Michael, in my opinion you should contact your Attorney and ask him/her! Short Sales in Arizona my be handled differently then in N.J. A short sale here is between the Buyer and Seller, once the sale price is agreed by both parties the Seller or Seller's Agent or hired Negotiator has to get the Lender(s) approval for the deficiency. At this point the Lender(s) can raise the Selling amount and the Buyer can then accept, counter or walk away.

Joe Warren, REALTOR ® CCLS
Certified Commercial Leasing Specialist
Tierra Antigua Realty
Commercial Division
7423 E. Tanque Verde Rd.
Tucson, AZ. 85715
(520) 829-6660 Ph/Fax
(520) 906-0575 Cell
JwarrenAZRE@yahoo.com

Michael,
Without having more information to go on, this is my answer to your question. When the buyers and sellers sign a contract on a short sale, the bank must approve it .So if you did not have a written approval on the contract then you only had an offer, not a contract on that property. The only way you have a contract on a short sale is if the bank accepts the offer and provides you in written approval saying they accept the offer. If you had a contract accepted and they changed their minds and counter offered which I don't think you have, then you may have a leg to stand on but without more information I really cannot answer 100 % correct. If you want more clarification please call me at 856-229-5454 my cell number.
Thank you,
Daniel J Molloy
Broker-Manager
Century 21 Hughes-Riggs Realty, Inc.
856-478-9600 x 110

Hi Michael,

I have heard a story similar to yours many times. :-(

Some banks will pre-approve a short sale at a given price, and all goes smoothly. Some banks will pre-approve a short sale, but when the actual contract comes in, renegotiate it. Other banks do not pre-approve short sales, but will review short sale offers upon presentation.

Buyer and seller reach agreement, and the fully executed contract is submitted to the bank for their written approval. If the bank fails to give that (even if they previously stated they would), you do not have a deal.

Without knowing what your buyer agent was told, or what your buyer agent told you, I would not attempt to point blame toward that person. Short sales can be challenging, even for those of us who are experienced with them. Unfortunately, sometimes banks do represent one thing, and when it comes time to sign off on the dotted line, they can sing a different tune.

Yes, the bank for the seller can do this. Depending upon if you want to the property of not, you may attempt to negotiate. I am not suggesting nor implying the bank will negotiate. Banks have countered on short sales; buyers have stood ground, and banks have backed down from their counter and approved the contract as presented. That does not mean that if you stand ground, this bank will meet your terms. Speak with your agent, who will give you advice based upon a complete understanding of the facts.

All the Best,
Deborah Madey - Broker
Peninsula Realty Group

PS Note to Realtors in New Jersey. Wells Fargo Corporate Offices will be presenting on Oct 28th in Central Jersey on short sales - an inside look from the loss mitigation dept. Trulia will also be at there on the same day. A great learning opportunity for NJ Realtors. Contact me for further info.

I am on the floor in pain and agony for you. How does one get involved in such a business transaction without complete knowledge of the steps that may be taken by all parties? I mean I get it that there are bad agents out there that may not have provided you with the NJ Consumer Information Statement or fully explained the process of buying and selling real estate, but you have an attorney. I deal with real estate every day so I may be insensitive to the woes of the consumer. So, I ask all the buyers out there, is this a common problem?

I am sorry, Michael. The short answer is YES. That's the way it is done.

The banks can do just about whatever they want to do in a short sale. With all the talk of banks working to help homeowners, when it comes right down to it the bank asset managers are really just glorified collections agents. Their job is to get the most possible money for the bank, and banks in short sales stand to lose very large sums of money with each transaction.

In short sale the BANK (to whom the sellers owes money) has the final say as far as what price they are willing to accept to allow the seller/owner to walk away. You said it yourself "the offer was accepted at $130,000....and off to the bank for final approval"

Since the seller owes more money to the bank then the house is currently worth, it's the banks call as t how much they are willing to forgive as far as the shortfall in what they are owed. You do not have a formal "contract" until the BANK, not the seller, signs off on the offer.

The listing agent prices the house at "market value" but has no control over what the bank will ultimately accept (based on the banks appraisers). Even if the listing agent/agency handles many short sales, no one knows what the bank will ultimately accept, and that goes for commissions too (question: did the listing mention anything like "short sale: subject to bank approval")

Unless the short sale amount was pre-approved for a certain amount by the bank, the seller can sign a contract for ANY amount, for presentation to the bank, but it is within the banks right to accept, reject or counter the offer.

The process should have been explained to you BEFORE you went ahead and pursued the purchase of a short sale.

I do fault the professionals involved for apparently not going over the process in detail before you began, but it was not "missed" by them .

Carol and Gina are right on the money.

I can tie this into another thread where some agents believe that the seller ( owner) has a say in what offers are accepted and which are not. To which I say.. baloney. Just becasue the seller accepted the offfer does not mean that the bank does, since the bank is the one to decide how much of a hit they are going to take, not the "homeowner"

That is also why agents should present all offers to the "seller" and accept what come sin and send it to the bank.. then the real answer will come into play. The bank will respond with yes, we will accept this or sorry, we want $149,000.

On a short sale the seller signs and then OFFER is forwarded to actual 'lein holder" of the property..... They have every right to counter. The seller can sign an offer for anything...... it has to go to the lender, and they will counter on what they are willing to accept. You have an offer..... not a contract. There is no contract......... on a short sale until the lender signs off........

Michael,

Hopefully this was an erroneous email from the bank, but it also sounds as though you are not fully under contract with them yet. Both parties need to fully sign the agreement, there needs to be earnest money given from the buyer, and the 3 Business Day Attorney Review needs to pass, which means that even after all parties sign, either party has 3 business days to void the contract, as long as proper notice is given by an attorney and delivered in accordance to the terms of the contract. This protects both parties and gives both the seller and buyer time to have the contract reviewed by their attorney after they sign it.

HOWEVER--If the contract was prepared by an attorney, and not your real estate broker, there is no attorney review period and the contract is is binding once all parties sign and there is a deposit given.

First determine if the bank has signed the contract and if you are still in the attorney review period and when it ends (if the contract was prepared by a real estate broker). Then make sure the notice was given in accordance with the contract. When the market was very hot, it was not unusual for buyers to lose a home because a higher and better offer came in during the attorney review period. It sounds like there may be a miscommunication somewhere if you were told the offer was accepted and you signed an agreement, so I'd pursue that possibility first.

Good Luck with the purchase, and enjoy your new home.


Barbara L. Smith
ABR, GRI
NJ/PA Licensed Realtor
cell/text: 609-980-7593
email BarbSmith321@comcast.net

since the bank has the final say on a short sale, yes they can and oftern do counter. Frequently it is on our commissions.

Michael,

From what I understand from your post, "The offer was accepted at $130,000 and all the contracts were signed and off to the selling bank for final approval." Therefore if the bank did NOT approve the amount then they have the right to counteroffer. A short sale is subject to bank approval even if the seller approved the offer, the bank has the final say as to what price it will accept to let the owner walk away.

Hope that helps. Good luck.

Gina Chirico, Sales Associate
Prudential NJ Properties
973-715-1158 cell
973-992-6363 ext 116
Gina.Chirico@PrudentialNewJersey.com