Home Buying in Catonsville>Question Details

Purty, Home Buyer in Catonsville, MD

Requesting advice from real estate on short sale in Maryland

Asked by Purty, Catonsville, MD Sat Feb 18, 2012

1st lender. Gmac. 2nd lender sun trust. House originally listed for 90k more than the last listing. We bid 2k over the last reduction. Sellers signed contract. However had several issues with sellers and their agent. Maryland pro realty. They wouldn't return phone calls and communication was limited. The first lender didn't approve but they stated they would push the short sale or foreclosure. So we kept extending our offer. The bank stated our offer was below the bpo but didn't say by how much. I would believe it had to be close to 90k more. The bank requested we send in reasons why we thought the bpo was too high and we did such. It required at least50-60k in repairs. We didn't hear back for two weeks so we asked for an update. The sellers Agent replied stating the following "I spoke with the sellers. They want to cancel current short sale and wanted to choose other options for them. Accordingly, I will need to withdraw this case.". Are owners still bound to contract

Help the community by answering this question:

Answers

10
You may not like this answer but if you are outside of the contract extension time, there is nothing that you can do. Once that time is up the seller can discontinue just as much as you can. When putting in a short sale offer remember that the bank relies heavily on the BPO. The banks normally do not disclose the amount the BPO comes back at. The list price of a home is something the listing agent came up with not the bank. If you don’t have comps supporting your offer it will most likely be a waist of time. Always make sure the listing or buyer’s agent meets the BPO agent and provided them with comps. Every Bank is different but you can usually challenge a BPO and ask for another one to be completed. They may require you to start the process over again though.

Hope this helps.

Candice Titus

410-262-5039
http://www.facebook.com/candice.titus
1 vote Thank Flag Link Mon Feb 20, 2012
Hello Purty,

Short sales can be a very time consuming process and sometimes after all the work there are no positive results for either party. The reason you need to sign the release is because someone is holding your money in escrow. The holder of that escrow account can only disburse those funds with specific events or instructions. The first event would be at closing according to the contract. The second would be after receiving a written release signed by the seller and buyer giving instructions on how to release the funds. Without the release the funds cannot be disburse unless it was so ordered by a court.

When you signed the contract, you may have sign a short sale addendum or something stating that the sale of the property was contingent upon a third party approval. In this case GMAC and Sun Trust. Unfortunately, both lenders must approve of the sale in order for the contract to be binding. Assuming you signed such a document. If the lenders did not agree to the short sale amount other than increasing your offer you maybe better off moving on. One of the reasons the seller can get a short sale approval is because of their current financial picture, which they must submit to the lien holders showing that they are unable to afford to pay the additional $90K to clear the liens. Since the seller cannot pay the full amount owed the lenders must agree the take less than what is needed to stratify the outstanding debt.

Without the banks’ approval you would not be able to get a loan on this property, because it cannot be transferred free, clear, and in marketable condition.
You certainly would not want to pay cash for it either. So without the lenders’ release, which is what a short sale approval does, you may want to consider moving on.

Please keep in mind that since I have not read the contract and have no working knowledge of the transition, my advice is general. I would talk to your broker, and an attorney if you don’t feel confortable with the information you have received to date. Good Luck
1 vote Thank Flag Link Sun Feb 19, 2012
Hi Purty,

If the normal short sale paperwork was included in your sale agreement the owner would not beboundtothe contract if the bank declined the sale or if it was not approved within the agreed upon time frame. Unfortunately too many agents get involved in short sales that have little or no chance of being approved because they don't understand the process. There should never be a lack of communication. This is how short sales get a bad reputation.
0 votes Thank Flag Link Wed Feb 22, 2012
Hi Purty, Short Sales can be such a roller-coaster ride! You have received some great advice from Randolph & Candice. I just wanted to emphasize again that the bank is not authorized to talk to you. When the sellers submit their short sale applications to their lenders they have to sign an authorization for the banks to talk to other parties, typically the listing agent, Title Co./attorney. Unfortunately, trying to get a hold of them will just cost you a lot of time and only result in frustration.

