Buying a short sale: 1st buyers offer fell through; I made an offer and was able to continue where they left off. Bank hasn't accept my offer,

Asked by Cally, Waldorf, MD Sun Oct 2, 2011

why? My agent was told by the listing agent that it shouldn't take long since most of the work has already been done. The seller has accepted my offer but the bank has not. What could be the delay? What are some reasons the bank would decline my offer and is it possible that they accepting additional offers? I really want this house.

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The Roskelly…, Agent, Gambrills, MD
Mon Oct 3, 2011
Hi Cally,

If the sale was fully approved when you jumped in, they still have to go through the process of review anytime a new offer comes in. It is a shorter review but could still take 30 days+. Be patient and you will end up with the home of your dreams.
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Elva Wormley, Mortgage Broker Or Lender, San Jose, CA
Sun Oct 2, 2011
Hi Cally,

Short sales can take many months to close. It really depends on the bank. Check with your realtor about the HUD-1 and the current status. You really have to be patient with short sales.

Best wishes to you.

Elva Wormley
C2 Financial Corporation
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Cally, Home Buyer, Waldorf, MD
Sun Oct 2, 2011
when the bank requests a HUD-1, does this mean they are close to accepting an offer?
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Anna M Brocco, Agent, Williston Park, NY
Sun Oct 2, 2011
Short sales are by no means fast sales; oftentimes much patience is necessary, as some lenders react faster than others; therefore your agent can better advise, check in periodically with him/her for any updates....
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Cally, Home Buyer, Waldorf, MD
Sun Oct 2, 2011
Thank you for taking the time to respond. I don't have all the details, my agent says they like my offer but need a HUD-1. Is this the final step before they accept my offer?
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Don Tepper, Agent, Burke, VA
Sun Oct 2, 2011
You don't say where in the process that first offer was. Had the bank come back and agreed to the offer? (I kind of doubt it.)

It doesn't matter whether the seller accepts your offer. The seller will receive nothing from the sale. What matters is the bank--their lender--accepting your offer. That's where the holdup is.

What could be the delay? First, the bank has to determine the value of the house. And it has to confirm that the sellers are experiencing a hardship. That may or may not have been done by the time they dropped out and you stepped in. That's usually the biggest barrier.

Second, the bank has to review your offer. If your offer was the same as the first buyers, or higher, then that's not an additional problem. But if your offer was less than the first buyers, it well could be.

Example: The sellers bought the house for $300,000. The first short sale offer was $200,000. The bank has a BPO (broker's price opinion--sort of like an appraisal) done and the BPO says the house is worth $220,000. In that case, the bank wouldn't have accepted the first offer. And won't accept yours, either, if your offer is under $220,000.

Example: Same scenario as above, but the sellers fail to prove hardship. In that case, the bank really won't consider a short sale at any price.

Banks are notorious for not communicating with the various parties in a short sale. They're also well-known for losing documents provided by both the buyers and sellers . . . often losing the same documents 3, 4, 5, or more times.

So there are lots of reasons why it could be taking long. (By the way, with a short sale, 4-5 months is fairly typical. 8-10 months isn't too unusual. So, with those numbers in mind, maybe there really isn't a delay at all.)

Make sure your Realtor stays in regular contact with the listing agent.

Hope that helps.
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