intent WAS to provide information that would be useful to buyers. But since shoprt sales can be so difficult and the process varies depending on the lender, having feedback, questions and information from folks who are going through the process is helpful to all of us.

Please keep up posted and feel free to share information that might be helpful to other buyers.

Jeff

Jack:

I hope you are working with an agent who can look out for your interests. It is questions llike these that really need that sort of assistance and guidance.

Banks are looking for the best financial terms and the cleanest offers (those with few or no contingencies). It is impossible to know what the reality is but one hopes that the agent is being honest. You might ask if that buyer is hers or represented by someone else, although she is not obligated to share that information. Will the bank counter or not? Hard to say. If they have an offer that meets their requirements they may simply want to make that happen.

It is hard to advise without knowing the situation, and certainly if you are working with someone I cannot interefere with that relationship. It is precisely these situations that make short sales so difficult and frustrating. Good luck.

Jeff

Anonymous - Sorry about the delay, we have been somewhat busy with the fires, etc. here in San Diego.

The timing is really up to you, of course. Some folks are willing to wait several weeks, others not. Your agent seems to be on the ball and giving you some reasonable advice. As in any purchase it depends on what it is worth to you personally. Banks are going to move at their own speed but the listing agent can play a role in moving things along.

Jeff

MArk - they ARE difficult transactions and not right for everyone. I don't find that they are necessarily a good deal financially - buyers can do far better in many cases in negotiating with sellers who are not in a short sale situation. A number of the homes out here have ended up in foreclosure and then become REOs. It does appear that things are getting better as some banks are getting a better handle on moving out the short sale inventory, but it is a slow process.

Jeff

Baghead

Handling a short sale is complicated, time consuming, and often frustratingl. it is NOT right for every agent. Those who are experienced and who are willing to put the work into making them happen, and who understand the process can be more effective. If you do not know what to do, and are not willing to work you cannot do the best job for your client (either the buyer or seller) and probably should not be involved. Thanks for your comments.

Jeff

Thanks, Heather - I think you said it well. It takes tenacity and lots of patience. Some deals go fastr than others depending on the lender, the people involved (the loss mitigator and the asset manager) and so on. It's tough on teh buyers, the sellers, and the agents on both sides. And some banks are overloaded and short staffed.

Jeff

Baghead - well it is certainly a challenge. For some it can work out well, but no so for others. It becomes an important personal financial decision for every buyer. I'm not sure that ranting about it does any good, thought - best strategy is to fiugure out how to make it work with the bak if you can. But there are certainly many stories from frustrated buyers, sellers AND agents.

Jeff

Thanks, Vincent. I let every buyer know about the possible pitfalls so they can decide for themselves what makes the most sense. It's difficult since some banks seem to be able to work through these deals pretty effectively and others cannot. you just never know. I am happy to help anyone who wants to work through such a deal as long as they understand the issues they face. It's all part of being informed and doing your due diligence.

Jeff

Well that sounds like both a legal question (which I cannot asnwer since I am not an attorney) and one to ask the lender. The bank will have to approve the short sale, which means that financial hardship will have to be shown in order for a short sale to be complete. IF there is no financial hardship the lender will not approve a short sale. Keep in mind there may be tax implications for a short sale too.

It may be that simpy buying out the owner through a normal purchase and sale process, provided pricing can be agreed on based on market value, is the best route.

KC:

Laws may vary from state to state, and have to do with the fiduciary responsibilities of agents to their clients. What that means, in general, is that agents must preserve confidentiality - they cannot reveal information without their clients' approval, which would include offers. If the seller say it's OK there is no reason why the agent cannot reveal the presence of offers. But it could jeopardize negotiations, so often the details are not shared (they may say they have other offers) or they might say an offer must be higher than X.

Hopefully you are working with a qualified agent who can guide your through the process. Generally with a short sale the bank is looking for the best offer (typically the highest) but that could depend on the details of the offer. But since they want to minimize the amount of the loan they are foregoing (for the seller) the highest number will often be the best offer. Knowing that one offer is X, per the agent, is a suggestion that any other offer must be higher in order to be accepted. But ulitmately the seller (the lender) can do what they want. Put yourself in the bank's shoes as the seller - what would YOU do?

