We did have an out clause on our short sale - "if the bank response was not granted within 90 days of the offer the buyer could choose to void the contract" So we took the out and found a better home at the same price the same day.... placed and offer - had it accepted - had the inspection - and appraisal and will be closing by the end of April!...... must have been fate as the house was only on the market for 3 days and was priced to sell....

This has been happening a lot. Did you have a clause in the offer stating that the offer was subject to bank approval? If not, the seller himself is on the hook.

I think it would be good practice for agents working on short sales to put in a deadline, like with secondary offers, allowing the buyer to look for alternative properties after a certain date (yet keeping the seller in contract) and earnest money & other deadlines begin only upon BANK acceptance. Something like...

"This offer is a short sale and subject to approval by Seller's mortgagee. Buyer may declare this Offer null and void by delivering written notice of withdrawl to seller prior to delivery of Seller's written notice that Seller's mortgagee has approved the short sale. Buyer may not deliver notice of withdrawl earlier than_________days after acceptance of this Offer. All other Offer deadlines which run from acceptance shall run from the time of actual delivery of the Seller's notice of approved short sale."

If you have the opportunity to get out of the short sale.... do it! We placed an offer Jan 7 and received notification from the bank on the 26 of Jan that all was in place and the review should be completed within 30 days. Here we are in April and just found out that the bank actually did not even start the paperwork and we notified that it would be at LEAST another 2 months....

In my experience with short sales the seller's lender does not want any paperwork until there is an accepted offer between the buyer and seller. It is then submitted with what is called a hardship package to the seller's lender for approval. The hardship package usually includes the seller's most recent IRS tax forms, pay check stubs, bank statements, a financial statement and a letter from the seller explaining their personal situation. The lender will also require a HUD statement which is a breakdown of the costs associated with the transfer of the property. This is usually obtained from a title company. The lender may also require that an appraisal of the property, a BPO (broker's price opinion) or active & sold comparable sales from the listing agent to be provided. Even with all of this information, the seller's lender will often continue to require addition documentation of their choice. Why the seller is not returning the agent's calls is anybody's guess. Sometimes sellers get very overwhelmed and detached from this process rather than following through with requested documents to get the job done. A seller might also file for bankrupcy without telling anyone which could also tie the house up depending on how the bankrupcy is handled. Technically, the seller is bound to the contract and to act in good faith. Keep in mind that if the seller's lender and the seller cannot come to terms on how the deficiency is to be handled, the whole deal could be off between you and the seller. Feel free to call me at 608-921-0502 if you have any further questions.

Sounds like you need to start looking for something else. Have your agent explore ways for you to get out of the contract. I hope you're not stuck indefinately.

See, here is what has started happening... sellers are disappearing halfway through the process. Vanished! Poof! Gone. Buyers are stuck, they can't get released - well, not easily if the seller is simply unresponsive. If the buyers walk away and then suddenly the seller resurfaces & the bank approves it, they may be bound to move forward with purchase. On the other hand, buyers who wait must wait until the contingency expires or until the bank forecloses. Some makes have a moratorium on foreclosures right now, so it could take awhile.

It can be really ugly. Hopefully your realtor knew the risks and has you well protected in the contract.

A short sale offer is only a proposal that has to be approved by the lender. Owners do this because they are not getting anything out of the sale. They are upset and they just don't know what to do. On a short sale the lender can come back with an offer that is higher thean what you signed for. Short sales are a lot different then a foreclosure. Have your agent explain it to you. Just so you know the seller is not stalling he just probably doesn't care any more.
Debby
Homestead Realty Inc
Milwaukee WI http://www.debbyrealestate.com

Gthoro, you said: "the seller's realtor just contacted us and said one of the sellers has not provided the bank with some needed paperwork" The listing agent does not know what he is doing. You'll be frustrated with time delays. Cut and run. Go find a professional realtor to work with who will represent you properly throughout the sale process.

Good Luck!