Home Buying in 32223>Question Details

Kitpi, Home Seller in 97114

Is the bank obligated to sell a short sale home if they get an offer for the asking price? They are the only bank involved.

Asked by Kitpi, 97114 Thu Jun 2, 2011

We have been waiting 7 months on a short sale and have made 3 offers, all have been accept by the Sellers, but the bank comes back and asks for new offers. There is only 1 loan on the home. The first offer was $9,000 less than listing price, the sellers accepted and the bank requested a new offer. The second offer the bank requested us to offer $33,500 less than asking price, because the house did not appraise at our previous offer, the sellers accepted. The bank again requested a new offer at their requested price and promised they would sign within 48 hours. The third offer was slightly higher than the last at $32,000 less than listing price. The last offer is over 45 days old. Since we've offered the asking price is the bank contractually obligated to sell and is there a time limit on their response?

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13
Kitpi,
Welcome to the wonderful world of short sales. The sellers acceptance means nothing on a short sale since it is the bank that is taking the loss. Over the past 4-5months I have noticed that the approvals to my solid short sale offers, and even my foreclosure offers have come to a ginding halt - even with my realtors who know how to navigate the distressed sale market.
The story I am hearing is that banks feel that they have hit the bottom of the market, are no longer sitting on a declining value asset, and are more willling to wait for a better offer than in months past. I do not think this is exactly true - the market details at least. But you are not alone in your frustration in waiting for an offer to be approved or denied,
The advice I give all my clients - use this time to your advantage. There is not a shortage of homes on the market right now but there is a shortage a good, well priced homes -and those do not stick around very long. While the bank is deciding whether or not to take your offer, keep looking at homes for sale. Your dreamhome for the dream price may be just putting the for sale sign in the yard right now. Keep your options open while the approval proccess plays out at the bank. There is no other home offer process that will allow for you to keep shopping for 3-5 weeks. Use this as an advantage instead of detriment.

Keven
1 vote Thank Flag Link Thu Jun 9, 2011
Sorry Kitpi, but no. The bank has no obligation as they are not the owner, but the lein-holder on the property. In WI we sign what is called an SSO form which protects the buyer insofar as it gives a date by which the lender must agree to the purchase price or the offer is null and void. Short sales are the trickiest things to negotiate, and entirely dependant upon the lending institution that owns the lein on the property. Mega-institutions have little to no incentive to make short sales work quickly, smaller state and local institutions tend to work more quickly to keep their foreclosure costs and inventory down. Even the best Realtor can run into a sticky contract and there is nothing that you can do other than pick a different home or understand it may take another 7 months or more. The longest one I had was almost 26 months and my buyer finally purchased it at the foreclosure auction. Good luck!
1 vote Thank Flag Link Fri Jun 3, 2011
Frustrating isn't it. That's what I tell my customers looking at Short Sales. Strange stuff going on here. When the bank received your first offer a processor ordered a BPO to find market value. My guess is the Brokers Price Opinion informed the bank that your offer was to low so your offer got rejected. Happens. Now the strange part. The bank requested you to offer $33,500. less than the asking price? That's very odd and why would they reject the first offer if it was high. A bank would accept your offer then wait on your lenders appraisal. Then if it didn't appraise the bank would have to preform. Ask your Realtor to get some advise from the R.E. attorney he or she works with. Strange stuff here.
1 vote Thank Flag Link Thu Jun 2, 2011
The short answer is NO and NO which is a shock to some people. The real decision maker is the holder of the loan. Usually it is not the bank as they are only the servicer of the loan but almost always the investor who bought the loan and will be taking the loss is the one who decides what he will accept and therefore what his loss will be. Most investors should realize if they don't take a market price offer they will end up in foreclosure and probably get even less but sometimes it doesn't seem they act on that realization.
Mark Good, markgood500@gmail.com Prime Properties of NE Florida, LLC
904-599-5462
0 votes Thank Flag Link Sun Jun 12, 2011
I am sure that the other answers you have received are very good ones. I will tell you that the bank is never obligated to sell and that the list price is only a guide.
The best way I have come to explain this to the Buyers I work with on Short Sales is, it's like going to Las Vegas. The house always wins. It's the same with a short sale.
All I can speak from is experience and I can tell you that if the lender has been working with you and responding to your counter offers, this should resolve in due time. Unfortunately there is no magic time line or even required timeframe. Just be patient. You should close soon enough. Hope all goes with with your purchase.
0 votes Thank Flag Link Fri Jun 10, 2011
This scenario sounds highly suspicious. Also just so you know the asking price is purely "ficticious" and may not be in the ballpark of being acceptable to the lender and PMI company (if any).

Do you have your own agent representing your interests? If so, ask her to get the following information for you:

Is the owner occupying the house or is there a tenant living there? Is the owner going under the HAFA program? Who is the lender that actually owns the mortgage. The "servicer" handling the mortgage probably does not own the mortgage and is a mere middleman collecting fees to "manage" the loan. When the owner purchased did they put down at least 20%? IF not, then the Private Mortgage Insurance company must also approve the short sale.

