My short sale tale | Coastal Real Estate and Lifestyles

A short sale tale

Published January 24th, 2010 in Mortgage/Finance, Sellers, Buyers, Real Estate Industry. by Marian Bennett, Coldwell Banker Tags: short sales.

I got up close and personal with one short sale transaction this past year. The lack of standard procedures can be unsettling and challenging in preparing your clients for what to expect.

Here’s the story…My extremely well qualified and patient buyers submitted an “at market” offer on a short sale listing last Spring. The sellers had two liens on the property – both with the same bank. There were 5 other offers, we were told at the time. After a month, we were informed that our offer was selected and that the bank approval should occur in about a week. One, two, three weeks…nothing in writing. The agent told me they would inform me of updates, but they weren’t coming very regularly. Every week or so, I check in with the listing agent to obtain a status – so I could document my file with something…anything. I believe they were doing the best they could. We then get an Addendum signed by the bank, but the approval was yet to come. My buyers still hang in there.

I learn they have offered the 2nd lien holder a few thousand dollars. Another couple of weeks pass by. We then learn that the first lien would be 100% covered, so it did not need to participate in the short sale. The listing agent would need to now work with the 2nd lien holder to accept a short sale without the first loan involved. While the listing agent and loss mitigators at the bank were negotiating, at least that’s what I think is going on, (maybe the file is just sitting on someone’s desk, I don’t know), my clients change their mind.

By this time, my clients decide that it is not making any sense that an over asking, market value, cash offer is not good enough, on top of the minimal and sometimes conflicting communications that we were receiving. I could not give them any real reason for the delays from the information I was getting. They asked me to cancel the contract in the Fall; they received their small initial deposit back and found another property, where they are currently very happy. As for this short sale property, it appears to have closed as a private sale in November 2009.

4 Responses to “A short sale tale”

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1 Curtis Van Carter Jan 25th, 2010 at 9:50 am

Marian
I forwarded your article to a frustrated client of mine who is having a similar nightmare. They made 3 increasing cash offers; $150,000, $159,000 & $170,000; over the course of two months on a small condo in Sonoma. Their final offer was acceptable by the bank but before formally accepting in writing, ordered another appraisal. Based upon this appraisal, by a HVVC selected appraiser, the bank raised their asking price to the appraisal amount which came in at a ridiculous $242,000.
This condo was originally listed on 4/29/09 at $209,000 and reduced in six price reductions to $259,000 on 5/23/09 and went into escrow on 6/8/09. This bank also was extremely non-responsive to an initial full price offer. It was only after my clients increased their offer to $170,000 on 11/16/09 did the bank do anything, thus ordering the new appraisal in mid December and their re-pricing on January 4, 2010.
Obviously, my clients said no way and are very frustrated by the process. Is there any wonder why so many banks have gotten such bad press lately and is there any doubt they deserve it. I am not pointing out any particular bank but all that your readers need to do is Google Bank of America, Countrywide and short sale nightmares and read a few of the 34,400 results.