Mark & Lisa of Coldwell Banker

I hope it works out for you Elle, short sales strain agent/client relationships, nerves, and your faith. We've had more poor experiences with short sales then positive. One thing to know is that "the seller has accepted" means nothing in a short sale, because it's the bank who ultimately will make all decisions regarding price, terms, concessions, etc. Like Mike said below, I hope you have your own separate representation (buyer's agent) in a short sale transaction, because they are some of the more complicated and hoop riddled experiences in real estate. But, sometimes they do definitely represent a good opportunity for a buyer as long as you have the fortitude to stick it out. If you are aware of the risks involved (read: bank canceling at the last minute) and go into it with eyes wide open then I think you'll be ok. If it doesn't work out, know that it wasn't meant to be and everything happens for a reason.

And that "reason" will ultimately be a lesson in - how/why did I get caught up in this short sale when there is a plethora of bank owned properties out there!

Best of luck Elle :) - Mon Oct 8 2007, 20:45

the easy answer to your questions is: time. It will take more time before the price reductions reach a point where it's seen as a value to either a home owner or investor.

Some of the things that play a part in pricing and strategy by a bank are: is it local to the area of the home? Is it familiar with the neighborhood and market trends? How many properties does it have in it's REO inventory currently on the market or pinned for future REO due to Notice of Defaults?

For instance, if the bank is unfamiliar with the area, then it must rely heavily upon the agent listing it to provide them with accurate information and advice. If the agent is also unfamiliar with the area of the property, then that could be the culprit. But on the other hand, sometimes a bank has so many current or pending forclosed properties in a target area that they actually have a great deal of influence on market prices, so as a result they will very slowly use price reductions to creat a sense of urgency so as to not diminish market values to fast and thus, shoot themselves in the foot with their upcoming inventory. - Mon Sep 24 2007, 10:10

Leaving the loan contingency in place would work assuming that the buyer's agent or the buyer themselves doesn't abuse this loop-hole in a myriad of ways. I think the last 10 offers I've seen over the past few months have all had the loan contingency in place for the entire escrow and after advising the seller as to the pro's and con's of that, we have countered on that point every single time.

In regards to the actual question, if it is of no fault of the buyer (and obviously in those circumstances stated within the question it isn't) , then no, I don't think the seller should keep the deposit in most instances.

Regrettably I've seen situations where criteria has changed for the loan program which forced the buyer's lender to go shopping for a new product. Now there is a professional and ethical way to deal with this, and an unprofessional way to deal with it. In those instances I would hope that the lender would be honest with the situation, advise BOTH parties of the change so that at the very least there is communication and let each party make an educated decision as to how much risk/reward they're willing to endure. However, when the lender isn't professional, hides such things, and allows people to be unpleasantly surprised by their little jack in the box, then, well, I think you'll find seller's a little less willing to part with the deposit. Especially if they feel lied to.

Or, if they feel that the lender dragged their feet and cost valuable time by not being prudent, well then, I think you'll find seller's to be less negotiable in those situations as well. Getting escrows closed promptly is a benefit to both parties these days, because none of us know what tomorrow will bring.

And it's a shame, because in either of these scenarios it's not directly the buyer's fault, it's a problem with the agents and loan officers working on their behalf. And that's why it's so critical that you interview and choose carefully who you want to represent you and work for you, regardless is you're a buyer or a seller! Buyer agents are just as important as listing agents. - Sat Sep 15 2007, 17:35

In addition to what Irina said, I'd also point out that if you don't have your own agent to represent you and your best interest you will be represented. It just will be by the Listing agent who already has an established relationship with said seller. Now I'm not saying that a Listing Agent can't fairly represent both buyer and seller in a transaction, I'm just saying that... it may not be the best idea. So, keep that in mind, as well as all the other great information and tips that others responded with as well :) - Mon Sep 3 2007, 15:35

Many times they would like their own lender that they are either in house with, or have a proven track record of working with, simply to verify your pre-qual or pre-approval letter from your chosen lender. The reason for this is that some lenders can be rather liberal with those letters and after time many realtors have put less and less value in them, especially if the letter is coming from a lender they have had previous poor experiences.

However, most of the time that same Realtor that is asking you to do this (apply to their mort. company) is not requiring you to get your loan through them, they are just making sure that your pre-approval letter is accurate. In a way they are not only doing their client, the seller, a service, they are also helping the buyer. Now if the Realtor is requiring you to get your loan through their company, well... then that would be a warning sign to me and I'm not sure you can even do that.

But most of the time it is simply for verification of the information they were given. - Mon Sep 3 2007, 10:26