First Time Buyer, Problems Acquiring a Short Sale House

**nowwhatnapster** · 08-31-2011, 10:58 AM

Hi, I have been house hunting with my fiancee for the last 6 months. We've put offers in on 3 houses thus far. First house got to the home inspection and it found insane amounts of problems and sellers wouldn't negotiate. We walked away, the house is still on the market.

Second house, slightly above our price range, we weren't able to get the buyers to come down in price enough, about a $14,000 gap between our offer and theirs. We are hopeful the sellers will reconsider as time passes. More time that passes the more I have saved and the higher I can offer.

The last house is a short sale. It was listed for several months at a much higher price and then recently reduced some 30% and listed as a short sale. We visited the house liked it but before we even got to put an offer on the sellers pulled it from the market. Our realtor contacted them and the sellers said the elderly woman living there fell and was bed ridden so they couldn't show the house etc etc. We asked if they were still interested in offers and they said yes. So we put an offer in, slightly below asking. They rejected. We countered with a full price offer. They accepted. We signed a binder, however, disclosures had not been given to us yet, so we marked that on the binder.

At this point we were told the offer had been submitted to the bank. We asked our realtor to confirm this and find out exactly when they submitted it. My realtor contacts me today saying that they never submitted the offer and they are re-listing the house on the market. Sure enough they did re-list the house. Were a little baffled at this point. My realtor is trying to get the disclosures from the sellers today so we can sign them and return them. Apparently that is the only thing preventing an offer being submitted to the bank.

This is all very sketchy to me. Sellers saying an elderly person fell so they pull the house. Now they are re-listing it after they already have a FULL PRICE offer, WITH a Pre-Approval letter stating 20% down in cash... What the hell!

Are people just being greedy? Do they have the right to do that?

Another thing the seller said when they explained they were re-listing is that they don't want to make any repairs and they are re-listing it AS-IS. I have no problem with that, but I still want to do my home inspection for my own sake. Lord knows what can turn up in a home inspection. If the inspection is horribly bad (like our first house we put an offer on) that's something I need to know. I don't care if the seller wants to fix it or not, I still want to know for my piece of mind and give me an out if the repairs are going to be beyond my budget.

Anyways, I'm frustrated and trying to learn more about my situation so I can act accordingly. I like this house and the second house i bid on. I would be perfectly happy in either house. Side note, I have no pressure what-so-ever to move.

Thank you for your time.

**Greg** · 09-01-2011, 08:03 AM

You are dealing with sellers who are in deep financial trouble and can not be expected to make rational decisions.

They may have re-listed because when the house came off the market it was probably still legally listed for sale with the original company so any offers would have to go through them.

If you are already frustrated at this early stage of a short sale then you might want to consider looking for something else. Short sales can take forever and are even more frustrating once the sellers lender gets involved.

Just because the seller signed a contract/binder with you doesn't really mean anything. The seller cannot sell the house at the list price without their lenders approval and if their lender does not want to work with your contract they can work with another one.

Your binder only means you have have something to sue the sellers with but we already know they don't have anything to sue for.

good luck

**nowwhatnapster** · 09-01-2011, 09:15 AM

Greg,

Thank you for shedding some light on the subject. It was become more apparent day by day that the sellers had no obligation to do anything with our offer.

We've decided we like the house enough to deal with a short sale, however, we are definitely still looking for other houses. We've been looking for so long we pretty much know the minute we find something that works for us.

I don't have high hopes for acquiring this particular house, especially after all that has happened. I'm wish they would stop delaying putting our offer in with the bank, but I know what they are trying to do. They want others to put offers on the house knowing they have ours to play with. They're trying to make a bidding war.

I wish there were some nifty tricks I could pull out of my sleeves to get the ball rolling.

It's too bad I'm not a lawyer. I would love shake a legal fist at these sellers to speed up the short-sale process.

**JC RE Investor** · 09-01-2011, 10:45 AM

I agree with Greg,

Short sales can get you some great deals if all the dots are lined up and connected but they can also be a very tedious and annoying process especially if you are not familiar with how the process works.

My suggestion is, if you really love this house and want to live there, then follow your course and go after what you want, however keep in mind that, you're not just dealing with a distraught seller, but you are also dealing with the lender. These banks generally play ball at their own pace, if they play at all. Which means in the end you might end up wasting a lot of time and effort.

There are many great deals out there, especially these days. Follow up with this house but in the meanwhile keep looking for others.

Who knows, you might find a bigger better deal somewhere else with less aggravation.....

JC

**Greg** · 09-02-2011, 05:38 AM

just make sure you can get out of the short sale deal if you find another house. don't sign anything that takes away your right to walk away. we actually have a short sale addendum which gives the buyer the right to walk away at any time prior to the seller's bank's approval of the sale.

also, don't spend any money on the short sale. some agents will insist you get the home inspection and appraisal done before the seller's bank's approval. don't do it because the whole deal could die for some reason outside of your control.