BiggerPockets

Anyone know somebody who wanted to do short sales but couldn't get an agreement together with their lender and ended up in foreclosure?

Yes, My wife. Working with an investor that buys most of a national builders, model homes here in California. The builder closed out a project and handed the three models back to the investor. He bought for 1.2 to 1.4M Current values were under 1M.
Had all cash, and back up cash offers on all properties. Bank took 7 months before any movement was made. In month 9 she closed the first, two weeks later, the buyer calls and said, do you know they foreclosed plan #1 last night?
No one knew anything. Talking to the assigned AM for the file daily, and sometimes, multiple times a day, nothing was ever said about a possible sale date.
After 8 months the first buyer walked. Submitted the 2nd all cash offer same day. Because BPO's were more than 6 months old, new ones had to be ordered. It took more than a month to get the 2nd BPO completed. In the mean time the second did not have an accepted offer on the table, so they foreclosed. It was a classic case of one department not talking to the other, or just how screwed up the banks are.

My wife is not a garbage Realtor!! Did you see this part:

"Talking to the assigned AM for the file daily, and sometimes, multiple times a day, nothing was ever said about a possible sale date."

There is nothing that can be done with an incompetent, over worked, salaried bank employee. My wife thought she had everything worked out, and the deal closing, when an hour into the phone call, the rep says " tomorrow is my birthday, I am taking the rest of the week off and going fishing." After letting him know she needed a name and phone number for someone that will be familiar with the file, he gave her Bob's number. Bob did not exist! This was on a Thursday, It was Tuesday before the concerned banker was available to answer the Phone again. I say let them all foreclose. Nine months talking to banks and re faxing the docs 5 times because, "it did not come through yet" is not worth 2.5 %. work it out, a short sale agent would make more money being a greeter at Walmart. The leads would be great too!

Anyone know somebody who wanted to do short sales but couldn't get an agreement together with their lender and ended up in foreclosure?

Not once in over 60 SS listings.

John - so sorry, not personal at all! I'm not calling your wife a garbage realtor, and I am sure there are instances where its not the realtors fault....all I am saying is that from what I have seen , thats usually why the short falls apart and the bank ends up foreclosing.

There is such a back log of pre foreclosures in Florida, the bank is not eager to take them back and are happier to sort sale them.

I concur that the banks are not eager to foreclose on bad debt. However, I don't know why it's any different than CA. It certainly does seem that FC occur more frequently out there though. Maybe it's just a raw numbers and density thing though.

I have found that if you talk to the lender, you can pretty much stall a FC as long as you want. I may be off base, but based on my own personal experience, it seems that FCs that occur now are the properties that are more or less abandoned (or all communication with the lender has been cut off).

I may be wrong, but that's how it looks from my point of view.

Joshua you've gotten a lot of response that validates different perspectives. Ours is along the same lines as Tommy R's, where we've been able to show them multiple ways how accepting our offer would save them on holding costs, repair costs, in every way it makes sense, and yet because of some strict algorithm the offer falls on deaf ears and they take it back REO.

We've gone as far as tracking past deals that fell through this way, and then following the property through REO to see what/when the final sales price went for so we can use that information to negotiate with those specific banks.

In some cases though, it's just non-sensical that they are allowing the property to go to auction instead of dealing with cash offers...so inevitably if you do enough SS's, not matter how diligent and profficient you are, some will go back to the bank.