Home Buying in Fort Myers>Question Details

Pattywac, Home Buyer in Fort Myers, FL

Are we just wasting our time?

Asked by Pattywac, Fort Myers, FL Sun Dec 4, 2011

In early Nov. we put in a full price offer on a home which we were told was a pre approved short sale, the offer was accepted by the sellers. Our contract stated "no back up offers were to be taken". The MLS home status was then marked "active contin short sale. We submitted our paperwork for financing with our lender and since we were told the short sale was pre approved we've been waiting for this letter to proceed. Our next step would be paying for an appraisal. The approval letter still hasn't come from the seller's bank and we learned their bank has given them until 12/31 to close a sale. This week the seller's agent changed the status to active and we are under the impression they want a cash buyer in order to close the sale in time. Our agent suggests we need to walk away, paying for an appraisal would be throwing away $500, the letter will never come in time and this is all about commissions. We really want this house, any suggestions or are we beating a dead horse

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36
"no backup offers to be taken" - without all do respect, it is not within your rights to tell a seller what to do in that regard
1 vote Thank Flag Link Tue Dec 13, 2011
An update:
thanks to both agents involved things are now coming together and it appears we will have a happy ending to our story.

In our opinion based on the price point of this home our agent's compensation seems small when compared to the hours of work she's put into making this deal happen; but we appreciate the difference she's made in our life.

To those who are buying a home, hang in there; sometimes when things look impossible they do turn around.

To all who have given advice I want to thank you for sharing your many years of experience and knowledge.
1 vote Thank Flag Link Fri Dec 9, 2011
Pattywac,

First of all ask your real estate agent to check the MLS rules regarding Short Sale. In our area Short Sales that get an offer must go into the Contract/KO status.

Second do not do anything until you get the short sale approval letter from the listing agent.

Usually a short sale takes somewhere 90 days to 180 days. So if you put the offer in Nov you are within range.

Patience, ask your real estate agent to get monthly updates from the listing agent.

Good Luck,

Rosina
1 vote Thank Flag Link Fri Dec 9, 2011
I am truly sorry to hear about your situation, the only advice I can offer is to move on and buy a property which is for sale at a truly listed price whether an REO, estate or private sale. (Short sale listed price means nothing, it is usually a LIE) I don’t do short sales for the very reasons you describe, the banks are unethical and many agents are misleading and make statements & advertise what they interpreted the bank to say not what the bank will truly accept. If the “Deal” is too good to be true then it probably is, the banks are very smart and they know what the property is worth and may make small concessions but generally speaking they try to get top dollar out of a bad situation they do not play by the rules others are expected to play by. Good Luck in your search!
Web Reference: http://www.randshomes.com
1 vote Thank Flag Link Thu Dec 8, 2011
Pattywac,
Sometimes short sale properties were approved at an earlier time through a previous offer and then the buyers decided to walk away. Then some listing agents advertise that the property was pre-approved at that price. That does not mean that the bank will approve the next contract for the same amount. Not sure if that is your situation, but it may be. Ask you agent to find out. Also your contract is with the seller of the property and should be subject to the seller's lender approval. If you can wait, I would request an extension to the finance contingency date and closing date from the seller. If you are pre-approved for the purchase price and all you need is the appraisal of the home done to get your loan I would wait until you get the seller's lender approval of the sale to get that done. Your agent can help you get this done. It appears that possibly the listing agent is looking for another offer by putting the property back to active status. Have your agent find out if they have competed a BPO (Broker Price Opinion) on this property yet , or if they recently requested a new BPO for the property. I wish you all the best.

Gary Geer

http://www.GaryGeer.com
1 vote Thank Flag Link Wed Dec 7, 2011
I would amplify Patty's suggestion that you have your agent call the listing agent to ask about the status change. In my experience with short sales, the bank often wants the property to continue to be shown in case the deal does fall through - and many do because of the delays and buyers becoming impatient with the process.