Hope that helps.

Jeff

Mike - I think staffing IS a big issue, along with how the process is being managed by the loss mitigation person. I suspect the asset manager in many cases may be holding out. Your comments refect what others have experienced as well. Thanks!

Jeff

Guyneutron - sounds like an interesting property.

The asking price is simply that - what the bank would like. You can certainly make any offer you wish. I don;t know how things work down there but here the asking price is often low in order to generate a bidding war, or at least multiple offers. Ultimately the bank will decide on an offer that meets with their approval based on an appraisal. If you really want the home you will have to pay what the bank will accept. The listing agent may have more information on the situation (are there other offers, will they even consider an offer lower than asking, etc.) that can help you decide what is reasonable. I have found that in some cases the bank will not counter, and in others they will...at full price. It depends on the bank.

As a buyer it is always prudent to do a full home inspection and test all the systems, including a pool, plumbing, HVAC, electrical, and so on. This is typically a contingency of the sale. Hopefully you are using an agent who can represent your interests in the transaction - short sales can get tricky and be very time consuming. If you need a recommendation I can refer you to some folks I know down that way - just let me know.

Good luck!

Jeff

Anonymous:

Thanks for your follow-up. Unfortuantely your story is so common. So much depends on the agents involved, but even more so the bank. It is frustrating for all involved, and many buyers just decide to move on. I am not encouraging you to do this, but simply pointing out that some people make that choice at some point and others stick it out becuase the house is soemthing they really want.

While it can take months many deals do finally close. Good luck, and thanks for sharing your story - this can help other buyers who are thinking about short  sales understand what they might run into.

Jeff

Green Apple - yes, I think it is an erroneous assumption in some cases. However, there are some folks who run into problems and then trash the home, or fail to take care of it. Sometimes people run into situations beyond their control (loss of jobs, etc). that put them in financial jeopardy. Some people took out large equity lines and then spent the money, which also creates problems. Plus it is not be responsible as a homeowner.

I'm sorry to hear of your situation. It is, unfortuanately, a story we keep hearing over and over.

Best of luck.

Jeff

Joyce - that is the one thing we keep hearing...how very long it can take. And sometime you get no answer at all. Glad you made it through successfully. Some buyers cannot wait. They need to understand this potential risk.

Jeff

Anonymous - that's good news. Sounds like you made the right decision.

I'm glad this has been useful. It is a learning experience for many. I'm very pleased it has generated questions and stories from consumers. The more people share their stories, the more information will be available for those who are in, or getting into, short sale situations, or are considering doing so. Thanks for your continued support and best of luck. Please let us know how it all works out.

Jeff

Amarilis:

Good question. I am not an attorney so you may wish to consult a lawyer who specializes in real estate and knows about short sales.

It is possible, I think, that conditions could arise that might prevent the bank from moving forward (excessive liens on the property, a cloudy title  which prevents transferring clear title to you). I would review the offer to purchase contract to see what the terms and conditions are, your rights, etc. Presumably the bank knows, at this point, what the liens are and can determine if they are able to move forward based on creditors that are due money, including the bank's loan. There may be state regulations that govern what the seller can and cannot do, and how these issues can be settled, if, in fact, there IS a signed offer to purchase by both parties.

Good luck.

Jeff

Alan - good question. My understanding was that the lender would report this and that a 1099 or similar form was issued to show theshortage/income. There are bills being dicussed to give these indivuals a break on teh taxes but as far as I know those have not been passed. The lender could choose to not reort the shortage, I believe. I would consult a tax professional and refer all questions from buyers and sellers.

Jeff

Tracey:

Thanks for visiting.

The bank WILL have to approve the short sale and the owners will have to demonstrate a financial hardship in order for that to occur.  Yes, the bank will normally wait for 3 months to payments to not occur and issue the Notice of Default (arrears), but a short sale can be approved before then based on hardship that must be demonstrated by an application, letter, financial documents and whatever the bank requires to satisfy them.

The bank may be willing to forgive a certain amount of the loan but they want to limit their losses too. So they typically will do an appraisal and use that for market value.

