Home Buying in South Orange>Question Details

Sherry, Both Buyer and Seller in Essex County, NJ

Short Sale Back Up offer Nightmare - What are our options

Asked by Sherry, Essex County, NJ Fri Mar 9, 2012

We want to be a back up offer on a short sale, but facing many obstacles.

To make a long story short, a few weeks ago we submitted an offer on a short sale, and was told we’d be the 1st back up because another buyer just went into attorney’s review. The seller’s attorney said that he couldn’t take our offer to the bank because we had a home sale contingency. Within 2 weeks our home sold and we went back to resubmit our offer, except now there’s a new attorney for the seller. And she has no idea what’s going on. We’re not receiving any cooperation from the seller’s realtor as well.

We’re so frustrated. We really love this house and would like our offer to be submitted to the bank so they can at least review it. HELP

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Answers

14
HI Sherry,

Listing agents are reluctant to submit a back up offer to the bank because they work for the seller and the seller is in a short sale because they can not keep up with the mortgage. The bank process is long 4-6 months typically and when you start over with a new bid the time also starts over. The truth of the matter is, the home you love has been listed at a price the listing agent and the seller believe they can sell the home- this is the marketing price. During the 4-6 month process the bank comes out and appraises the home , they then go back to the buyer and tell the buyer what price and terms they are willing to sell the house for. Anotherwords, you most likely love this home at the price it is listed at. This is not necessarily the price you will buy the home at.
I agree with the other agents on this blog, if your home is under contract, you need to find a home which can sell within the time frame you need to buy. The buyer for your home most likely will not wait 4-6 months , so you will end up having to start over.
Best of luck,
Gerri Leventhal
ReMax Village Square
973-489-7916 cell
1 vote Thank Flag Link Sat Mar 10, 2012
As others have indicated, we'd love to know the outcome of your short sale adventure!
0 votes Thank Flag Link Sat Mar 17, 2012
you're most welcome Sherry.......please let us know how it turns out...........have a great weekend!
0 votes Thank Flag Link Sat Mar 17, 2012
Sherry,

You are very welcome. That's what we are here for !!

Good luck in your home search and let us know what happens !!
0 votes Thank Flag Link Sat Mar 17, 2012
Hi there, I've done my share of short sales and can amplify the cautionary advice of others -- short sales share one characteristic and that is that they are anything but "short" in their timeline. As you are experiencing, they can be frustrating and uncertain.

Your agent can position your offer with the agent and attorney as back up. I've got one in now that is in that position, but it is still no guarantee as our offer is not what the bank is looking for. And so in our case, though several deals have come and gone since we made our offer, we are keeping ours on the table. The difference between this investor and you as a buyer is emotional attachment.

If you do decide to continue to pursue this,highly recommend that you continue looking for alternatives. Even if your offers gets into first position, you will be looking at a long and uncertain ride. Short sales do get done, much has to do with the resources, banks - including number of banks - involved. But even if when everything looks to be in great hands and in good order on the face, it can take 6 months to reach the closing table. Short sales take the starch our of even the best....

Good luck and best,
Jeanne Feenick
Unwavering Commitment to Service, Unsurpassed Results
0 votes Thank Flag Link Sat Mar 17, 2012
Thank you all for taking the time to answer my question
0 votes Thank Flag Link Fri Mar 16, 2012
sherry....well,you've already received a lot of good advice.........let me reiterate that buying a short sale is rarely, if ever, smoothsailing, and usually is most frustrating.....in addirion, you say you sold your home 2 weeks ago.........i assume you mean you accepted an offer............you probably have contngencies - ie mortgage - that have not yet been satisfied............so you still needa home sale contingency as part of your offer......these days, especially, a home isn't sold until it closes!...........my best advice, imo, is.........fall in love w/ a "normal home" that is not a short sale!

best wishes...........

hi to all my friends who responded here! sorry for my funny typing style, but i am typing 1 handed these days - broke my arm at my open house 2 wks ago......ouch!!