My recommenation to all buyers I work with on short sales is to throw your hat in the ring and then keep looking. At their core, short sales are uncertain and lenghty. At a minimum, they are anything but "short" in duration.

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
Unwav
1 vote Thank Flag Link Wed Dec 7, 2011
Walk away there's a reason why your agents are telling you that. You should be bounced around like that. It's disrespectful. If you found one house you like theres possibly another one almost like it.
1 vote Thank Flag Link Tue Dec 6, 2011
If the approval letter has not come the date of closing has not been established yet. Have your real estate agent contact the listing agent and find out why the property is marked active in mls. I have banks give extensions on closing dates on a regular basis so if you really really want the home I wouldn't give up yet but I wouldn't pay for an appraisal until I had approval letter in hand.

Even homes with a pre-approved price for short sale take time to get the approval letter issued. The file still has to be processed by the lender. Putting in your offer in early November and now it is December 5th hasn't even been 45 days yet. If your offer was structured correctly they can't just accept another offer and reject yours if they signed your offer. Review your offer and check out all the terms. If you don't totally understand the terms ask your agent to explain it to you.

Terry McCarley, Realtor, CDPE
Jones & Co Realty
email: leecountyrealtor@earthlink.net
cell: 239-707-4575
1 vote Thank Flag Link Mon Dec 5, 2011
Alma, thanks for your response. No, I don't believe fraud is involved. The problem appears to be that everyone expected the bank to submit the necessary paperwork in a more timely manor since the bank had previously agreed to this asking price. Now with the cut off date fast approaching the listing agent is hoping to meet that deadline with a sale; we can't blame her for acting on behalf of her client to prevent them from going into foreclosure.

We can continue on the path of financing up to a point w/o the seller's bank signing on, but could never close w/o it. Also after putting out money for an appraisal another buyer could come in with cash, which would knock us to 2nd place since they'd be able to close much faster (w/i the bank's set deadline). Another road block would be that the lender wouldn't present the written approval prior to the deadline, and again we'd be out the money spent. Just a sad situation b/c the seller's want to sell, and we are more than willing and capable to buy the home.

Speaking of granite counters, you would laugh at one of the reasons we've had trouble locating a home. Our goal is a simple, clean, small, 2nd home with a smidge of retro flare and a few warts. Of course our other big hurdle is having 5 small dogs (smile).
1 vote Thank Flag Link Sun Dec 4, 2011
Patty,

We're sorry for your difficulties but there appears to be something else on the lenders agenda. Absent complete and accurate information, it's often very difficult to get a grasp on what the issues are. Multiple loans, liens, lender deadlines, etc can play a big part in how these transactions unfold.

Your best and most reliable information resource is likely your agent. Having been down this road previously, there is probably a sense that this may not end well. Under the circumstance you outlined it would be risky to proceed with the additional expense of having an inspection.

Hopefully, your agent is not the listing agent which would remove much concern about "conflict of interest."

The interesting thing about "short sales" is that once the lender has made their mind up and commited to a direction, things can happen very quickly.

I would want to know more about the bank's reason why the bank changed the property status to "active." It certainly doesn't indicate a committment to you.

Good luck,

Bill
1 vote Thank Flag Link Sun Dec 4, 2011
Patty, What we are trying to say is, " the bank can do what ever they want." YOU HAVE NO DEAL UNTIL THEY SIGN."
" YOU do not have, and I am guessing, a single document with the bank signing saying they approve the deal. Until you have that, you do not have a contract with the seller.

You need to know, the odds of you closing on a short sale is less than 1 in 3 - so 66.6% of the time you are not going to buy the property.

You also need to know, a short sale can take up to 18 months to close, average time being 6 months or so.
1 vote Thank Flag Link Sun Dec 4, 2011
If your expectations were set that you were going to hear something back from a bank on a short sale transaction in under a month, then I don't think they were accurately set.