Did you have a buyer's agent representing you in this case or did the listing agent write up your offer? I'm wondering because you explain that you've tried to finds answers, get a hold of the listing agent, bank, attorney etc. If a listing agent is unresponsive, it sometimes helps if we escalated up the chain, ie. ask to speak to the office manager or have our broker contact the other broker.

You'll probably never find out what the real issue is, short sales can fall through for several reasons. The bank may not be willing to eat all the costs and is asking for a contribution from the seller which the seller may not be willing or able to do. Or the short sale package was incomplete and either didn't demonstrate true hardship or didn't correctly portray the property's condition. If it required such extensive repairs it should have been documented in the package, complete with pictures and repair estimates.

Sometimes, the way the banks act defies all logic - there are many more players though and the problem could also be caused by them (investor or mortgage insurance for example). Unfortunately, it sounds like that this sale will not happen. My opinion is solely based on the information provided by you, however. You should consult an attorney if you'd like to have your contract reviewed and want to see what options, if any, you have.

Last, but not least, you definitely want to sign the release or otherwise your earnest money deposit wont be released to you. Good luck & all the best!
0 votes Thank Flag Link Mon Feb 20, 2012
That could be the issue. In order for a bank to approve a short sale the sellers must prove a true hardship. If they do not have a hardship, the bank may not approve the short sale. Banks still have the right to collect the full amount from the sellers. The contract is contingent upon a third party approval and if the bank is not willing to give one no party is liable. Always wait for final approval before spending any money on the property like inspections or appraisals. The bank will not talk to anyone that is not authorized by the owner. Since you are not getting a response, I would suggest talking to the manger at the listing broker's office.

--Candice
0 votes Thank Flag Link Mon Feb 20, 2012
Candace your answer was extremely helpful. It does not expire for more than a month. But the agent is refusing to talk to us. The only thing I can think of is talking tO the bank. But keep getting pushed around. I have all cases listed against the sellers should I contact the last attorney trying to foreclose against them? My friend suggested the title company should have a lawyer that represents the banks interest. It's really criminal these people were able to push off six foreclosures against them. And in addition to this somehow they were able to buy a 1m dollar home with the second mortgage. They made 200k after selling the 1 m home.
0 votes Thank Flag Link Mon Feb 20, 2012
Your offer was likely a non starter from the onset. A BPO does not take into consideration any damages to the property. A full appraisal coupled with an estimate from licensed contractor will provide the documentation necessary for the bank to consider the valuation of the property.
0 votes Thank Flag Link Sun Feb 19, 2012
No sellers are not bound because the entire agreement was conditioned upon the bank eating a significant amount of money. The bank does not have to agree. Frankly I am a little perplexed at how buyers in general think that banks should relinquish assets without thoroughly exploring all avenues. Why not move on, explore other properties from sellers that actually can sell the property?
0 votes Thank Flag Link Sun Feb 19, 2012
Yes I understand so we asked how can we get our escrow back. The sellers agent then asked us to sign a release from the contract. Why do I have to sign a release if they aren't bound? Anyways I don't feel that I should release them if their attorney isn't responding to our inquires And yes we have been working with their attorney as well. I only asked to see some documentation that the bank denied the request or they are planning to foreclose. I have yet to get anything from either source. I started to contact the first lender but having no luck trying to get any information. A friend of mine is an under writer. she recommended I try to find out from the title company who the lawyer is representing the first lender. I found all the cases against them in the md court system not sure how to go through my agent to get to the title company. Can I ask that or do you have any more advice? Or can I use the last foreclosure case from the first bank to find out. It appears six foreclosure cases have been brought against them and all those relating to gmac appear to be a specific law firm. Thanks for any info you can give me. I really don't want to be screwed over in this.
0 votes Thank Flag Link Sun Feb 19, 2012
Purty,
If they are bound, it's to an unenforceable contract. Short sales are subject to the lender(s) approval. If the lender denies this, your contract would have to state the owners must agree to any subsequent negotiations between you and the bank. If your contract does not contain such a clause, and I've never seen this, I don't know how they could be forced to comply.
I can only speculate without reading your agreement, so if you want to take this to an attorney for review that would be your final answer.
0 votes Thank Flag Link Sat Feb 18, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer