Home Buying in Denver>Question Details

Kristin, Home Buyer in Littleton, CO

More questions regarding short sale w/Wells Fargo and issues with seller/seller's agent

Asked by Kristin, Littleton, CO Thu Oct 25, 2012

We executed a contract with seller 2 months ago - no short sale addendum was signed. I looked at title on home and noticed a Notice of Election - Demand for Sale was filed by Wells Fargo 09/01/11. I was told last night after pushing my agent for answers on why it was taking so long to get a BPO done (over 2 months - still waiting) that the reason for the delay was the buyer declared BK and it took until Friday to clear everything for sale. Am I getting a complete run around? Also told that it was a good thing we did not have signed SS addendum because seller could cancel contract and go with higher backup offers. I am scared we are playing with fire here and dont know what it true both agents apparently know little about short sales.

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I think you meant the seller filed bankruptcy, right? That's not unusual, and yes it does put the short sale on hold. Your agent would have had no way of knowing the seller declared bankruptcy if the seller's agent didn't tell, although they should have disclosed that in my opinion.

Short sales are notoriously difficult and complicated. You do need to be working with two agents that both know what they're doing. I don't understand the hesitation to include the short sale addendum, I can't imagine two agents who would neglect it.

Mostly what the short sale addendum does, is inform you and the seller how difficult a short sale is to accomplish. As far as being afraid the seller will cancel your contract and go with a higher one, that would be incredibly foolish when your contract has been on the table this long. If they cancel your contract, the bank would close the file and start from the beginning. Since the NED was filed over a year ago, the seller would really be pushing their luck to try such a thing. I'm sure the seller's agent wants this deal to close too, so they can get paid for all their work.

Still, you never know what's going to happen in a short sale. The best practice is lots of communication.

If you have no short sale addendum, what is the closing date on the contract you signed? Was there something stated about the sale being short in the Additional Provisions?
1 vote Thank Flag Link Thu Oct 25, 2012
It sounds like the NED was filed after you put in your offer. The property was being submitted to the lender as a Short Sale and this should have been disclosed in the MLS listing prior to your offer being submitted. That said, A Short Sale Addendum should have been prepared, signed and submitted with your initial offer by your agent with the box checked not allowing the Seller to terminate so your offer could not be out bid later while you are waiting for approval. If the Seller/Borrower filed a BK during this process, the Short Sale would be put on hold until the Bk was resolved as the lender cannot work on any terms of the property while the Seller is under the bK and could not order the BPO. BPO's should take on average 3-5 days to be ordered and completed and in most cases 7-10 days before the lender will receive the completed BPO file in their office and have it uploaded so they can view it. This time frame can very depending on the lender and the current volume of Short Sales they are working on. Also, Short Sale with a near pending Foreclosure Sale date get priority from the lender over files with no date set or dates set out into the future. Short Sale Approvals can take from 45 days to over 1 year to complete, again depending on all the variables, BK, multiple lenders and liens to be released, etc.

I recommend you discuss in more detail with your agent what is actually going on with your offer and the Short Sale, until you understand and feel comfortable with your situation and offer. It is a confusing process for buyers and sellers both, but it sounds like there may just be some miscommunications with your agent that could easily be resolved by talking to them.

If after you still don't feel your concerns have been answered, email me the information and I can take a look at it for you. amberpleiss@comcast.net. I have been working Short Sales with lenders and teaching agents how to work them for the last 7 years.

Good luck and I hope you are able to get everything resolved.
1 vote Thank Flag Link Thu Oct 25, 2012
An NED is not unusual for someone who is facing foreclosure, either prior to or during a Short Sale process. A Short Sale addendum has the option to preclude a seller from cancelling or accepting another offer. If the seller filed for bankruptcy at any point, you really need more-solid advice than any of us can provide here. If you are intent on getting to the bottom of this and/or purchasing this home, you would be well advised to consult a REAL ESTATE attorney who has extensive experience in Short Sales.
1 vote Thank Flag Link Thu Oct 25, 2012

All the agents here shared great information with you! I just want to add, that you are currently at the very beginning of the process. Yes, 2 months after you submitted an offer is the very beginning. If everything goes well, be prepared to wait several more months to close. In fact, it may never close for various reasons. Please ask your agent for a Short sale addendum - it's purpose is to inform you, the Buyer, of the uncertainty of short sales. Best of luck to you and I hope you get the house!