Virtually every short sale transaction has bumps in the road that extend the timeframe to close. Usually, "pre-approved short sale" actually means "pre-approved short sale price" which is a big difference.

While there may not be anything on the market right now in your neighborhood of choice, the good news is that we are seeing a steady flow of new listings coming on everyday in the Fort Myers market.

Good luck with your search!
1 vote Thank Flag Link Sun Dec 4, 2011
Pattywac,

Short sale transactions can be challenging working with the seller and the short sale bank. Short sale banks give time frames in which they want the home to close in. The short sale bank will often extend the closing date.

My buyer had a transaction in which the short sale lender would not provide an approval letter until the end of the sale. I helped my buyer to continue to work on closing the sale in which we were able to close quickly.

You can check with your lender and see when you will be able to close your escrow. Maybe, your lender can close within the lender’s timeframe. If you really want to buy this home, help your lender close this home quickly as possible.

Best Wishes in your home purchase!

Thanks,
Carol Perdew
Prudential California Realty
(209) 239-7979
Carol@PerdewHomes.com
http://www.CentralValleyHomes.com
DRE 985176
1 vote Thank Flag Link Sun Dec 4, 2011
Sadly in short sale situations the banks are in control. Anything could happen - right up until the day of closing.
Cash is king - especially if the bank gets their price. Financing comes with expenses and based on what you have disclosed - I agree with your agent. You could be risking $500 or more.

Commissions in a short sale are usually reduced by the sellers bank in order to make the numbers work. If your agent is not the listing agent or doesn't have cash buyer waiting in the wings - I doubt this is an issue.

Good luck!
1 vote Thank Flag Link Sun Dec 4, 2011
short sales don't close that fast and will not likely be approved that fast. here is more on short sales http://wp.me/P1MLJl-54

best of luck.
0 votes Thank Flag Link Thu Dec 15, 2011
Wow this sounds a bit out of whack.

Pre-approved doesn't always have a lot of teeth but it should give you a solid indication that if you write on those terms the bank will accept it. So, you're waiting around on approval yet there is an approval to close by 12/31? Or is that the foreclosure date?

Has the file been escalated? Who is the bank? Who is the investor? Do they have a previous approval letter in hand? Is this a HAFA short sale? There are a ton of variables.
0 votes Thank Flag Link Sun Dec 11, 2011
Hoorah for you! And thank you so much for returning to the thread with your update. So glad we were able to be helpful, that is our goal!

Good luck getting to that closing table -sounds as though you are getting very close ;-)

Best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Sat Dec 10, 2011
EXTEND, EXTEND, EXTEND....get your agent to get with the seller's agent to complete an extension. It sounds as if you have everything ready to go, but you need more time to close. Make sure you are relentless in the process; just keep after it. I've completed Short Sales with 2 or more extensions ensuring the buyer has enough time to get their loans processed. Don't give up! This can be done.

James Williams III
RE/MAX PREMIER PROPERTIES
KISSIMMEE, FL
0 votes Thank Flag Link Sat Dec 10, 2011
I always say to my clients that if you are serious about buying a home short sales are a waste of time and all they really do especially if the buyer is financing is frustrate everyone and get everyone's hopes up on a home that may or may not ever close and then no matter how much work an agent does to get the home for the buyers they get angry at the agents.Banks are not helpful and in my opinion they are in no rush to sell so why not use the fact that real sellers meaning not short sales or foreclosures need to sell and have to compete to get buyers.I really feel that I can get a client a better deal on a home dealing with the owners and not take all the headaches and problems of a short sale/foreclosure where what you get is what you get and make a great deal and a lot less stress on all parties involved.I tell my clients that I don't even handle short sales for this reason and if they are serious buyers they did their homework and found out that yes it is true short sales are a waste of their time and they appreciate the honesty.
0 votes Thank Flag Link Fri Dec 9, 2011
Patty,
Congratulations! Thank you for the acknowledgment of the many hours of work your agent and all of us agents and brokers put into bringing things to a satisfactory conclusion!
0 votes Thank Flag Link Fri Dec 9, 2011
I'm very happy for you it's rare these things work out congrats to you!!!!
0 votes Thank Flag Link Fri Dec 9, 2011
This is why short sales sell for much less than the market. Congress should pass a law requiring lenders to give a yes or no answer on short sales within 30 days of a request with full documentation. This practice by the lenders is further driving down prices, surely they can not be this stupid.
0 votes Thank Flag Link Fri Dec 9, 2011
Pattywac,
The approval of the sellers lender for a Short Sale, is just that --A Short Sale. The bank has not approved the original price, that is set by the seller and Listing agent.
At this juncture, it sounds as if you move on to another property, that again, You Really Want.
Regards,
Ed Humbert, GRI, MBA,PMS,SRES
Advanta Realty, LLC
239-464-9855
ehumbert@advnatarealty.com
0 votes Thank Flag Link Mon Dec 5, 2011
Hi Patty,

