I agree with the responses regarding additional liens that my be holding up your short sale. You also need to know a property can be taken off the auction block the morning of the auction. I have been negotiating short sales and had a last minute extension of auction to give more time. Lien holders are overwhelmed with "files". Good Luck!

It may be too late to stop this foreclosure. If you do have any junior liens, then that is a problem. As an experienced Realtor, I have helped sellers successfuly navigate this landmine. One property had 3 liens that were all in foreclosure, and none of the lenders wanted to pay off the other 2 liens and accquire the property. Your Realtor needed to negotiate with the lender(s) at least 3 months ago; as a "short sale" depends on how much of the principle and interest the lender(s) are willing to waive. This needed to be established before you accepted a "short sale" offer.

Jean Bradford
Associate Broker, ABR,GRI,CRS,CRB
John L. Scott Real Estate
Silverdale, WA 98383
1-800-482-4398

A bank has no liability because a bank does not have any requirement to accept less than the amount they are owed. So, in answer to your concern about liability.....no, there is none.

Why would a bank sit on an offer? Various reasons.....

The bank might be overwhelmed w/ offers with the surge in short sale offers and simply be unable to get to all of them. They may be trying, but understaffed.

There may be additional liens, and those might be mortgages as suggested, or they might be judgments for taxes, credit cards, etc. on the homeowner. In order to clear title, all liens must be cleared. If the title is very cloudy, sometimes the only option for clearing title is a foreclosure....which wipes out all junior liens.

The ask price on the short sale may not bear any relationship to what the bank considers reasonable. If the seller and listing agent determined an ask price which is far removed from the bank's threshold for consideration, your offer at ask could be a distant cry from acceptable.

Internal politics at the bank can impact how decisions are made on individual deals. Within a bank, what makes life easier, better, or more productive for one desk might not always be consistent with what is best for the bank as a whole. Once it moves from the foreclosure dept to a bank owned property, it becomes another person’s file.

There are probably other possible influencing factors that I omitted, but this covers most of them.

Deborah Madey - Broker
Peninsula Realty Group - NJ

Amy

Many short sales fail to come together because there are two instead of one bank involved with liens on the property. This occurs when the buyer used 80/20 financing (zero down). One bank has an 80% lean and the other holds the 20% of the original purchase price. These were very common loans in the past boom years. This creates a problem if a short sale is needed to dispose of the property. The second position lien (20%) usually ends up getting next to nothing when the property is discounted. They have little or no incentive to approve a short sale. Although they may receive nothing at a foreclosure either why would they do a favor for the borrower who defaulted on them. As agents we need to recognize when this situation exists and stay clear of it with our buyers. And, as the others have stated, the banks have no obligation to cooperate with short sales at all.

No, the bank has no liability. It's up to the lender to decide whether or not to approve a short sale. As Barbara says, perhaps some liens will be wiped out. Or maybe the bank figures it will get more at auction (or, looked at the other way, that it would receive less from the short sale). Or maybe it figures the market will rebound soon, and calculates it will lose less by waiting to sell when the market's higher than by accepting the short sale loss now. (I'm not saying I agree with that logic, but I know some banks do feel that way.)

SImply put, there may be other (junior) liens on it which would be wiped out upon the court sale. Banks are looking for what is best for them. Sometimes it seems counter intuitive,