It is not uncommon for sellers to have a 1st and a 2nd mortgage, often a home equity loan. Or they may have taken out two loans to buy the property. One will be a primary creditor, the other will be second. Your offer will be based on what you believe to be the value of the property, whether that is the listing price or some other number and that has nothing to do with 1 loan or the other (I strongly recommend having your own agent to advise YOU and represent YOUR interests - your agent can advise you on pricing given comps that have sold and other factors).The bank will determine what offer is acceptable based on the appraisal and the loan amounts due. The second lender (unless it is the primary bank) will also have to be willing to take a hit.

Since the NOD has not been filed you can work with an agent. But since you are essentially an investor (you are not buying the home to live in as a primary home) an agent cannot represent you once the NOD has been filed because of the Home Equity Sales Act, or if it is close to being filed. That is true of the listing agent as well.

Hope this helps.

Jeff 

Tracey:

Well I am not an attorney and cannot provide legal advice, but here is MY understanding.

If you are an investor purchasing a short sale property when the NOD has been filed, California law specifically precludes a real estate estate from representing you since the law requires that agent to obtain a surety bond equal to twice the value of the home and getting such a bond is nearly impossible (this is what I was told by our company attorney).  You can and should, however, hire an attorney to help. The law is in place, as I understand, to protect homeowners who are having financial problems and need to sell from being taken advantage of by investors seeking to obtain the property for the lowest price, then reselling the property for more money. If the NOD has not been filed then the law does not apply. although if it will be filed soon then it could be a risk. If you are buying a property to live in it then it is not applicable. I am not sure if buying the home as a second home is considered a personal residence or an investment but it likely since you will not be living in it full time (i.e., not your PRIMARY residence) and, theoretically, you could rent the cabin out for investment purposes when not using it. Worth checking on.

Here is the link to the details of the Act. 

In terms of hardship that will depend on the bank and what they require for proof. I would think they would require more than a simple statement from the owner that a divorce is occurring , e.g., letter from attorneys, filing of the divorce paperwork.

Once a short sale occurs the homeowner's credit will be impacted; it has nothing to do with the reason for the short sale but the fact that a SS had to be completed and the loan not paid in full. Certainly if fraud occurs the bank will likely take legal action against the person committing the fraud. And a buyer would not want to be a party to fraud either.

My advice, given the scenario you describe, would be to consult a real estate attorney (or call the Legal Aid Society to get a few questions answered.

Jeff 

Tracey - if you would like a referral to someone, let me know. I know lots of great agents. Just let me know what area the cabin is in and I will get you someone to work with.

Jeff 

Tracey - well, it makes sense to pass on this given the scenario. Sounds kinda risky to me. There will probably be other opportunities down the road. If the cabin does go to foreclosure and become an REO you would have a chance to buy it directly from the bank (again I would use an agent) but the situation will be much cleaner. Obviously the price has to work for you too.

Best of luck and please keep me posted. I appreciate the dialog as it helps others who are interested in these kinds of properties to learn about different scenarios and potentials risks. 

Cheers,

Jeff

Vicki - thanks for your comments. The more information we, and buyers, have, the more effective the process. Many agents, and buyers, have no clue how complicated short sales can be.

Jeff 

Thanks, Ken. BUt you have some great experience, too. I'd love to hear what you have to say. Time for a post??

Jeff 

Felix - I think that can be one of the more frustrating parts of the process. Communication is important to keep things moving along, but of course the bank and their responsiveness can make a huge difference, either direction.

Jeff 

Ken - thanks. I think that is true. And that's what makes this sort of thing so valuable to so many. Truly a dialog among interested parties.

Jeff 

Jclassy - well, I am not in a position to advise you as buyer, or to tell you what to offer, etc.. And since you are an investor you cannot be represented by an agent if the NOD has been filed.

But here are some thoughts on your questions. The agent has a contractual agreement with the seller and that must be honored. So that means working through the listing agent as the seller's representative.  You would be smart to get an attorney to handle your representation in my opinion.

