Profile picture for user6433561

Crazy short sale transaction

Has any experienced agents with short sale experience heard of this?

1) Early June, listing agent called and said we got a deal and approval by the Bank to close on 6/20 but no later and that seller gets 2 wk post closing possession so that he can make arrangements for finding another place and will have funds to do so from the closing. The Bank gives seller some agreed upon amount to leave the property; the amount is hinted to be around $35K.

2) The title company involved said that there are potential actions against the seller/property and that there is a second lien and possible personal loans. But title company will continue to work to clear the title.

3) The listing agent just called 15 minutes ago to propose that the offer be reduced by the amount of funds that the Bank was to give to the seller to move and my buyer writes a personal check to the seller for that amount (again around $35K). Listing agent says it is still the same bottom line number to both bank and buyer. Seller is getting on HUD 1 funds from the Bank to move, which he supposedly has to forfeit immediately to some creditor, but he wants my buyer to cough up the amount to pay him so that the money won't be forfeited to the creditor (the explanation is that if the Bank pays the seller, the money will automatically be forfeited). Supposedly seller needs the money to make arrangements to move out of the property.

I have never heard of this. Sounds a bit shady.

Please help shed some light on this matter. Thanks a lot.
  • June 17 2012 - Chicago
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Answers (5)

Haven't heard of this one before. Since when does the bank need help paying a lump sum? Doesn't make sense. You should report it to HUD & the title company. Is the title company going to let this slide?

  • June 18 2012
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Profile picture for JohnWilt
At the closing you, your attorney, your Realtor, the seller, the seller's Realtor and the seller's attorney will all have to sign a document from the seller's lender indicating all transfers of value (ie money) are clearly displayed on the HUD.  Would you sign that? As your agent I wouldn't and I am sure your attorney wouldn't. That's fraud.  Someone suggested this so the 2nd and and judgements get screwed. Even if is was legal why would you do it?  You would essentially 'lose' $35K as it's not equity and doesn't seem to exist.  One more thing, NEVER, let a short sale seller saty in the property after closing. They already have shown that they are not about to pay anyone to stay there. You may never get them out.  There are plenty of other places to buy.  Move on to another property. 
  • June 18 2012
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You should not need to ask this on zillow. It is crazy! Buyer is an idiot. DId the attorney for the buyer agree to this nonsense? Walk away.
  • June 18 2012
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If there is a 2nd lien on the property, how does the listing agent propose that this will disappear without negotiating a settlement with the 2nd? The title company won't allow a closing with liens against the property.

Personally I wouldn't be writing a check to the seller without all the banks involved being aware of the circumstances.
  • June 17 2012
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Profile picture for Matt Laricy
Never heard of this. Sounds very shady. I ran into some odd situations before and had something sound similar to this, but not exactly. What I can say, is I am not sure if this is even legal. A lot of fishy things going on with short sales out there.
  • June 17 2012
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