can a Sheriff's sale occur when there's an existing short sale sale contract?

Asked by Ilana Hairston, Ypsilanti, MI Wed Aug 25, 2010

I placed a short sale bid in May this year. Although two people were named on the agreement, only one co-signed the contract. My agent seemed satisfied that that was sufficient. After several months of delay, in which we were told that the paper work is at the bank, it turned out - in late July - that they were looking for the second owner to sign some sort of release. Several weeks later i was informed that the co-owner, is actually a co-borrower, and was not cooperating with short sale process.
Today i was informed by my agent that the property was auctioned off, on a Sheriff's sale, in late July.
Obviously i am quite angry and feel that i have bot been represented properly. But i'm not sure what is the best course of action. The last contact with my agent, she advised that i hang in, because the Sheriff's sale my work to my benefit, however the redemption period will expire in January, and who knows what will happen then.
Any advice, insight?

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8
Debby Thomps…, Agent, Wauwatosa, WI
Wed Aug 25, 2010
I would ask your agent to better explain the processes to you. In each state things are handled differently. If I were to tell you this is how it is done. Well that would be in Wisconsin. That could be completely different then your state. So contract an attorney if you are looking for legal advise on this or have your agent sit down with you and explain all of this to you. Why, what and when... So you better understand the processes. Short sales are out there on their own with their own set of rules.
0 votes
Jon Boyd, Agent, Ann Arbor, MI
Wed Aug 25, 2010
This set of events suggests you may not of been kept in the loop and that some of the real estate professionals involved may have not been familiar with short-sales.

Missy is right, if you keep on the current path you need to hope the listing agent knows what they are doing.

Depending on who the bank is this property may be taken off the market and re-listed in six months at the end of the redemption period. Often it would be re-listed with a different brokerage.

As the company who represents buyers we have a montra: Short-sales are a Long Shot for home buyers!
0 votes
Tom Stachler,…, Agent, Ann Arbor, MI
Wed Aug 25, 2010
Ilana
Yes the Sheriff's sale can happen as part of the foreclosure process. There is still plenty of time for the bank to accept your offer. Sounds like there is more to it however with one of the Seller's not cooperating. The question here is WHY? Perhaps the bank or investor wants them to sign a promissary note for all or part of the deficency? Check with your agent to get some answers to better determine whether to hang in there or not. Of course you can always find something else in the mean time and move on.
Web Reference:  http://www.TheRealtyTour.com
0 votes
Lyle Wolf, Agent, Morristown, NJ
Wed Aug 25, 2010
Your short sale bid was just that, a bid. Until it is accepted by both the seller(s) and lender(s), and the transaction closed, the home can be sold at sheriff sale. If you really want the home you might be able to convince the seller(s) to sell it to you in the redemption period by offering them additional money over what was paid by the buyer at the sheriff sale. You enter into a contract with the sellers. Your money is used to redeem the property, then they sell it to you. You will need all cash for this transaction. If you want to go down this path make sure you have a good real estate attorney. I have done this successfully.
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Cicely Brook…, , Birmingham, MI
Wed Aug 25, 2010
Your agent is correct is that the sale "might" help. However unless the co-borrower becomes a part of the process, your agreement may never close. In January the bank becomes the owner and your deal is dead. You wait for the bank to figure out it owns the home, find their local REO agent (who probably will never go in the home - just hire the locks changed), hope it comes on the market and you agent sees it quickly and then you bid again for a home that has now sat empty and hopefully has not flooded. Frustrating, but don't blame your agent. He/she has little control over the crazy process.
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Missy Caulk, Agent, Saline, MI
Wed Aug 25, 2010
In answer to your question in the Ann Arbor area, the answer is YES, it can occur while you are under contract for a short sale.
However, the bank can still sell short as in Michigan we have a six month redemption period.
I have sold many homes after the sheriffs sale, during Redemption.
The Redemption period ends 6 months to the date of the sheriffs sale. So if it went on July 26 then it would be over on January 26.
Let's hope the listing agent knows how to proceed.
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Vivian Mock, Agent, Montgomery, AL
Wed Aug 25, 2010
A short sale must be approved by the bank or mortgage company and if it goes to far there is no truning back with the froeclosure process. Your representation by your agent has nothing to do with your not getting this home by short sale.
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Scott Godzyk, Agent, Manchester, NH
Wed Aug 25, 2010
A simple check on teh deed would have told you who the owners were, checking the deed is one of the first duties of the short sale listing agent. Without every owners signature, your contract was not even valid never mind having a chance to be approved by the bank.

the bank is under no obligation to accept a short sale and can foreclose at anytime. At this point you need to get your deposit back and start checking to see if teh bank bought the home back at foreclosure and when they put it back on teh market as bank owned. If it was sold to another buyer, investor etc, you may be out of luck. You should have an attorney review all of your paperwork to see if there is any recourse.

Please see my blog for tips and advice on short sales
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