The bank will approve a differential between what is owed and what they are willing to forgive.  No one but the bank knows what that number is. It is likely that there are offers that are higher than the asking price but no way to know without asking what would make an offer appealing. So often where there are multiple offers (as there appear to be here) that folks are offering above the asking price. And an appraisal may be above the asking price as well.

Sometimes, as I understand, banks only want to see the highest offer or two, and other times all are presented. The listing agent could certainly represent a buyer in a dual agency situation, although this has its issues and risks, but that could be part of the mix.

I would advise your REALTOR friend to speak with his/her broker on this matter.

Good luck.

Jeff

Nicole - you are welcome. We all learn by sharing these experiences with short sales.

Jeff 

Mike - well that is true. Some seem to go fairly well, while others never get resolved and go through foreclosure. You are right about having patience - for all parties involved I think.

Jeff

GMB - Well good luck. It is possible the bank will not approve the sale even though the seller did agree, and will let it go to foreclosure. Depends on the asset manager and their willingness to sell at the price you submitted.

Depending on how things work in Nevada, it may go to trustees sale (I do not know the laws there but here in CA you normally have to put a substantially amount of money down if you buy at a trustee's sale). If it does not get sold the home becomes a bank owned property and would likely be sold by them directly on the market. The price the bank is looking for may be based on the current appraisal but could differ. Hard to know. 

If you need an agent to help you if this does not work, let me know - I know several top-notch REALTORS in Nevada.

Jeff 

GMB - yes you can. The second loan will be in place behind the first with regard to negotiations about what amount each will agree to take to settle the debt. There may be enough from the sale to pay off the first but not the second (in it's entirety). Thus BOTH will have to come to some sort of agreement in order for the closing to occurr, instead of just the primary lender approving the short sale.

I would advise you to discuss this sort of thing with your agent, who may be able to get more information from the listing agent.

Good luck.

Jeff 

Bill from Denver:

Those are good questions. However I am not representing you as an agent, nor am I familiar with that area and market (BTW if you want the assistance of an agent I can refer you to one I know well who is excellent) so I cannot give you any specific guidance. But here are some things to consider as a buyer.

Keep in mind that the bank wants to minimize their loss, and that they will do an appraisal to get an idea of the market value. That is probably what they are going to be looking for. It may be the listing price, but it could be lower or even higher. An agent who represents you could help gather more information from the listing agent (who represents the seller) and about the market to give you better guidance  as to a reasonable offer price. I always recommend to buyers that an inspection is prudent so you know what you are getting (short sale or otherwise) and what repairs might be needed. Often a bank is selling a short sale AS IS, so a buyer will need to take on repairs, etc.

Hope this helps!

Jeff

Jess - well that is the $64,000 question, and I sympathesize with you. Some banks are fairly communicative and others are not. I have heard of situations where the bank never responded to offers. Others, while they may take a while, eventually respond but slowly. It seems to depend on who the staff is that is working on off-loading property, how overloaded they are with properties, and so on. Sometimes the bank simply allows the short sale to go through foreclosure (even though that is costly) and then trying to sell it at a trustee's sale, and it then becomes an REO if it does not sell. Guess it depends on how badly you want the house and how patient you are. And how good the offer is.

The new information is interesting. I always recommend buyers have an inspection so they can uncover any problems. You mention foundation issues. I know of situations where banks have refused to loan money on a home where there are significant foundation issues. I of course have no way of knowing if that could be the case here since I am not representing you, and know nothing about the home or your financial situation. Fixing a foundation problem can get expensive and buyers are wise to have a qualified professional (including a structural engineer) look at this sort of thing to find out what it may cost to repair as part of the due diligence.

Hope this is useful.

Jeff 

Terri:

Are you working with an agent? If so they should be able to help. I can't really offer very specific advice since I am not involved in this deal nor do I know anything about the situation. I can understand how you are feeling, however.

Getting feedback from the bank seems to be one of the biggest frustrations, next to how long this can take. I know sales where it has taken weeks before there was any follow-up from the bank. If you are not working with an agent I would talk with the listing agent to see if they can get some information from the bank on the status and when an answer might be forthcoming.

Bottom line - how long are you willing, and able, to wait before you make another decision? That really is a personal matter and only you can decide how long you will wait. Many buyers do walk away because they are unable or unwilling to wait any longer, and there is no guarantee the deal will actually get finalized.

