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We have run into a few people who I am sure put the house on the market as a short sale, with the intention of stalling. They have a renter in the house, and a short sale offer will often delay the foreclosure date, allowing them to collect rent longer. Or if they are still living in the house themselves, they can continue to stay there rent free. It does happen. If they CAN get a short sale offer that makes sense, they may follow through, but they also may just drag their feet to make the process last as long as possible. If the house is vacant, I can't think of any reason for trying a short sale with no intention of follow through.
I also agree that the guarantee "the bank will respond quickly" is a pretty bold statement to make, since banks are pretty well known for being very slow to respond on short sales.
However, as for having contacted the bank prior to receiving an offer, most of the time the bank won't even talk to you until you do have an offer, so that is pretty normal. The agent might have done 100 short sales with Bank of America before, but if this short sale is with Wells Fargo, they have to learn the process almost from scratch again.
So it sounds like the agent is having a few issues, but it is a complicated process that NO agent has down 100% at this point, no matter what they tell you.
We have run into a few people who I am sure put the house on the market as a short sale, with the intention of stalling.... if they are still living in the house themselves, they can continue to stay there rent free.
That's what I thought in passing, as the sellers do still live in the house. I'm sure no one wants to be surprised by having law enforcement show up at their door to evict them out of the house, but it can be a long time before that really happens and who doesn't want to live somewhere comfortable for free for a few months.
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I also agree that the guarantee "the bank will respond quickly" is a pretty bold statement to make, since banks are pretty well known for being very slow to respond on short sales.
My guess is the LA is lying from day 1 thinking I'll be naive enough to just take his word if he repeats it often enough. However, would any realtor take on a listing to help someone stall.... maybe the realtor is a friend of the sellers.
I figure I'll either revoke my offer or just let it expire on it's own in a few days. If they are serious about the sell, then they'd contact me (thru my Buyer agent). If not, then they never wanted to sell the house anyway.
There are people who will game the short sale system. Stupid government made the mortgage and forgiveness act of 2007 to forgive debt owe on short sale.
While I belive the majority of short sellers are in financial distress, there are probably 10-20% that will game the system.
Prime example is one of my former neighbors. They stopped paying on their mortgage over 3 years ago. Yes 3 years of rent free. They finally listed their home as a short sale this past April. They moved out finally in May of this year. It's so obvious in Florida you can check court records of everything. These homeowners had the first foreclosure notice all the way back in Sept 2007.
As they listed their home as a short sell, they immediately rented the house to some stranger. I am sure they just collected rent because they just used the rent money collected to pay for their own rent on their new rented property. At the same time, these people still ride in their leased Mercedes and BMW and send their kids to private school.
So yes, their are people completely taking advantage of the system these days.
And the sad part, their short sale finally completed after 8 months and we met them at a social event and they bragged they got their "house sold". I said you didn't get your house sold. They banks forgave them on the debt because you threaten bankruptcy twice in the past year (also on the public websites). They said they didn't give a crap because "everyone is doing it" and they have financial hardship. I said financial hardship isn't sending your 2 kids to a private school costing 17K a year.
Very sad parents can afford to drive luxury cars and send kids to private school and game the short sale system.
And the real kicker is they are in the mortgage business. They know they will be able to get an FHA loan in a couple of years....thanks to Uncle Sam letting all these short sellers buy again in a very short amount of time instead of waiting the full 5-7 years.
On Day 20, I finally got a signed offer from Sellers thru the Listing Agent, agreeing to my initial offer price. Then it took another 4 days to get a P&S proposal from their attorney and after some revisions by my attorney, I plan to sign it in the next day or 2.
Weird thing is, the P&S Proposal looks like it was used for another Buyer who would've closed the deal last month (around the date of the OH). If this is the case, then the sellers attorney would've applied for SS approval once before. Now, why did the Listing Agent not mention this upfront, even when asked by myself at the OH and by my Buyer Agent later?
Wouldn't this be a piece of positive news in that they have the SS package ready to go... why hide it?
It is possible the initial Buyer was simply tired of waiting for the bank to answer and walked. Maybe the bank said 'no' before, and they want to apply again (using my offer this time) and see if they get another answer from the bank?
