First Time Homebuyer: Am I being scammed?

**Machiavelli999** · 10-06-2010, 11:32 AM

So, I am a first time home buyer trying to purchase a property in South San Jose. The property is a short sale and I have been waiting for it since May.

Besides the fact that it has almost been 5 months of waiting, I also became aware recently that the guy I am trying to buy it from still has people living in this condo I am trying to get (He says they are family who know that they will have to move out soon).

Also, I thought that the short sale process was handled better now and should not take this long.

The seller has been more or less responsive. I have my real estate agent call him up every couple weeks and he has some new update each time. Recently he told us that the bank agreed to his cash contribution but not the final price. (As part of our agreement, he agreed to pitch in some cash to get the final price to where the bank wants it.) But I don't understand how the bank could agree to JUST his cash contribution. His cash contribution is meaningless without the total price.

He also recently told us that the bank asked him if I, the buyer, could close by the end of October. Seems like a good update. Seem like the bank is about to take action. But nothing happens. So, it's these type of cryptic updates that have me worried.

I am trying to think of a motive for him to delay/prevent this short sale from going through. Perhaps he doesn't want to sell right now. Perhaps he is collecting rent from his "family" member that lives in the condo now.

My parents and my real estate agent all tell me that I should have patience and am being a bit paranoid.

So, my question to you guys is am I? Have you seen people try to delay and delay their short sales from going through? Is there anyway for me to check on the status of the short sale at the bank?

It is a very good deal and I don't want to drop it. In fact, I have been looking for other properties these past 5 months but everything else pales in comparison to what I got if the short sale goes through.

Anyway, any advice would be appreciated. Thanks.

**Chrisopher Moltisanti** · 10-06-2010, 12:07 PM

Originally Posted by Machiavelli999

So, I am a first time home buyer trying to purchase a property in South San Jose. -Sorry, don't know "the way". Little joke there...

The property is a short sale and I have been waiting for it since May. -This isn't a long time. This is an average time to wait.

Besides the fact that it has almost been 5 months of waiting, I also became aware recently that the guy I am trying to buy it from still has people living in this condo I am trying to get -Removed? the last word was cut off.

(He says they are family who know that they will have to move out soon). -Don't believe it.

Also, I thought that the short sale process was handled better now and should not take this long. -This is an average length. Some take as long as ten months. Depends on the bank, the Asset Manager's attitudes on any given day, his boss's attitude if the paperwork was filled out correctly and by correctly I mean ALL the i's dotted and t's crossed. Just to name just a few forces behind this.

The seller has been more or less responsive. I have my real estate agent call him up every couple weeks and he has some new update each time. -Well that's good. This means the bank is responding to his agent's repeated phone calls.

But I don't understand how the bank could agree to JUST his cash contribution. His cash contribution is meaningless without the total price. -It's only meaningless to the buyer and the seller. What banks do isn't supposed to make sense to consumers.

He also recently told us that the bank asked him if I, the buyer, could close by the end of October. Seems like a good update. -Can you close by the end of October and what did you tell the listing agent?

Seems like the bank is about to take action. But nothing happens. So, it's these type of cryptic updates that have me worried. -I know. You're not alone. The banks do this on purpose.

I am trying to think of a motive for him to delay/prevent this short sale from going through. Perhaps he doesn't want to sell right now. Perhaps he is collecting rent from his "family" member that lives in the condo now. -It's possible, you may be right but I think it's in his best interest now to follow through. And unless he hits the Power Ball, will the gears at the bank stop running. Ya see, he's already started the conveyor belt: claiming he's in financial dire straits and the bank confirming this and agreeing to a Short Sale. Once this horse starts trotting, it's difficult to make him stop.

My parents and my real estate agent all tell me that I should have patience and am being a bit paranoid. -They're right.

Have you seen people try to delay and delay their short sales from going through? No, not me but because in my opinion, again, why would they? The seller has a way out of being underwater and dealing with a money pit of a house they'll never recoup their investment in unless they remain (in my opinion) in said money pit for another ten years. Why ten? Because, again, in my opinion, it's gonna take that long for this freakin economy to turn around for homeowners to at least break even come time to sell.

Is there anyway for me to check on the status of the short sale at the bank? -No. The bank's Asset Manager's secretary only deals directly with the listing agent. And sporadically as you've seen. Consider yourself lucky they've given you as much information as they have thus far.

It is a very good deal and I don't want to drop it. -You probably won't have to.

In fact, I have been looking for other properties these past 5 months but everything else pales in comparison to what I got if the short sale goes through. -Well, good luck to you and just be patient. The banks are controlling this situation.

Greg may have more to add, sit tight maybe he'll respond.
CM

**JLNorthOC** · 10-06-2010, 06:05 PM

well since you have a Realtor representing you you should at least trust the Realtor you chose to know if this was a scam or not. Sometimes short sales can be tough. Just make sure the person doing the negotiation with the bank knows what they are doing.

**Machiavelli999** · 10-06-2010, 06:54 PM

Thanks for the help. I guess I'll wait a little more...

**Chrisopher Moltisanti** · 10-07-2010, 03:07 AM

Tj's right. I forgot about the bank's wanting even more from the seller.

Maybe the seller doesn't have the extra cash the bank is demanding. Since he's underwater and probably in financial dire straits, he simply doesn't have it. This'll be the end of that deal if the bank sticks to it's guns. If you want it bad enough (and the bank is hoping you do), and I'm not sure but perhaps you or the seller could borrow the extra they want. I'm not certain this can be done because of lien issues, but then, this deal is a short sale, so the bank maaaaaaay not even question where the extra came from, but it's a long shot.

**kalebj** · 10-07-2010, 06:53 AM

Originally Posted by JLNorthOC

well since you have a Realtor representing you you should at least trust the Realtor you chose to know if this was a scam or not. Sometimes short sales can be tough. Just make sure the person doing the negotiation with the bank knows what they are doing.

yes i agree with this, you should make sure the person doing the negotiation with bank knows whats he doing

**bouchermark654** · 10-12-2010, 10:36 AM

Excellent site, keep up the good work

**Greg** · 10-12-2010, 11:09 AM

Reasons why this deal might die.

1. The bank does an appraisal and realises the condo is worth more than your offer and demand a higher price.

2. The seller refuses to sign the promissory note from their bank which requires the seller to pay the balance back in the future.

3. There is a second mortgage. You can check up on this one.

4. The seller realizes they have nothing to gain from the short sale and walks away.

5. The bank forecloses on the property while you are buying it. You loose in this scenario.

Have your agent do a CMA on the condo to see if the price is realistic. A lot of short sales have teaser low prices which never go anywhere. If the CMA shows the condo to be worth more then your offer then don't expect your offer to go through.

**First Time Home Buyers** · 10-13-2010, 11:18 PM

Short Sales Suck!

Welcome to the "New Market Norm".

I tell my clients to be ready to wait 6 months on any short sale offers and to not know if it will EVER be approved.

If you want it, you gotta wait and keep your agent on top of the Listing Agent to make sure things are getting done correctly.

**Adam Benedict** · 10-14-2010, 06:48 PM

I would say absolutely not. Unfortunately the short sale market is such that this sort of thing takes place all the time. I currently practice real estate in Minnesota and I have had a number of deals that have taken over a year to pull together. I know that the updates can get frustrating and sometimes if feels like nothing is getting done, but one thing I would check into is to find out if the selling side agent has an attorney that handles all of his deals. The reason for this is that the attorney's know the legal jargon and can deal with the idiotic negotiators that we run into on a daily basis.

Best wishes on this deal, I hope it goes through sooner than later for you!