Jeff 

Frank:

LOL. I wrote a post about When is a Short Sale NOT a Short Sale. It seems to be true here, too. Many do not make it to the closing table and end up as REOs. I suppose as a BA advising my buyers, I would not refuse but definitely would give them all the pros and cons so they can make an informed decision. Without knowing the bank involved and how quickly they are likely to respond, it really is a crap shoot. Working with a good listing agent can make a difference as well, but even their hands can get tied if the bank is not cooperative.

Jeff 

Chad:

You certainly have a right to request that you have representation by a buyer's agent. The other agent may not be happy about it. Make sure you disclose this to the agent you wish to have represent you so you can discuss the possible ramifications. The listing agent cannot represent your interests, as you know, but you certainly should ask as many questions as possible about the process, wh ois involved at the banw, how quickly things can be expected to move along, and more; The LA cannot advise you on the price to offer, but may have some information from the bank regarding what is needed as a minimum, especially if an appraisal has been done. 

Keep in mind that the bank is looking for the cleanest offer possible - a reasonable amount of money down, a pre-approval, minimal contingencies, expect the standard (mortgage, inspection). You will likely need to buy the house as is and an inspection would be very prudent so you know what you are getting.

Hope this helps. 

Jeff 

Christina - well your story is just another example of how difficult the short sale situation is for buyers AND sellers. The bank holds the wild card in these situations and there is not much you can do. If they are not motivated to sell, or are overwhelmed with properties, or the asset manager insists on a certain price because that's what the appraisal says, then the home will just sit until it is foreclosed.  It does seem that, in general, banks are getting better about responding and moving some of these properties, but since we continue to see so many hit the market, they continue to struggle.

Certainly there is no reason why you cannot continue to put in offers, but the question is how long are you willing to do so because of personal time involved, mounting frustration, etc. I always recommend that buyers look at all properties that might meet their needs and price range, NOT just short sales, so you can make the best decision.Often the best deal is with a more traditional seller where you can negotiate a sale.

Good luck, and thanks for reading and commenting. The more people do this the more we all learn.

Jeff 

Christina - regarding your question...

The laws vary from state to state regarding these properties and protections for homeowners. Here in California an agent cannot, for example, represent an investor who is buying a short sale if the Notice of Default has been filed. This is to protect homeowners from investors from swooping in and buying the home at a much lower price for investment purposes. And a buyer who represents themselves as someone who will live in the home but then does not could run into issues legally depending on state laws, and the lender may also have requirements about the terms and conditions of a sale. I would check with a knowledgeable agent in your state and even an attorney on the issues you raise.

A mortgage may also have requirements that the home be owner occupied. 

Jeff 

Natalie - thanks. I'm glad this is helpful. We are all learning about these types of properties.

The laws in your state may dictate how and when offers expire. I would check with your agent. I do not know if making another offer is going to make a difference, and if it, too, expires, then you are no further along.

Here in CA an offer expires after 3 days if no date is included. At that point the buyer can walk away if they choose.  But if the bank comes back with an approval you can still move forward if you wish. Given how long banks take to respond the issue of expirations seems moot. It depends as much on your level of patience and your interest in your offer still being considered, or not.

You can certainly ask about the BPO but they are not obligated to share that with you, unless the laws dictate that this is not confidential. Some banks seem to be willing to state what $ they are looking for, or a range, and others will not be that forthcoming. it would, of course be nice to know what number they will accept so you could, if you wish, make an offer that meets their requirements. But then sharing this information would mean, possibly, multiple offers at the same number. Not sharing gives them the potential for a bidding process.

Jeff 

You are welcome, Lisa. There are some very knowledgeable people here regarding short sales so be sure to ask if you need help or have questions.

Jeff 

AppleTree1:

Well as I understand, and have seen, the bank can do what they want. I have seen some that only look at offers 1 by 1, or the highest only, and others review them as they come in.  I know of situations where there are multiple offers that have been submitted to the listing agent but the bank is not reviewing them. There is no consistency. Do you have an agent helping you? If yes, I would suggest they get more information from the listing agent. If not, it is difficult since the listing agent represents the seller. And laws in your state may impact who can do what, etc.

