Are we waiting around for nothing, or will the bank accept our offer on their short sale property?

Question

We offered asking price on the short sale property. They took our offer and only ours to the bank. The house was listed as sale pending. That was the second week in June, over 10 weeks ago. In the mean time one of the banks that holds the note on the house excepted our offer, while the second bank countered offered a significant amount more (25K). We countered offered with our original offer. That was 3 weeks ago and we still have not heard anything. We feel like a pair of chumps, just waiting around for nothing while hundreds of homes around us are being bought and sold no problem. We really love this house but are SO afraid that we could spend another month or two waiting just to find out that the second bank decided to bail. Here is my question... should we wait, are things looking good for us, is this normal (or at least not too abnormal)? And my final question is, since two banks own the note, do they both have to agree to let the property go into foreclosure, or can one decided forcing the other to follow?

Answer 1

The time frame you describe is perfectly normal for a short sale. Some can take 6-8 months. Your real estate agent should have advised you that short sales can take a long time, are unpredictable, and many simply fail.

It does get more complicated when two lenders are involved. Typically, the holder of the second gets almost nothing...because the second trust is worthless. For instance, say the property sold 2 years ago for $400,000. Let's say there was a $325,000 first mortgage and a $75,000 second mortgage. Now the house is worth $300,000. You make an offer for $300,000. In this case, the first mortgage lender might be willing to accept $300,000 for the $325,000 mortgage. However, the second mortgage holder is completely wiped out. Sometimes, to expedite the process, it makes sense to offer the second mortgage holder almost a token sum--$1,000 or so--to remove the second. Discuss the strategies with your real estate agent.

At this point, the lenders are in the driver's seat. All you can do is wait. That, and have your agent make sure that the listing agent stays in regular contact with the lenders.

Good luck.

Answer 2

My dear, you need to understand the issues involved with short sales.  The owner of the property can list it for sale at whatever price they choose.  Meanwhile, you have one or two lenders who are owed MORE than the asking price.  No offer will be approved without the agreement of the lender(s) involved.

It would appear, from what you have posted, that the primary mortgage holder might be in agreement, but the secondary mortgage holder thinks otherwise.

As an example, if the property is worth $300K on the market, and you have a primary mortgage holder with $280K on a mortgage and a secondary with $45K outstanding, it's apparent that the seller is upside down at least $25K.

Before agreement is reached, both lenders consult and decide which will take the greater loss.

The fact that the sellers accepted your offer means nothing, unless both lenders involved agree to swallow a loss and let you proceed to closing.

Answer 3

Even if you put an acceptance deadline on your offer, have your buyer’s agent submit a formal written withdrawal of your offer so you can move on with your search.

By countering with your original offer, you told the banks you weren’t willing to negotiate so they likely are done with you. Basically they said no to it once, and you didn’t budge. If you’re not willing to pay more, that’s fine, but you have to accept that the sale isn’t going to happen and walk away.

It’s important to realize the owning banks don’t have any say in the list price. The owner picks that and then hopes their lenders will agree to it. Offering list doesn’t guarantee anything.

Answer 4

dont you worry banks don't want a foreclosure on their books. so know they will do the short sale.

Answer 5

Educated guess, this is a no-go.

Your sale is not pending, you do not have an accepted offer yet.    If they did not accept it in 2.5 months they are not very likely to unless you are talking about a high $$ sale where 25k is really nothing.   If 25k is a very small percentage of the sale the first bank may pay it to get it done.