...It is possible the initial Buyer was simply tired of waiting for the bank to answer and walked. Maybe the bank said 'no' before, and they want to apply again (using my offer this time) and see if they get another answer from the bank?
Last year, in May, I began the process of buying a Short-Sale home. The home was listed for $190,000.00. I made the offer for the full amount, as the home was worth it to me, location, amenities, etc. The offer was submitted. After Wells countered, and drove the price up another $5000.00, then agreed to $2500.00 on my counter offer, I began the process of buying the home for $192,000.00.
For the next 5 months, I jumped through numerous hoops with the Realtors and Wells Fargo. Every time I was about to close, SOMETHING would come up, requiring yet another extension and the associated paperwork, more things to be fixed (with ME paying for it), etc. In the end, I had paid for the VA Appraisal (as a Veteran, despite the Contract language that the SELLER pays for the Appraisal), which oddly came back at $210,000.00. I also paid for the Septic Inspection (and nearly paid for septic repairs), and while I was TDY in July, my Realtor paid $400.00 to have some boards fixed on the roof-line where the Termite Report (that I paid for) indicated wood-rot. In addition, I now had the Utilities in MY name, as Wells Fargo had them turned off, and the landscaping around the home was dying due to the Irrigation System being off! It would have cost me about $5000.00 to replace all of that if I had allowed it to die. This was now the 4th extension of closing.
In the end, at extension number six, I finally DID close on the house, which is located at 5729 S Calle Sedillos, Hereford, AZ 85615, on August 23rd. I signed the Closing Documents at the Fry Blvd Pioneer Title Office in Sierra Vista, AZ.
The following day, I was to return to Pioneer for funding and to get my keys. That next morning, my Realtor called and told me not to bother going into town, as Wells Fargo had foreclosed on the owner. I was shocked! After several calls to Freddy Mac, Wells Fargo Home Mortgage in Sierra Vista, Wells Fargo Foreclosure Department, and the AZ Attorney Generals Office, I got the Foreclosure turned around. By this time, my locked rate of 4.5% had expired. The current rates that morning were 3.75%. When I received the call from Wells Fargo Home Mortgage to come back in and lock in the rate, I was told that it would be re-locked at 4.5%, but that they would pay for the extension of the lock. Seriously??!! The locked rate had EXPIRED due to Wells Fargo and the Sellers Realtor playing around, dragging their feet, and Wells Fargo actually foreclosing on the property I had JUST BOUGHT! I had ALREADY closed on this house once! The rate should have been re-written at 3.75%, period! Wells Fargo vehemently refused to lock the rate at 3.75%, giving me several excuses why they couldn't. In the end, I told them to stick the house up their collective butts and I lost everything I put into the house, amounting to nearly $1000.00. The house is currently back on the market for $220,000.00. I wound up buying another place just up the street from this house.. and financed through another Mortgage Company.
While I belive the majority of short sellers are in financial distress, there are probably 10-20% that will game the system.
Much more than 10-20%.
I read a report back in 2009 that at the time 28% of defaults were strategic defaults.
They did some analysis on all those who have quit paying their mortgages at the time, and how many of them kept up their car payments, credit card bills, phone and utilities and other obligations. In other words, the only thing they stopped paying was their mortgage. I think this number is higher now.
In Florida there are so many gaming this it is unreal.
I know of one short seller stalling the system because they are buying time to close on a house they are purchasing which is a short sale as well. Yes, they are short selling their house and they are using their brother or sister to help the buy another short sale house. They need time to make that happen so they intentionally stall the sale of theirs.
One house I walked into in Miami, another short sale situation. I did some investigations just to see if there may be liens on the property and guess what I found, the owner had declared bankcruptcy. I told the listing agent this and she had no clue. I told her the seller cannot legally sell it, it is now subject to bankcruptcy court approval, good luck...
Oh another short sale, the listing agent was the owner short selling. Property was listed at 299K. He told me he has been through the process with the bank and knows exactly how much the bank would accept. When I inquire about the amount, he told me he would tell me if I strike a deal with him to buy all his crappy furniture (which I have no use for) for 30K off the side.
Unfortunately, for every legit person in an unfortunate situation, there is another one scamming off it.
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