Home Buying in Chesapeake>Question Details

Houssam, Home Buyer in 23503

short sale issue

Asked by Houssam, 23503 Sun Mar 29, 2009

We put an offer ( $335k , we pay the CC ) on a short sale house ( listing price was $355k). we waited for over 5 weeks expecting a counter offer, only to have our offer REJECTED, without a counter one. The selling agent then INCREASES the listing price to $380k. Can they get away with this without legal consequenses? Had they listed the house for $380k from the beggining we wouldn't consider it and spend the time and effort ( 6 weeks) waitnig for their answer. What legal action can we take?

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This is why I think agents need to work with real estate investors. We submit the first offer to the bank, the bank will order the BPO, acccepted or reject the offer, but at least have opened the file and started on it. We are offering a service to agents and that is getting your short sales that first offer, and getting the bank to look at the offer. Sure we might get a good deal once in a while, but it helps consumers that won't end up waiting 5 weeks for the bank to look at the offer, they can respond much more rapidly because the bank already knows what they want/need to get.
0 votes Thank Flag Link Thu Apr 30, 2009
Last poster is dead on - I am going to encourage you to read the blog below. Your agent should have been educating you and forewarning you of the possibility of this. I am sorry it happened to you, but it is par for the course. Agents sometimes list the property low to get offers; and then to get feedback from the bank. The new list price is probably the price the banks said they'd agree to - now, the listing agent can get a new buyer and tell them (honestly) that the bank has said they will sell for that price. It makes it much easier to get the second contract. It's true - you were used. Don't blame that agent. She works for the seller, and the seller is in trouble. If the bank had approved your offer, I am certain they would have proceeded with the sale. Each bank and each bank's approach to accepting or rejecting offers is different - and the market is constantly changing. You wrote 5 months ago? We don't even go back that far on appraisals anymore if we can avoid it.
0 votes Thank Flag Link Thu Apr 30, 2009
Without reading every response that has been given - I scanned them and the answers have been right on point - the problem with short sales right now is that agents do not know what they are doing! They think that getting a contract is the hard part...that is easy! Banks want a short sale to be seasoned if it is going to be listed at such a low ball price. What most agetns are doing is listing the homes at way below market value pricing and then getting offers slightly higher then submitting them to the bank. The bank wants proof that the home was marketed and an attempt to reach fair market value was reached. The bank will send out an agent to do a Buyers Pricing Opinion once a contract is submitted for approval, and if the numbers do not add up, they will reject the offer and request a higher price. You have to remember, if it makes more sense to foreclose on a property and will generate more revenue to the bank they will simply do that instead. The advantage to a short sale is that you will be getting a discount on a home that should also be in better shape than a foreclosure. A short sale is a regular sale between a buyer and seller - the seller can reject any offer at any time. There are even sales strategies for regular homeowners that list homes at super low prices to get people to bid them up.
0 votes Thank Flag Link Thu Apr 30, 2009
There is nothing wrong with lowall offers and I agree it can start the process with the bank. I am representing a seller right now on one the bank has accepted that I never thought would happen because of how low it was but we just never know. However, this agent specifically knew that the bank would not accept her listing price and told me as much. Her whole goal was to give the seller more time to get his affairs in order, stay in his home and prevent the foreclosure process from beginning. In the meantime my buyer thought she had a valid offer on a home. My concern is that many "real estate agents",are playing games with people's lives.

Nelene Gibbs, Realtor, e-Pro
William E. Wood & Assoc.
mail to: nelene@homesbynelene.com
Web Reference: http://www.nelenegibbs.com
0 votes Thank Flag Link Mon Mar 30, 2009
Dear Houssam,

You got some great answers here already. Perhaps the lender or Pretender lender (servicer) found that there was PMI on the loan(s). 20% of loans have PMI and those loans are much harder to get pushed through because PMI has to agree and often they don't agree. The other thing is if there were two loans, or other liens on the property and the lender or pretender lender felt it's too complicated to get all parties to agree for a short sale. Finally, if the current loan on the property is a refinanced loan (recourse) loan the lender may want a promissory note from the seller because the lender wants the money back.

Stay strong and get a good negotiator to represent you!
Good luck!
0 votes Thank Flag Link Sun Mar 29, 2009
What if the bank did accept the lowball offer? Wouldn't she still be providing a service?

I've made "lowball" offers to start the process with the banks, sometimes they accept, sometimes they don't. But the important thing is they look at the file seriously. It provides a service, if accepted, I buy a house at a fair price, if they deny it, a loss mitigation agent at the bank has processed the file and the agent can do their job and get a better offer on the table.

Stalling a foreclosure while it seems like a good idea only prolongs the pain...it doesn't solve it.
0 votes Thank Flag Link Sun Mar 29, 2009
I am so sorry for you. You have learnd the hard way that what you see is not always what you get. There are also some shady practices going on with short sales. I have one buyer that put in an offer with almost your same situation that was rejected by the bank. When I talked with the listing agent she told me that she had intentionally low balled the listing just to get offers to present to the bank to stall the foreclosure process. She had listed low to buy her sellers more time knowing the bank would not accept the price she had listed. I explained to her that she was dealing with people's lives and that the buyers that were, with good faith, puting in a bid on a home that she knew they had no possibility of getting for the list price. I don't know how some people sleep at night.

Nelene Gibbs, Realtor, e-Pro
William E Wood & Assoc
mail to: nelene@homesbynelene.com
0 votes Thank Flag Link Sun Mar 29, 2009
-Of Course not legal advice, just my experience-
You can't take any legal action. As long as you got your earnest deposit back, you have no recourse. Only once you have an accepted and ratified contract and the sellers/buyers back out do you have any recourse. Right now you have no loss, no case.

That's the fun of the short sale game, or really any purchase for that matter just about.

Sorry for the bad news.
0 votes Thank Flag Link Sun Mar 29, 2009
This is one of the problems with a short sale situation. You have to be patient and realize that the time you invested could result in your offer being rejected. I think that if you find another property that is also a short sale you should keep in mind a couple of things (1) the potential for the offer being rejected, (2) competing offers (since the bank will take all offers during the timeframe you are waiting), (3) negotiating a contract that allows you to pursue other options should something become available before you hear back from the bank.

Don't look at this as your only opportunity, while you may want this as your first choice always keep an eye on the market for another opportunity. Until you have a ratified contract in a short sale situation do not get emotionally invested. Even once you get a ratified contract there is still the inspection and subsequent negotiations. While the property may seem good from the outside there may be serious underlying problems and you may want to void the contract -- again taking you back to square one in your search.

There are great values in short sales but understanding the process and where you stand is the key to succeeding in this type of purchase.
0 votes Thank Flag Link Sun Mar 29, 2009
Its more than likely that after your offer was submitted the seller's lender order either an Appraisal or a BPO to determine the current market value of the home. This is to make sure that if the offer is accepted, they did not take a greater loss than need. BPO and Appraisial can take time to order and be returned to the lender. This is where the 5 weeks probably can from. Based on the information provided by you, it seems that the appraisal came in substantially higher than both your offer and the list price. This could also be the reason for the INCREASE in the listing price. The lender has decided how much they want to net off the transaction. In order to recieve the offers that would achieve this, the list price had to be increased. If you have any more questions you can contact me by email: charleshlewisIII@gmail.com
0 votes Thank Flag Link Sun Mar 29, 2009
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