Marina Bay
Cherry Creek Properties
0 votes Thank Flag Link Thu Oct 25, 2012
The difference with this scenario if I understand the complete question correctly, can the Bankruptcy change the nature and timeline for a short sale? The answer is yes. The bankruptcy laws protect the consumer and may add another layer of approval for the bank to be compliant with federal laws. With this said please seek legal consultation to help you make any further decisions about your position in the transaction. If there is no “short Sale Addendum” there should be some type of reference as to the bank accepting the conditions of the contract and subject to the banks approval. My suggestion is to be very frank with your Broker and be specific with your questions to start. There are plenty of attorneys to review your paperwork and see if there is any reason for concern. The communication with your broker is the key to getting this deal done if that is your intent, hope this helps.
0 votes Thank Flag Link Thu Oct 25, 2012
One general point on short sales: We generally add a clause to our short sale offers that says that the seller/agent will list the contract as under contract, not allow further showings, not review or accept other offers, and not submit other offers to the bank until either the buyer terminates the contract or the bank comes back with a proposed deal that the buyer doesn't want to accept. The Seller may or may not accept these conditions, but if they don't we have no interest in waiting 2-12 months to see what the bank says...and then get nudged out by other buyers.
0 votes Thank Flag Link Thu Oct 25, 2012
Sounds like a great clause to have in a contract!
Flag Fri Oct 26, 2012
I think Bob Gordon has it right on this. You need an attorney. It isn't unusual for short sales to take more than 2 months...in fact they rarely take less...but there are serious questions here as to what your rights are. Without the short sale addendum, the Seller has effectively agreed to sell you the house at the price you agreed to...whether or not the bank agrees...since the references to approval by the lienholders are typically only in the addendum. that said, I'd be surprised if the contract is enforceable...but these are attorney questions...and not questions that an attorney could probably answer without reviewing documents and the events that have transpired. This forum is not an adequate source of info for you...and neither apparently are the agents involved. Get the to an attorney...IN COLORADO...who SPECIALIZES IN REAL ESTATE. Other attorneys may know less than you do about this.
0 votes Thank Flag Link Thu Oct 25, 2012
Nothing sounds good here. I'm a Certified Distress Property Expert. Call 720-231-2509 if you have questions. The bank shouldn't know that the buyer has a bk. By not signing a short sale addendum, there are problems and maybe legal problems against your agent. The reason your agent gave you on the buyers BK, doesn't sound right at all. Within the next year, your going to attorney commercials that ask "did you short sale your house and x,y,z happened"?
0 votes Thank Flag Link Thu Oct 25, 2012
Nothing sounds right here. Feel free to call me 720-231-2509. I am a certified distress property expert. I have a ton of info for you.
0 votes Thank Flag Link Thu Oct 25, 2012
Short sales take a lot of time to work through; 2 months is not that long to be waiting. Depending on the choices made in the SS addendum, the seller MAY have had the ability to cancel, and may not have had the ability to cancel. Generally if you're buying and short sale, the proper course of action would be to sign a ss addendum for the protection of all parties to the contract. Additionally, if there is more than one lien on the property it will take even more time to work through. It takes a lot of patience to buy a short sale in most cases; hang on.
0 votes Thank Flag Link Thu Oct 25, 2012
I agree with you James. Short sales are anything but short! Two months for a BPO sounds about right.
Flag Thu Oct 25, 2012
Hello Kristin: you should consult an attorney, as some of your questions regard Agency, your relationship to your agent and your personal comfort level. Short sales are notoriously lengthy processes. I took a look at the answers on your three questions. I don't think there is enough information to advise to terminate based upon what you have stated. It is also vague if the contract was initially a short sale - if it was, you want to add the SSA but can initiate this with seller, being sure to uncheck the box allowing seller to terminate. Another important question: do you have an agent representing you specifically, as a buyer's agent in this transaction? A good buyer's agent is going to communicate with you on a regular basis; get answers to your questions even if it means asking another broker for help and represent your best interests. Your questions here suggest you might not have an agent.
0 votes Thank Flag Link Thu Oct 25, 2012
You should do a short sale addendum when dealing with a short sale. If you didn't know it was a short sale at the time, you can always add it once you find out. It's not unusual to get ignored on a short sale when you're the buyer. Banks get multiple offers and often ignore all the buyers except the highest one.

Is your agent a buyer agent for you? If so, this agent should be working on your behalf. I do a lot of short sales and know the workings of the process. You are welcome to contact me if you are not under a buyer agency agreement with anyone.

Good luck with your home purchase. I hope it goes well for you.
0 votes Thank Flag Link Thu Oct 25, 2012
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