Did you agent see a copy of the prior approval letter or a current one?

Also I'm hearing very recent stories of lenders actually encouraging sellers to do a Deed In Lieu rather than a short sale. It doesn't make any sense other than there is word on the street that the FHFA.gov is planning to sell off blocks of foreclosures to large investment firms who will then in turn agree to rent them out for a few years or do a rent to own deal. The FHFA.gov has a report about it here and as usual our leaders will do wht is in the best interests of their wall street campaign contributors! Take a look:

http://fhfa.gov/webfiles/22805/REORFISubmissions_112911.pdf

Do you know if the owner of the mortgage is Fannie Mae or Freddie Mac? Note: the servicer (bank of america, wells fargo, chase, etc.) will do the Short Sale approval according to the actual investor/owner's guidelines. Your Realtor can ask the listing Realtor who the owner is. If it's Fannie or Freddie then they absolutely will pay 3% commission to each Realtor so it will send up a red flag if they are saying the commission are reduced from 3%.

Good luck and keep looking and make sure not to put up any "good faith" earnest deposit money or pay for inspections or an appraisal on a short sale until/if you get an approval letter in your hands. And keep looking and writing offers up until you get an approval letter in your hands listing you as the buyer.

All the best,
Alma
http://www.SoldOnTampa.com
0 votes Thank Flag Link Sun Dec 4, 2011
Hi Patty,

Sorry to have to say this, but you may be a victim of a fraud. Some unscrupulous listing agents and their insider investors will search for an ALL CASH buyer so they can get an approval at a lower price and immediately "flip it" at a higher price to an ALL CASH investor. You see, many lenders do not want to see a Short Sale owner only own if for a week or less before immediately selling it to you so that is why they target ALL CASH buyers.

This may not be the case and nowadays many of the lenders are requiring a purchaser on a Short Sale to not sell within 4 months after closing.

Lastly, I'm hearing on the street that lenders are being encourage not to do short sales on properties that my be good candidates to be sold off in bulk to investment firms and they will agree to rent them out for 2 or 3 years.

Also I'm a little confused... I read your earlier posts and it says you can actually close by Dec. 31st so why are they not allowing you to proceed with buying?

Yes, it's unfortunate that you have missed other opportunities while you have been waiting but if this one doesn't work out, you will find the right house. Try to focus on Bank owned listings and get an approval for an FHA 203K S mortgage that will allow you to fix up the ugly bank owned property and turn it into a model home (new flooring, new paint, granite counters, new kitchen cabinets, etc.) soon after you close.

All the best,
Alma
http://www.SoldOnTampa.com
0 votes Thank Flag Link Sun Dec 4, 2011
listen to your agent and find a home that is either a foreclosure (those have issues too) or a "normal" sale. good luck to you.
0 votes Thank Flag Link Sun Dec 4, 2011
All good advice.

Patty, the thing about a short sale is that your contract with the buyer is subject to lender approval. So it is the people working at the bank who make the decisions, not the seller.

