Trying to purchase short sale/foreclosure

**nvus1too** · 04-16-2008, 10:18 PM

Hello, I have searched the forums and although I can find answers on situations where someone has purchased both and the good vs bad of their situation. I think my situation is unique and i would like some serious insight if possible.

Almost two months ago, my wife and I were looking at houses on a whelm one Sunday and saw a house in a development which we have always wanted to live in but thought we were still a few years out in making such a purchase since we already owned a home. We saw a house that was listed at $483K and we thought, wow, lets take a look. We knew putting out house on the market right at that time may not have been an option because the market over the last 12 months has seen the value of our home decrease by about $40K because of new construction by my builder directly behind me and the home loan thing of course.

Anyhow, we went into this house since there was an open house, met the listing agent, fell in love with the house and were like, well, we know what to shoot for. The agent then tells us that he really liked us and "told us we could get the house for 100k less. We thought to ourselves immediately, sure you can. Then he goes on to say that he isn't supposed to say anything but the seller could loose their mortgage.

We went home after exchanging contact information and a couple of days later, we got a phone call stating that he talked to the seller and if we were to make an offer of that amount (383K even though the house appraised at 515K). So we began to discuss with him the options of selling our home and in the meantime, we made a contingent offer on the house and the seller accepted our offer which was pretty surprising to us. Our agent, who is also the seller's agent, began the process with us to lease our house. We found someone to lease our house and our agent did paperwork to do a "Lease until Close" for the house we are trying to get. We are actually moving in this Friday.

Honestly, as we get closer to moving in, this whole situation seems a little shady to us. Not in the sense that we are getting money stolen but like that old saying about if it's too good to be true, it usually is. We have asked our agent on repeat occasions over the last couple of weeks, if we have an answer from the bank since it was submitted with our signatures and the sellers signatures a month ago and he keeps saying they are being difficult. I began researching Public Record information from my state's website about the seller and found that a form was submitted on 3/26 by a company who represents the lien holder that this house which we are moving into this Friday will be sold at public auction on 6/27/08 at 10 AM. My agent says that we have nothing to worry about and will hopefully close on this house by the end of May.

I know the seller owes 360K in principal but has 22K in non-payment and fees. Our offer will actually allow the bank to break even on the sale vs spending the money to foreclose on the house and risk getting less than what is owed on the loan to that point.

Any advise would be greatly appreciated.

**Tony Zito** · 04-17-2008, 07:13 AM

Wow! You have a lot going on here!

I would suggest getting an attorney involved. Start with a title attorney doing an abstract for you. This will tell you exactly what is owed and more importantly if there are any tax liens.

There could be issues with the title.

Also understand that in the price you agree to it must pay off the lender, the attorney or foreclosure fees, real estate commissions etc. If not it aint closing!

Good Luck
Tony Zito

**Codythebest** · 04-17-2008, 07:56 AM

And I love your agent who say "she can't tell" stuff from her seller and who knows what she told to her seller about you the buyer.
It's amazing how easy is to destroy the entire Realtors reputation...

Make sure to understand there are a lot of good, honest Real Estate agents out there....

**nvus1too** · 04-17-2008, 09:27 AM

Originally Posted by Codythebest

And I love your agent who say "she can't tell" stuff from her seller and who knows what she told to her seller about you the buyer.
It's amazing how easy is to destroy the entire Realtors reputation...

Make sure to understand there are a lot of good, honest Real Estate agents out there....

Thanks for your reply "Codythebest." I completely agree with you on how a handful of agents can destroy the entire Realtors reputation. We have worked with one great agent on our last three transactions but this agent sold us on the fact that he'd sell or lease our house for free and as much as I respect my previous agent who I consider a friend, I wouldn't ask him to do work for me for free given the situation and how much the resale value of our home fell over the last year which didn't give us a lot of room to work with selling so we just leased it out for two years.

**nvus1too** · 04-17-2008, 09:45 AM

Originally Posted by Tony Zito

Wow! You have a lot going on here!

I would suggest getting an attorney involved. Start with a title attorney doing an abstract for you. This will tell you exactly what is owed and more importantly if there are any tax liens.