have a great weekend all.........
0 votes Thank Flag Link Sat Mar 10, 2012
Oh no Debbie, so sorry to hear that you broker your arm. I say the fact that you are sharing your expertise here on Trulia even with one clipped wing is confirmation or your dedication! Heal well and soon my friend!
Flag Sat Mar 17, 2012
You will probably need someplace to rent short term if you are going to pursue any short sale property. I would keep looking for another home, placing preference to properties that are not short sales. It is easier to puy a horse than a unicorn. Good luck,
0 votes Thank Flag Link Sat Mar 10, 2012
Sherry,

This can be a bit complicated, but i will try to explain it as simply as possible. First of all, I am not sure if you are aware of this, but even if your offer is the first offer, it can take months (like 4-6) for a bank to approve a short sale and get it through all the internal bank processes before you close on the house.

If your current home is already sold, can you wait 4-6 months to move out while waiting for a short sale approval? I seriously doubt YOUR buyers would be willing to wait that long with the chance that your offer might not even be accepted by the bank and you can't move out.

In your specific case, if the bank has an offer on the table, the sellers agent can submit another offer to the bank, however, they first have to cancel the first contract. This can only occur if the first contract is still in attorney review.

Also, if your offer is not better than the first one, it's not worth the bother of canceling the first contract, and sending ALL the paperwork involved necessary to notify the bank that the first offer is null and void, and asking the bank to now consider your offer. Not to mention that you still technically have a sale contingency (your home sale can fall through, it happens all the time), and the banks frown upon that as well.

The change in attorney really means nothing, it's typically up to the sellers agent to deal with the bank involved, with contact on a weekly basis to make sure things are progressing.

The short sale process can be long, aggravating, and there is no guarantee that your offer will be accepted. As much as you love the house, I might suggest you turn your attention to finding another home, rather than waiting to see if the first contract on this short sale falls through.
0 votes Thank Flag Link Sat Mar 10, 2012
Your putting a lot of pressure on yourself. Now that your home has sold, you need to get a response from the other side; I would aslo continue looking for another house incase the first one falls through.
0 votes Thank Flag Link Sat Mar 10, 2012
If this is the home you want, you must push your buyer agent to have the cooperating listing agent get in touch with the bank, directly, something that should be done multiple times a week (and Attorneys aren't necessarily the pivotal players in the deal, either). This is where the hang-up is: have all the necessary papers been submitted by the home owner(s) to the bank, has the BPO been conducted, is the first deal in the hands of processor/negotiator, what?! If time is of the essence and you are concerned you might not have a place to live, you should consider moving on with your search for a home to purchase. As sad as this sounds, the short sale process is fraught with inconsistencies and not something one can count on. Take this advice from someone who has been through this with both buyers and sellers. Wishing you the best of luck.... 'My Pleasure...My Business!'
0 votes Thank Flag Link Sat Mar 10, 2012
Until your home is sold, it is still considered contingent. If you really love the home, have your agent stay in touch with the listing agent.
0 votes Thank Flag Link Sat Mar 10, 2012
Since you obviouslosty aren't confident in the current buyers attorney, consult your own real estate attorney. That is the person who is going to be most qualified to get real answers. It's very important that your real estate attorney is knowledgeable in short sales. Not all attorneys are well versed in the long tedious process of short sales and deals can and will fall apart without knowledgeable professionals. Stick with it if you aren't in a hurry, if you are you might save yourself a lot of heart ache and continue to search for your new dream home that checks most of the boxes on your list. Good luck in your process! :-)
0 votes Thank Flag Link Sat Mar 10, 2012
If the seller is already in contract with another buyer, your offer won't be sent to the bank for review. Realistically, you'll have to stay in touch with the listing agent and watch to see if the first buyer backs out. Then, you can submit your offer. Short sales can really try everybody's patience.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Fri Mar 9, 2012
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