I think your agent is giving you good advice.

All the best,
0 votes Thank Flag Link Sun Dec 4, 2011
Bev, the reason I asked about this is b/c we aren't familiar with the short sale process. We've bought homes in the past using conventional methods; this is all new to us.

Our agent has suggested we think about moving on b/c the odds aren't in our favor at this point. We really would love to purchase this home but at the same time we are trying to be realistic. If we are missing something in the short sale process we need to see it now rather than waste our time, resources, our agent's time, tying up the seller's or our lenders time. On the other hand if there's a possiblity that this could work we would chose to hang in there.

This is a big decision for us and before we do anything we want to make sure we have as much knowledge as possible. I don't understand why my question upset you?
0 votes Thank Flag Link Sun Dec 4, 2011
Hard question to answer online in this format. I agree with Bev this would mortify me if you were my client. Our firm closes 95% of our short sales which a high close ratio but we do not promise what we can not deliver, and giving up some commission is many times part of the package and in some cases additional funds from buyer. I am so sorry for your disappointment. Sounds as if you are the victim of some serious miscommunication somewhere, your story is one I have heard all too many times. There are things your agent can do to save your deal but some aggressive and concise actions need to be taken. Good luck.
0 votes Thank Flag Link Sun Dec 4, 2011
Pattywac,
You do have my sympathy. Short Sales are very trying. However, there are properties constantly coming on the market and hopefully one that you fall in love with.
Good Luck!
Genevieve Ramachandran
0 votes Thank Flag Link Sun Dec 4, 2011
Bill, it wasn't the bank that changed the MLS status, it was the listing agent who did it. No the listing agent doesn't represent us.

thanks all for sharing your knowledge and your honest answers to our dilemma. It sounds as if we've hitched our tails to a falling star (sigh).
0 votes Thank Flag Link Sun Dec 4, 2011
One last question...
Our lender said we have until Friday to proceed with our loan in order to close by 12/31; our agent feels this is a waste of time and our money. She said that if the listing agent asks the seller's bank for an extension the commission is cut to $400 each, and this is most likely why the listing agent is trying to find another (cash) buyer. Is this commission reduction true?

Since this is our second attempt to buy a home in the last few months (the first involved a miscommunication between the lister and our agent) we thought this time it would finally happen b/c we had a contract.
0 votes Thank Flag Link Sun Dec 4, 2011
Marc, we had been told that the price had been pre-approved by the seller's bank when we put in our offer, which is why we offered full price. We've been waiting on pins and needles over the last 4 weeks for the verification from their bank so we could move forward.

Debbie, nope haven't rec'd any further paperwork (arm's length), but would have gladly signed it if this would put us closer to a "happy ending". As far as the date set by the seller's bank, bear with me b/c I'm not a realtor so I might not use the correct terms, but it's our understanding that the seller's bank had set a 12/31 deadline before this property would go in to foreclosure.
0 votes Thank Flag Link Sun Dec 4, 2011
Let's face it. The banks can do whatever they want.

That is why we are in this mess in the first place.
0 votes Thank Flag Link Sun Dec 4, 2011
Patty,
You need honest communication from the sellers agent. If the bank has given a "close by" date, that implies that they have accepted the offer. Did you get an "Arms length" document to sign? You will not get a close by date from the sellers lender without having a bank approval with it.

Debbie Albert, PA
Keller Williams Treasure Coast
0 votes Thank Flag Link Sun Dec 4, 2011
Thank you Alan and Peggy. Our agent isn't the listing agent. As far as having another buyer in waiting, I don't know.
We are just shocked that a contract means nothing; we did what was needed in good faith on our part and wonder why they even took our offer in the first place if they wanted a cash buyer?

B/c we waited over a month for the bank's reply, the only other home in the area that would have met our needs has since sold and now we are stuck with a bowl of nothing. Needless to say we are sick about this.
0 votes Thank Flag Link Sun Dec 4, 2011
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