foreclosure/ short sale

5 Replies

There is a beautiful home thats been in the foreclosure process for years.  I called the title company and got the notice of default as well as some other information.  They owe back taxes, and there are other liens on the property.  There are for sale signs out front showing its listed with a local realtor.   I called my realtor to find out more information about it, but she directed me to the listing agent to work with since it was a conflict of interest since her best friend was one of the lien holders.

When I called about it, the listing agent said that they are waiting for it to go into a short sale and that they already have a buyer for it.

Does this mean nobody else can bid on it?  Has anybody dealt with a similar situation and have some answers?

Originally posted by @Amanda M Laird :

There is a beautiful home thats been in the foreclosure process for years.  I called the title company and got the notice of default as well as some other information.  They owe back taxes, and there are other liens on the property.  There are for sale signs out front showing its listed with a local realtor.   I called my realtor to find out more information about it, but she directed me to the listing agent to work with since it was a conflict of interest since her best friend was one of the lien holders.

When I called about it, the listing agent said that they are waiting for it to go into a short sale and that they already have a buyer for it.

Does this mean nobody else can bid on it?  Has anybody dealt with a similar situation and have some answers?

 A short sale has to be approved by the lender. If the offer has been submitted it can take 6 months for the lender to decide. If the market is going up the lender may adjust the numbers up. If the market is going down the lender will speed up the process to mitigate loss (sometimes). Submitting an offer on a property that already has a short sale offer to the lender will drive the price up. It may even make the lender think there is demand for the property and they might reject all short sale offers. It's a bank. They are irrational. You never know.

The seller is willing to sell the house.
But they need the approval of their lender to sell it for less than they owe the bank.

Until the house is under contract, you can express your interest your interest and make your offer and the listing agent should pass it on to the seller.

Hope it helps

Originally posted by @Mike M. :
Originally posted by @Amanda M Laird:

There is a beautiful home thats been in the foreclosure process for years.  I called the title company and got the notice of default as well as some other information.  They owe back taxes, and there are other liens on the property.  There are for sale signs out front showing its listed with a local realtor.   I called my realtor to find out more information about it, but she directed me to the listing agent to work with since it was a conflict of interest since her best friend was one of the lien holders.

When I called about it, the listing agent said that they are waiting for it to go into a short sale and that they already have a buyer for it.

Does this mean nobody else can bid on it?  Has anybody dealt with a similar situation and have some answers?

 A short sale has to be approved by the lender. If the offer has been submitted it can take 6 months for the lender to decide. If the market is going up the lender may adjust the numbers up. If the market is going down the lender will speed up the process to mitigate loss (sometimes). Submitting an offer on a property that already has a short sale offer to the lender will drive the price up. It may even make the lender think there is demand for the property and they might reject all short sale offers. It's a bank. They are irrational. You never know.

 I'm not so sure the banks are irrational but what do I know...

There is nothing to "Bid" on until/unless it goes to public auction so, no, you can't bid on it. If it's under contract, I suppose you could make a backup offer but that backup offer doesn't go to the lender for review/approval unless the existing offer is no longer in consideration.

Technically, while someone might say it can take up to six months, by Federal statute, the lender is required to decision any short sale offer within 30 days. That said, it is common for buyers/sellers/agents (All rational parties) to misinterpret or disregard requirements of the lender for a short sale review/approval. As an example, seller usually has to complete a full short sale package to include YTD paystubs (Assuming they are employed) and well, they usually don't provide one or, they'll require proof of funds from buyer showing they  have the capacity to purchase and well, sometimes the agent provides a copy of earnest money instead. The list goes on...All of this can delay the short sale review process beyond 30 days but if it's a substantially complete package, all lenders are required to decision within 30 days.

Originally posted by @Ron S. :
Originally posted by @Mike M.:
Originally posted by @Amanda M Laird:

There is a beautiful home thats been in the foreclosure process for years.  I called the title company and got the notice of default as well as some other information.  They owe back taxes, and there are other liens on the property.  There are for sale signs out front showing its listed with a local realtor.   I called my realtor to find out more information about it, but she directed me to the listing agent to work with since it was a conflict of interest since her best friend was one of the lien holders.

When I called about it, the listing agent said that they are waiting for it to go into a short sale and that they already have a buyer for it.

Does this mean nobody else can bid on it?  Has anybody dealt with a similar situation and have some answers?

 A short sale has to be approved by the lender. If the offer has been submitted it can take 6 months for the lender to decide. If the market is going up the lender may adjust the numbers up. If the market is going down the lender will speed up the process to mitigate loss (sometimes). Submitting an offer on a property that already has a short sale offer to the lender will drive the price up. It may even make the lender think there is demand for the property and they might reject all short sale offers. It's a bank. They are irrational. You never know.

 I'm not so sure the banks are irrational but what do I know...

There is nothing to "Bid" on until/unless it goes to public auction so, no, you can't bid on it. If it's under contract, I suppose you could make a backup offer but that backup offer doesn't go to the lender for review/approval unless the existing offer is no longer in consideration.