There could be issues with the title.

Also understand that in the price you agree to it must pay off the lender, the attorney or foreclosure fees, real estate commissions etc. If not it aint closing!

Good Luck
Tony Zito

Hi Tony thanks for your reply and very useful insight. I know from public information records on this property that there are liens from the Home Owners association, water company and power company all of which the seller agreed to resolve today (4/17) since we are moving into the residence tomorrow. I found the Notice of Trustee's Sale paperwork in local Public Records online and it clearly states from the company who is handling the future date foreclosure, "Failure to pay when due the following amounts which are now in arrears: $22,713.68. The sum owing on the obligatioin secured by the Deed of Trust is: The principal sum of $360,000.00, together with interest as provided in the Note from the 11/1/2007, and such the other costs and fees are provided by statue."
I tried reaching out to the sellers mortgage company yesterday to get some sort of answer as to if our offer will be accepted or declined but they (Loss Mitigation) would not provide me any but the "agent" could provide me information. Every time I go to him, he just tells us that he keeps getting the run around but hopes to have us close on the home by the end of May. The more information I find online, the more I have issues with this entire situation especially after us renting out our home to someone for two years so if this falls through, we cannot move back into our house because we've leased it out and we would have to move out of the new home if it goes into a foreclosure sale and we are outbid by someone. The agent of course, says it won't come to this and the bank would be stupid to turn down our offer because they would break even.
After all we've gone though, we certainly wouldn't work with this agent again and he certainly doesn't represent what our past experinces have been with John L Scott but if we get an attorney at all, I think it would be to file a suit against this entire situation, the $800 we had to pay for a lease that was never marketed because JLS was also selling our house so it was never marketed but when we signed the lease, we used JLS paperwork but the agent said clearly that we weren't going through JLS for the lease on our home but using their legal paperwork then telling us that JLS wants there cut and he's not getting anything, the lease we signed which is a JLS form that's "lease till close" having us only pay $50 a month to live there plus utilities until we close...the list just goes on and on. I feel like the house isn't worth the frustrations at this point but to walk away and we felt at some point that this was a great opportunity to gain instant equity in this sour market, we jumped on it but the shadiness of this has us thinking all of this is illegal and he could loose his license or find himself and JLS in a legal battle of everything that has transpired in the last 45 days.

**nvus1too** · 04-17-2008, 11:14 AM

Just got off the phone with my agent and he says the bank has verbally accepted our offer as of this morning however, I'm not truly beliving it completely so I will wait until that is in writing. I want to say thanks again for the advise guys.

**jron** · 04-18-2008, 05:27 AM

yes it is best to wait till you have hard proof. It is wise to at least be cautious.

**REbuyersgroup** · 04-20-2008, 01:21 PM

Don't be too hard on the agent. Short-Sales take a lot of time, effort and negotiation with the loss mitigation negotiator.

The process kind of goes like this:
1.House is listed for sale. (Usually at market value)
2.Agent lowers the home in a progressive manner until an offer is made.
3.The offer along with all the short-Sale information required by the lender is submitted.
4. Within 2 weeks the bank should have ordered a BPO (Broker Price Opinion) to get an idea of value.
5. This is where things get sketchy.. Entire file goes to either a negotiator or Loss mitigation agent for review. This can take a few weeks depending on how many files they have. Average is 250 from the agents I speak with.
6. The agent should be in touch with these people to ensure the file is moving forward.
7. Negotiator will request a preliminary HUD statement, so they have some idea of what their net is based on the offer.
8. Negotiator will come back with a counter offer and ask to close in 30 days. This is where a good agent comes in to negotiate the final terms.
9. After all terms are accepted an accpetance letter is issued to be presented to the new buyers lender.
10. Close and all is happy!

If you all think this can get done in a few weeks, dream on. EMC Mortgage has their machine running in perfect harmony. Very easy to deal with.

If you add in additional Leins the process is doubled and very complex. We have seen transactions with 3 lenders all fighting for a piece of the pie. Then add in HOA fees. Real headache.

I have had Short Sales completed in 60 days and other in 5 months. You just never know what will happen. No 2 transactions are ever the same.