I had a similar situation happen... It was foundation issues. I had to get three estimates sent to the lender.... It has to be a Licensed Contractor. Hope this helps. Call the mortgage company and have them reopen file and forward bids to negotiator and supervisor.

Michelle - Yes, all estimates need to be from a licensed contractor.  That was not the issue here.  The issue is that the repairs needed are greater than 10% of the home's value.  With an FHA loan, that means no short sale will be approved.

Don, I ran into a similar situation.  I had listed the house and within a day, a furnace/hot water heater malfunction cause a huge amount of water damage.  Same thing, insulation and sheetrock had to be removed throughout.  I was surprized but happy to find the homeowners insurance is paying.  The banks happy, though they have to wait a bit longer, they're going to get more money for the home when  we get it back on the market.

Is this only for FHA loans, the 10% of the home's value?  

Laura - there was no insurance coverage for this home...  Insurance won't cover damage in vacant houses that was caused by failure to winterize.

Yes, this is only for FHA loans, where they won't consider a short sale if the damage has reduced the home's value by more than 10%.

Thanks for clearing that up.  Good luck, and again thanks for the info!

Laura - Not a problem!

Don

It is an unfortunate problem especially when you have a buyer who wants the home and can do the fix up work.  Many of these properties have damage as many of the owners lost the desire to care for their properties knowing that they will soon be lost.

by the way, Do you have an outside blog that I can add to my Blogroll ?

Thanks and look forward to reading your thoughts on the world of real estate.

Hi James - Yes, we had a buyer who was willing to do all the work.  It's a shame.  But perhaps now he'll buy it for less at the foreclosure auction.  It was a loss all around, but perhaps the buyer can win out in the end.

DON - I've bookmarked this to show to buyers that are interested in short sales.  The process is not easy, and even the most patient buyer runs the risk of losing out in the end.  I think that short sales are great for investors that just want to throw out a number of offers on homes and "see what sticks," but homebuyers planning on moving into the home should be very careful before deciding to proceed forward.  Thanks for sharing this story.

Adam - Short sales are tough, but we're doing more and more of them.  It does seem as though the banks are starting to be more agreeable to them.  But, they still want within 5-10% of the fair market value, so they're not necessarily the "steals" everyone expects them to be.

This one was a shame.  They bank should have moved forward.  They're going to lose more in the end.

Don - This is much like my experience, the whole roof blew off.  What is it going to take to get these guys to wake up and act like real busiess people?  Maybe we all should send our blogs to our legislators.

The problem with short sales is that the lenders do not yet have enough staff working on them.  Several months ago, I was told each negotiator at the lender had 500 short sale files on their desks to work on.  Now I've heard they have 2,000-4,000 files each.

Lenders say they are trying to hire more staff.  That could help.
Lenders say they are trying to make things go smoother, that they see the benefit of a short sale over a foreclosure to their own bottom line.  We'll see.

I've seen some improvement from some banks.

This FHA rule threw us all for a loop.  It was a loss for everyone involved.