Short sale now in foreclosure?

We didn't get ANY of our lost money back...but we've moved on...we put a contract on a foreclosure (can't really help it in this market, there are very few real sales out there)...we are scheduled to close this Friday.

Continued from previous post.

I have worked with clients on many short sales, and always counsel them that we are at the mercy of the lenders, and usually, they never seem to close in a timely fashion. I always mention they could do a lot of waiting, and it may not work out in their favor. I do try to minimize the monies they spend, and obviously, $4,000 is quite a bit of money. I had one family working on a short sale, where they offered 275K on a home where 445K was owed. We waited and waited for 5 months, getting always positive feedback from the listing agent. Then, we saw the home scheduled for the courthouse in Friday's paper for the following Monday. My clients showed up on the courthouse steps, the opening bid was 200K, and they bought the home for 206K. We were able to close within two weeks. I know this does not make you feel any better, at least now...but make sure with your lender you are fully approved, and go to the auction, maybe you can do as well as my clients did. Good luck, Jim.

Good morning, and first, let me say, I am horrified to hear of your time and monetary losses. That being said, I think it is also fair to cover what a short sale really is. You are making an offer for a home that is well below (at least in theory) fair market value, and well below what is presently owed on the property. Obviously, the bank very simply wants to minimize, if not prevent, its losses. So we have a transaction where the principles are immediately put into adversarial positions, the bank wants more, you want to pay less. These facts, coupled with the volatility in the market, the ever changing requirements, the sheer number of homes being offered in short sales, and now, the lenders being rocked by bad loans and losses, have actually laid off hundreds of thousands of employees. Adding to this "perfect storm", the recent interest rate drops have increased interest in refinancing, with some lenders experiencing 9 applications out of 10 for refinancing during the past month. This stress on them has pushed out underwriting times from 48 hours just a month ago, to some as high as 17 business days, historically an unbelievable long underwriting time. I am sure the banks are using their manpower for these potentially "full" profit transactions as opposed to assigning them to a potential large "loss" transaction, with their fall back to market these homes on the courthouse steps, where they are able to set a minimum price. I am not picking sides or being unsympathetic to your plight, however, you took a shot to come out way ahead on this transaction, and if you did "win" the home, presumably you would have stood to gain way more than the monies you risked. As hard as it may be to stomach, when we take such risks, sometimes we do not win. Continued

This listing agent LIED to our agent the entire process!  (our agent forwarded all her emails to us so we could see what she was telling her)!  The listing agent also did not tell us about the foreclosure, we saw it in the paper ourselves (as well as when we googled the address online).  We would have NEVER invested that much $$ on this had we known this would have happened.

The listing agent just kept stringing us along the entire time telling us that they would have answers the next day, next week, etc...she could have easily told us the truth from the beg. and we would have never touched this house with a 10' pole!

We extended our offer on the house until Jan. 31st, because she kept telling us she was working with the both banks (the sellers)...we have since withdrawn our offer and have sent her a release to get our EMD back and it has been a week now and she has not returned the release and will not take our agent's calls...we will get our EMD back as we have a contract on another property that will settle in less than 2 weeks (not a short sale either :-) )....

There should just be something illegal about agents listing homes that have ALREADY started in the foreclosure process and then telling the buyers lies about it (promising it won't go into foreclosure because she personally spoke to the banks and they guaranteed her it would not since we had a contract on it).....

The short sale process should be discontinued!  It is very misleading and costly to buyers...you put a contract on a home and wait and wait and you never know if it will go to foreclosure before you can ever reach settlement!

Hi Jeff,

Needless to say that the Real Estate Market is very volatile right now. I have worked on both ends of short sales. If you are using a buyer's agent, your agent could have found out if there was a foreclosure date set on the property. As a listing agent sometimes even we have no control over the banks, nevertheless one  is expected to keep clients informed. One of my short sales, with 6 offers on it ( 2 above asking) took the bank over 6 months to answer them and of course the buyers had walked away by the time they finally reached a decision. That to me illustrates the overwhelming number of short sales and foreclosures out there. In your situation has this property been bought by someone? Or has it been returned to the bank? If the agent knew about this i find it to be totally unprofessional of her. Hope this turns out in your favor.

Leonardo

Jeff, you sure caught the raw end of that deal. Ouch.

I have to ask, where was your listing agent during the process?

Sounds like someone may have given you not so great advice, I realize that I may be hearing one side of the story, but no matter what, you are the one out the cold hard cash and likely starting back at square 1.

Even if the house was 1 day away from foreclosure, there are ways to pull it off the auction and continue forward with a purchase but to do so you must have a knowledgeable agent representing you, and a amicable agent on the other side who also knows what they are doing.

I see this quite often where some people mis-represent experience in short sales or foreclosures. [content removed by moderator for solicitation] There are plenty of properties out there and there are plenty of good agents as well.

Sorry to hear you may not be able to recover your losses here.

Use a qualified full time agent who has the knowledge to look out for your best interest!

Jeffrocks,

Wow, that is just wrong! What did the listing agent say when you approached them? Did you and the seller sign paperwork agreeing to extend the contract past November?

What really stinks is I doubt you will get any money back for the home inspection, storage, or appraisal. I would fight to get money back for the utilities that is the sellers responsibility and especially your down payment money - did they hold it and not give it back to you? What about your earnest money did you get that back?

Short sales can be a pain they say they will close in 30 days and usually it turns into 90 days. I wish you the best of luck, and am sorry to hear that you are having such a bad experience - buying a house should be exciting and fun.

Good Luck,

Lindsey :-)