If the "servicer" is Bank of America, ask your agent to ask the listing agent for a "print out" of the Equator screen to prove it is on track for approval.

Oh and if there is a tenant living there, the seller may just be dragging out the process to allow him to continue "free" rent money for extra months. Also there are some listing agents who will engage in mortgage fraud by trying to get a lower priced approval for the short sale (your previous lower offers) and then put their "insider" investor on the contract to buy at the lower approved price. Once they have the approval for that buyer they will "flip" the property at a higher price by closing a week later with you as the buyer.

You absolutely need to continue looking for a property (only look at genuinely available homes - bank owned and regular sales) until theyday you get the short sale approval letter in your hands listing you as the buyer. On a fraudulent flip they will not be able to provide this because their insider buyer will be listed as the buyer!

ALL CASH buyers are the prime target for short sale fraudsters so if you're paying ALL CASH you MUST get an attorney to review your closing paperwork and title committment before you sign or hand over your cash at closing.
Alma
0 votes Thank Flag Link Fri Jun 3, 2011
Hi Kitpi,

The one thing about short sales is ~ the rules keep changing. Along with that, the values keep changing and what the investor will accept keeps changing.

First of all, Sellers will usually sign anything because they are not getting a dime out of the transaction and they are trying to avoid a foreclosure.

Second, the investor has to approve the sale, so it sounds like there are some mis-communications going on here possibly between the negotiator and the investor. 48 hours turning into 45 days means something is not right.

Third, my advice would be to escalate this to the executive offices of the President of the bank to see if you can get this straightened out. If not, then move on to another house. There are some negotiators who actually make more money by servicing the loan and letting it go into foreclosure than they do selling them. You may have run into one of those. Going to the top will blow the whistle and get some action. There are a couple of other things that you could do beyond that, but try the office of the President of the bank first.

You and your Realtor have been very patient, now it's time to take it to the top and see if you can get this resolved.

If you found this helpful, please give me a "thumbs up."

Best regards,

Sharon

Frank & Sharon Alters, CDPE, e-PRO, GRI
Team Alters
Coldwell Banker Vanguard Realty
904-673-2308
sharon@teamalters.com
Web Reference: http://teamalters.com
0 votes Thank Flag Link Thu Jun 2, 2011
Over the last 7 moths, according to Case-Schiller Index, prices are moving lower. Whatever the bank thought the house was worth 7 months ago is old news. Have your agent to a CMA on recent sales and also asking prices for listings in your area. I bet there are better deals than the short sale you bid on.


DAVID COOPER. Foreclosure and Bank REO Buyer's Agent at Verticle Realty-Las Vegas. 35 years experience. FReee List +1-7024997037...davidcooper@lasvegaswinner.org
0 votes Thank Flag Link Thu Jun 2, 2011
Kitpi,

Sorry to say, but this is the wonderful world of short sales, and it frustrates everyone involved in the process.

The house not appraising would be more a function of your lender not being willing to loan more than the house appraised at, which is standard procedure.

I would wonder why the bank promised signing within 48 hours, and then not delivering. Have you talked to your agent or the listing agent about this delay?

The short answer here is: check your contract, and see if you are within your rights to cancel this contract and move onto another house. Unless there is something so special about this house you just can't live without, I'm certain you can find something very similar that can close more quickly.

Good luck -
Carol Zingone
Broker Associate
Prudential Network Realty
904/993-9048
Web Reference: http://www.carolzingone.com
0 votes Thank Flag Link Thu Jun 2, 2011
No!

The bank is under no obligation to sell at all and they can change their mind any time they wish.

They get to make all the rules and change them at will.

In the end, short sales come down to how much money the lender is willing to write off as a loss. Depending on the lender, the day of the week and the time of day, that decision is likely to change.
Web Reference: http://www.golftobeach.com
0 votes Thank Flag Link Thu Jun 2, 2011
First off, the Sellers (Homeowner) is almost a "rubber stamp" and have little input in the proceedings. The Bank does not value their opinion.

The real question is, where are the offers in relation to the amount owned on the loan? The bank wants to recove the max possible. Where was the Listing price in relation to the amount owed? Quite often, the Bank will agree to a Listing price that is quite low in order to generate multiple orders. So, saying you gave them a full-priced-offers, is meaningless.

In regard to time limits; the banks are notoriously slow. There have been many instances where the bank beats-around-the-bush and loans expire and information has to be updated. That's the nature of the breast.

You have to be patient, particularly with a SS as the bank secretly hopes that they can go to Forclosure.
Do not try to understand the bank's rationale.
0 votes Thank Flag Link Thu Jun 2, 2011
Sorry. Banks can do whatever they want and it doesn't have to make any sense at all. There is no obligation to accept any offers. List price and accepted price are mostly independent. You may want to consider moving on given the difficulty you're having.
0 votes Thank Flag Link Thu Jun 2, 2011
What is your agent advising...unfortunately the lender is under no obligation no matter the offer, and there really are no set time frames as to how quickly it will respond; again consult with your agent, he/she can best advise.
0 votes Thank Flag Link Thu Jun 2, 2011
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