How can they do this? (Re: bank-owned; short sales)

DH and I went to look at a house last night listed for $299k. Beautiful house in a really nice gated community (in FL)... it's a short sale which means the bank owns it and the bank will accept an offer less than what is left on the current owner's mortgage so it won't go into foreclosure.

We really got excited about this house until our realtor called us and told us he spoke to the owner after we left (and then did some research himself to confirm) and they owe $375k on the mortgage! They list it for $299k so people will come see it and offer the listing price... then the bank can come back and say give us $340, $360, etc. What a waste of our time... how can they do that?

Re: How can they do this? (Re: bank-owned; short sales)

I dont think they can do that....

Re: How can they do this? (Re: bank-owned; short sales)

I am pretty sure they can do that. We almost went to contract on a short sale and it was a mess. We found out after we put in an offer that it was a short sale and that the bank wanted a certain amount of $ for the house. We would up walking away bc it was seriously a mess (not the house, the situation)

Re: How can they do this? (Re: bank-owned; short sales)

They most definitely can do this. The bank has the final say on how much of a hit they can take.

The same rule for the buyer applies in this short sale scenario as well as any other buying scenario:

Offer what you feel the house is worth.

Re: How can they do this? (Re: bank-owned; short sales)

That's what a short sale is. They list it for what they hope the bank will do a short sale for. The bank doesn't already own the house typically. If they did, it would probably have already went through a foreclosure unless the homeowner did a deed in lieu.

Re: How can they do this? (Re: bank-owned; short sales)

Re: How can they do this? (Re: bank-owned; short sales)

Would you put in an offer? We're not sure what to do.

Re: How can they do this? (Re: bank-owned; short sales)

Re: How can they do this? (Re: bank-owned; short sales)

Yes this happens more then you think. Banks are looking to stop homes into going into forclosure they are not in the home selling business. Some agents put the price real low to get activity, imo if an agent is going to that they should tell you what they owe on the mortgage and tell you it is going to be a short sale.

Re: How can they do this? (Re: bank-owned; short sales)

with short sales they dont have to list what the asking price is ye the buyer can bid lower.. the bank then can say they want more.. so annoying

short sales are a pain in the a$$ I got screwed trying to get a house also.. if that helps

Message edited 2/20/2008 1:13:20 PM.

Re: How can they do this? (Re: bank-owned; short sales)

Re: How can they do this? (Re: bank-owned; short sales)

It may be leagl, but I really don't think it's ethical.

We went to look at a house that was listed for 325k in Levittown. It needed work, but we were going to low ball the guy b/c of the shape of the house. WE offered $315 and the guy turned it down. So we came back with 320 and the bank had to approve it.

Turns out, we didn't know the bank had already started foreclosure procedings and the guy owed more then what the house was listed at.

Lesson leamed.

Re: How can they do this? (Re: bank-owned; short sales)

offer what you are willing to pay. The amount they have left on their loan is not your problem
REAs will list short sales at very low prices hoping that it will draw activity to the listing & that if a serious buyer comes along the bank might really take it. It will usually say in the listing *subject to bank approval*

Re: How can they do this? (Re: bank-owned; short sales)

They absolutely can do that. We put in an offer on a short sale and the bank played the same games with us. I decided not to look at anymore houses that were short sales for this reason. The best part is that the house has been on the market for over a year now, and although they claimed to have multiple contracts on the house, the house isn't going anywhere anytime soon. They'd be better off giving you the house and losing 75K, rather than the house sitting htere and sitting there and them just losing more and more money. My advice is that you should stay away from short sales unless you're willing to play games. Good luclk!

Re: How can they do this? (Re: bank-owned; short sales)

I also have heard that a bank can do basically whatever they want as far as approving a short sale and price.
I've read that you could actually go into contract on a short sale house before the owning bank approves everything. I don't really understand this (as in how this is possible and exactly why it takes so long) but I know that it's a little too risky for my taste!

Re: How can they do this? (Re: bank-owned; short sales)

We put in an offer on a short sale back on 12/4/07. We are still waiting to hear if the bank will accept our offer. We are still looking around at other houses but we're unsure of whether or not to move forward with other properties.

It is the most stressful situation ever. We had to jump on the property, but still, who knows what is going to happen.

Re: How can they do this? (Re: bank-owned; short sales)

You have tons of answers already but I will add my 2 cents because a friend in does these often.

The bank does not want the house since they do not want to be a landlord but they do not want to take too much of a loss. Right now with so many foreclosures, some banks are allegedly taking 50 cents on the dollar i.e., homeowners owes the bank $100,000 but they take $50,000 from the new buyer to get out of the deal.

My friend takes all offers to the bank (after the buyer & homeowner sign) and lets the bank choose who to pursue. This is after getting an appraisal of sorts (called a BPO). His strategy is to present the bank with the HUD 1 for each offer and then show them the realistic price they will get at auction. He works with multiple houses at once so he can get rid of 3 - 10 potential foreclosures for the same bank all at once. He is able to negotiate better pricing that way since the bank may lose $100K on house 1 but only lose $50K on house 2 - 10.

He says the process takes 2 - 4 months though.

So far he has been successful in getting numerous short sales closed with various banks. He works in VA but says that he does short sales nationwide.