Sheila,
Don't feel bad that you are confused. We do this for our livelihood and it's important we aren't confused but it is a constant battle to stay up on the "rules of the game".

For instant, new day, new set of rules: I just got a counter on a listing of mine that is a short sale. Although Lehman Brothers originally made the loan, then sold it to Wall Street in a mortgage back security, and is being serviced by Aurora and thus now needs final approval from Fannie Mae on any offer. Fannie Mae countered at what I feel is the current market value of the property. It appears no more, at least for now, discounting on Fannie Mae properties. Go to this site and it will give you clear reasons why the rules have changed http://www.youtube.com/watch?v=G0zVsMIYmD4.

Bottom line, not all short sales or even REO's are being sold at discounted prices. In today's current market it may take more time and patience if you are looking for a home to get a great deal rather than one you select because it fits you and your family's needs and wants.

Okay so here is another question, we believe we know the amount left on the 2nd loan as $46,000. So for that bank to ask for $6,000 to release the loan, is that reasonable? I thought I read somewhere that if the loan is $50,000 more less, the 2nd leader usually accepts $1000. Is there a percentage that they usually ask for? I just feel so naive in this situation....

I can't even tell you how I wished I knew more about the real estate industry before we went ahead with this deal. I pulled out our original REPC and we actually first went in at $180,000 and we did this because our agent said that he had a negotiator working with the bank and they were close to an agreement and that he thought they would be okay with $190,000. So we went in a little lower. Well then we were called back by our agent and said they had another offer at $192,000 and if we were willing to be a back up offer at that same price? We were not okay with that and said call us if that offer does not go through. They called because the offer did not go through and a that time we raised the price to $183,000 as a cash offer. The seller accepted it at this point I believe and then a little later our agent approaches us again to raise it to $186,000 for what I thought had to do with the 2nd loan but I guess it was for other fees and taxes my husband says. So we waited and the only response we would get from our agent (after calling him about it, he has never kept us informed by calling us...we had to contact him...very frustrating) they were waiting on the bank. Oh and by the way, the listing and buying agent are in business together as their own Real Estate company. Not sure if there is confilict there or not. Anyway, so now after 2 1/2 months, today our agent is now asking for $6,000 more (now we are at $12,000 more than our original offer) for the 2nd loan to be released. I guess my question is, is this normal....for asking for more money? And I can not tell if this is a counter offer from the bank or the agents getting more money for the seller. And my other question, can I ask for the original loan amounts or is this none of my business? What are my rights as a buyer? The comps our agent sent to us are all from a year ago. We again asked for more comps today but shouldn't they be for the market now? I just wish I knew more about the real estate industry...I just feel like a fool and personally, I am not confident in our agent at all. Especially where his business partner is the seller's agent...I just never thought about there being conflict there before...do you think there can be conflict there? I guess I am just a little distraught about all this extra money they are asking for (this being the 3rd time) and not knowing if it is the bank or the real estate agents talking. They do have a negotiator to pay for I guess. And now they are telling us they have back up offers to it is like we either accept or we lose the house...

Oh and yes this is a house we plan on living in for a bit. To be honest, I was not okay with the house originally but we did look at it as an investment opportunity later. It is definitely and upgrade for us too so yes, we plan on living in it for a least 2 years if not more.

And about the apprasial, I guess I just feel like we did not go into this situation with much information and so now I am wondering if the house even appraises for what they are asking...I would hope so but we didn't ask for this information at first...so now we are.

Thanks for your opinions!
Sheila

Ah, Sheila, you have entered the Twighlight zone of Short Sales. In answer to your questions, yes, you can find out what the loans are...your agent can get that through your title company.

The problem you are running in to is that there are 2 banks involved, and the 2nd loan is usually the one that causes the most trouble, because they are the ones that usually get short changed. Both banks are trying to work out the least amount of damage to themselves and sometimes that requires quite a bit of negotiation between everyone involved. And, just so that you know, a cash offer does have Some weight with a short sale because nothing is required but the close, but banks live in the banking world, they have no sense of time or inconvenience to anyone...they do things at their own pace, in their own time, and reserve for themselves the right to change their minds...alot.

If you want the house, the main ingredient in this recipie is patience. Short sales are not short..and they can be frustrating, but they can be a good deal if you have the time to wait it out. Good luck!

Since you are paying cash, the home does not have to appraise at a certain amount in order to get funding etc. As far as a good deal - are you buying this home because you want it and want to live there for some time or are you just seeking a "good deal"?
Your agent should have run through comparable properties and I assume they did.

I meant to say "where the BPO will come in at"

The listing price is a price set by the agent, based on current comps. It should be in line with what the BPO (broker price opinion, similar to an appraisal) that the bank will perform will come in out, but chances are BPO and the list price is not the same amount. The bank will negotiate with the sellers agent, and it is the sellers agent to get the offer in hand approved. That said, we can only do so much, banks will draw a line and demand a certain amount of payoff, and in this case it appears that the second will not approve without additional funds. The sellers often do not have these funds, so the buyers gets asked to pay it. You certainly dont have to accept, but there is a good chance that if you do not, the bank will not approve your offer, thus the back up offer will step into place.