Technically, while someone might say it can take up to six months, by Federal statute, the lender is required to decision any short sale offer within 30 days. That said, it is common for buyers/sellers/agents (All rational parties) to misinterpret or disregard requirements of the lender for a short sale review/approval. As an example, seller usually has to complete a full short sale package to include YTD paystubs (Assuming they are employed) and well, they usually don't provide one or, they'll require proof of funds from buyer showing they  have the capacity to purchase and well, sometimes the agent provides a copy of earnest money instead. The list goes on...All of this can delay the short sale review process beyond 30 days but if it's a substantially complete package, all lenders are required to decision within 30 days.

 I did short sale negotiations and foreclosure bailout for years and it my considered opinion that banks are irrational. ;-)

One I remember was a drug house. I made an offer with all of the photos, comps and documentation for a cash purchase at the then current value. They said no. Fair enough. It was about 80% of the amount owed. The missing windows and walls and graffiti throughout must have been mistaken for artistic enhancements of the property since there wasn't any other way to justify a higher number. We went back and forth for a year. It stayed in foreclosure that entire time never going to sale. I went through four different negotiators at the bank over the year because the negotiators kept getting "reassigned" and simply disappeared into the great behemoth called "the bank". After about a year, low and behold, they accepted the same offer I started with. They never took it to foreclosure, which they had the right to do, they were not getting paid, they were paying the property taxes and insurance and they had a liability on the books. I made a ton of money doing those but you have to be in for the "long play". There is no real rhyme or reason as to which will be accepted. 

(Having been a lender, I know that the bank's decisions are made on things like VA, FHA or conventional, if it was a purchase loan or a refi, homestead, quotas for the negotiators, pressure from the FED, incentives for the negotiators, loan modifications, bankruptcies, lawsuits, robo-signing, MERS, bank's availability of funds, vacant management positions and on and on. But, all of that is "unknowable" regarding a particular property and makes a particular property anybody's guess as to how it will turn out.)

Originally posted by @Mike M. :
Originally posted by @Ron S.:
Originally posted by @Mike M.:
Originally posted by @Amanda M Laird:

There is a beautiful home thats been in the foreclosure process for years.  I called the title company and got the notice of default as well as some other information.  They owe back taxes, and there are other liens on the property.  There are for sale signs out front showing its listed with a local realtor.   I called my realtor to find out more information about it, but she directed me to the listing agent to work with since it was a conflict of interest since her best friend was one of the lien holders.

When I called about it, the listing agent said that they are waiting for it to go into a short sale and that they already have a buyer for it.

Does this mean nobody else can bid on it?  Has anybody dealt with a similar situation and have some answers?

 A short sale has to be approved by the lender. If the offer has been submitted it can take 6 months for the lender to decide. If the market is going up the lender may adjust the numbers up. If the market is going down the lender will speed up the process to mitigate loss (sometimes). Submitting an offer on a property that already has a short sale offer to the lender will drive the price up. It may even make the lender think there is demand for the property and they might reject all short sale offers. It's a bank. They are irrational. You never know.

 I'm not so sure the banks are irrational but what do I know...

There is nothing to "Bid" on until/unless it goes to public auction so, no, you can't bid on it. If it's under contract, I suppose you could make a backup offer but that backup offer doesn't go to the lender for review/approval unless the existing offer is no longer in consideration.

Technically, while someone might say it can take up to six months, by Federal statute, the lender is required to decision any short sale offer within 30 days. That said, it is common for buyers/sellers/agents (All rational parties) to misinterpret or disregard requirements of the lender for a short sale review/approval. As an example, seller usually has to complete a full short sale package to include YTD paystubs (Assuming they are employed) and well, they usually don't provide one or, they'll require proof of funds from buyer showing they  have the capacity to purchase and well, sometimes the agent provides a copy of earnest money instead. The list goes on...All of this can delay the short sale review process beyond 30 days but if it's a substantially complete package, all lenders are required to decision within 30 days.

 I did short sale negotiations and foreclosure bailout for years and it my considered opinion that banks are irrational. ;-)

One I remember was a drug house. I made an offer with all of the photos, comps and documentation for a cash purchase at the then current value. They said no. Fair enough. It was about 80% of the amount owed. The missing windows and walls and graffiti throughout must have been mistaken for artistic enhancements of the property since there wasn't any other way to justify a higher number. We went back and forth for a year. It stayed in foreclosure that entire time never going to sale. I went through four different negotiators at the bank over the year because the negotiators kept getting "reassigned" and simply disappeared into the great behemoth called "the bank". After about a year, low and behold, they accepted the same offer I started with. They never took it to foreclosure, which they had the right to do, they were not getting paid, they were paying the property taxes and insurance and they had a liability on the books. I made a ton of money doing those but you have to be in for the "long play". There is no real rhyme or reason as to which will be accepted. 

(Having been a lender, I know that the bank's decisions are made on things like VA, FHA or conventional, if it was a purchase loan or a refi, homestead, quotas for the negotiators, pressure from the FED, incentives for the negotiators, loan modifications, bankruptcies, lawsuits, robo-signing, MERS, bank's availability of funds, vacant management positions and on and on. But, all of that is "unknowable" regarding a particular property and makes a particular property anybody's guess as to how it will turn out.)

 No disagreement with you Mike that it was that way...not supposed to be that way today. It's not that way in my experience...but acknowledge that its only my experience I'm going off of. That said, all of the things you mention, while valid, are things of yesteryear.

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