Unfortunately this happens more frequently than we may think. It certainly does not make any logical sense when it appears that the lender would receive more money by selling the property though a short sale and not incurring all the foreclosure expense involved.

It sounds as if one department doesn't know what the other department is doing. You cannot ever take the bank's word on their date scheduled for trustee sale. Always be sure to contact the trustee directly for up to date information on the scheduled sale date. Many times the lenders don't know that a sale date is on the calendar unless someone points it out to them. This occurs most often with BAC for one.

You can be going along thinking that you are waiting on the bank's final approval only to receive a phone call from the REO listing agent asking that all marketing efforts be relinquished to them due to the recent foreclosure sale. Surprise!

Bottom line is that in most circumstances it is legal, yet very frustrating and confusing. So sorry.

Diane Wheatley, Broker
diane@moveupproperties.com

The bank does not have to accept the short sale and if the house was sold in foreclosure than there may be very little you can do as a buyer. You should be able to retrieve your deposit without a problem, however. You can consult with a Real Estate Attorney to see if you have any legal rights but I have not heard of this being possible. It does not hurt to ask though.

I am not sure what went wrong in this transaction as it seems since your offer was higher that it would have been in the bank's best interest to accept your offer. When a seller is attempting a short sale, the lender usually will continue with the foreclosure process. If the house goes to Trustee sale, then it is usually up to the seller's agent to make sure the foreclosure sale is postponed so that the bank could consider your offer. Perhaps this did not happen or perhaps the lender did not postpone the sale as promised.

The homeowner could have decided not to continue with the short sale as well. Sometimes a lender will ask for the seller to sign a promissary note for some of the loss the bank is taking. Sometimes when this happens the seller refuses and this could end the deal. Or perhaps there was a 2nd lender that was not cooperating? Make sure your agent gets the full story of what happened from the seller's agent. Since the seller's agent should have the authority to talk to the seller's lender, they should be the best source of information. We are also experiencing problems with inexperienced Realtors trying to do short sales. This could have also caused your problem as well. Bottom line is there is a million things that could have gone wrong. It is not uncommon for short sales to fail especially since they are difficult and not all agent's are properly educated to handle them. And sometimes even if everything is done right, something can go wrong. Short Sales do not work 100% of the time.