Made an offer on a short sale..bank put it in escalated file. What does that mean?

Question

We put an offer on an approved short sale 45 days ago. Apparently both of the banks (1st and 2nd) looked at our offer and put it in an "escalated file".

Does anyone know what that term means and how long does it usually take for an offer to be approved from that point?

Thanks in advance.

Answer 1

I have no idea what an escalated file is either. However, it does sound like a stall tactic. The first answer is probably right on; the lender in the 2nd position is in a horrible spot and is most likely trying to apply what little pressure it can on the lender in the 1st position. If the house goes into foreclosure, it is unlikely the 2nd bank will get anything out of it so I am guessing it is trying to get something out of your short sell offer. If you really want this house you will need some patience waiting for the final approval. However, if your offer did not have an expiration date you may want to send a written notice advising both banks that you will withdraw your offer on a specific date that will fall within the next 90 days, depending on how long you want to wait.

8/21/08-

I am still guessing, but I believe after reading the additional information you provided, the “escalated file” has something to do with the seller and not your offer.

To give you some background info, I work for a homebuilder that is trying to sell some of its land assets through short sells. It has been my experience that banks will take a loss on a short sell if they feel there are no other options.

In the short sell, there two things that are obvious to the seller and the banks: how much principle is owed and how much the buyer is willing to pay. The difference (the loss on the short sale) is the issue that you have no control over. It is very possible that both the seller and/or the banks are not being open and honest with you. This is the issue that I have dealt with and I am sure that the seller in this case is as well, the banks want the seller to take the loss. If this property was in danger of foreclosure, I would bet that the banks would have already have taken your offer and written off the loss. However, in this case, I am sure that both banks believe that the seller has the financial capability to pay the difference on the loan. So your offer is most likely on hold until the seller either commits to repay the difference on the loans or can prove that he/she is unable to pay it.

Answer 2

I will never deal with another short sale as long as i live.  The first and 2nd lenders are competing to see who can bluff the other.  The 2nd is going to be wiped out.  THeir only chance is to refuse to cooperate with the short sale. THen the 1st lender will give them $10,000 to "go away". And you are a pawn in their silly game.

You said in your question "an approved short sale".  You were lied to.  If it was approved, this little game would not be taking place.  The "escalated file" means nothing in plain English or in real estate.

Withdraw your offer tomorrow and see if they banks will come calling in 5 days when they realize you have disappeared./