The bank will require demonstration of hardship in order to approve a short sale - has the short sale actually been approved yet? Hard to know if there is something inappropriate going on.  As in CA, I suspect there are procedures in your state for filing complaints as a consumer if you feel strongly that there is something illegal or inappropriate happening. Not hearing from the Listing Agent can be very frustrating. You could also check with the brokerage firm itself to enlist their assistance, unless she is the broker.

Good luck 

Jeff 

CHris:

Well I am not an attorney, nor do I know what state you are in or the particular laws so I can't advise you specifically. Seems to me that until you have a signed agreement you can back out. But I would check the terms and conditions of the offer on this, or ask an attorney. If the acceptance date has passed without both parties signing then the agreement may be null and void...but could remain if you are willing to let it until the bank agrees to it.

You could possibly submit a request to change the 90 day period but the lender is really holding the cards here. 

There is nothing wrong with looking at other properties while you wait to see what happens. Maybe you will find something better. Again, if you do not yet have a binding agreement (the contract will probably state what determines that. say signatures by all parties and receipt of same) you would seem to have other options. If you do have an agreement that is signed then you will have to abide by whatever terms and conditions are in the agreement with regard to your rights and obligations. If that is the case I would definitely consult and attorney (sounds like you are not working with an agent, who could also advise you on this).

Good luck, This sort of stuff in these deals is very frustrating.

Jeff 

Di:

Sounds to me like you need to talk to that person's supervisor to better understand the process adnt he bank's reporting responsibilities.

Jeff

GA:

Good questions. You can certainly ask that repairs, or some of them, be taken care of, especially those of a serious or hazardous nature. But they can still say NO since they did say AS IS. It may depend on the the nature of the problem since a serious issue will plaque them if you back out and another buyer comes along. There may also be some NY regulations regarding AS IS purchases, what this means, etc.

Becuase the seller is in a hardship situation getting a concession may be difficult. I have, though, seen buyers requesting closing costs to be paid, or a portion thereof, adn some banks approving this.

Good to see you have some legal advice. These can be tricky.

Jeff 

Good points, Roger. I do think that some of the issues related to the short sale process are the fault of the listing agent, who does not know what they are doing.

Jeff 

Casey - well, I suspect you will not be able to change that. The fact that they have even communicated that much says something. If the timing is really an issue, given what you know, making a different decision might make more sense.  They could end up moving faster, or worse, take even longer. The other issue is that someone else could come along with a better offer and you would not get the home to begin with.

I suspect that in many markets there are other homes that are similar to the short sales and that buyers could find something they like equally well. Perhaps that is the case in your market as well.

Jeff 

Christina - well congratulations!! That is very good news. The timing is really not too bad in your case. Thanks for sharing. Now people know that it CAN happen, but also that is may take time to get the initial acceptance from the bank, as we have all been saying. BEst of luck. Let us know when you are the new homeowner.

Jeff 

JC - Sorry it took me so long to respond. Ihave been real busy and away from the laptop a lot. Not a good excuse.

I don't know the laws in your state and since I am not your agent, nor an attorney. I can't really advise you. But it seems that without a signed agreement you can take other steps if you wish. I would review the agreement to see what it says. Some states have a default period after which an offer becomes null and void if not accepted by both parties (e.g., in California it's 3 days). You have chosen to continue to keep it active but you could make a different decision, or look at other properties. If you do want to move on it might be prudent to submit a request for the seller to perform, i.e., with a new time period, before you make that decision. Unless both parties have signed the agreement, or the laws otherwise indicate that you have an agreement, you should be able to make another choice that's better for you. You might also consult a real estate attorney.

Sorry this has gone on for so long. Unfortunately it seems to be a story we keep hearing over and over, and many buyers DO decide to walk away and do something else.

Good luck.

Jeff

JC - Well that sounds encouraging. Hopefully the banks can negotiate and work things out so that the 2nd loan holder is satisfied and things move ahead. I will be interested to hear ho wthings move along, and finally settle. Best of luck - maybe you will be one of the statistics.

Jeff