Buy it now as a short or wait for auction.. (auctions, foreclosure)

[Whereto?]

I saw a house the day it hit the market last October. It was a short sale and we called the listing agent to view and make an offer through him. When he saw the chance of double commission he jumped at it. The house was taken off the market the next day without further viewings. We offered list price. The deal has been dragging on since then (nothing new there!)but would appear to be coming to an end. There is a second lien holder who had been stalling but looks like they're ready to finalize things.

However today I called the title company to query a few things and it turns out that the house is due to be sold at auction in 2 weeks time on the courthouse steps!! I called the realtor to tell him this and he said he already knew but didn't want to alarm me He says this is an automated process and the auction won't go ahead.

I explained my scepticism about this and he said that at the auction, the bank wont accept anything less than what we were going to pay as they know know the market value.

Now the cynic in me says the reason he didn't want to tell me was because he suspects I may have access to the $$ to buy at auction for cash (I do)... thereby loosing his 6%.

So I can either go ahead with the short sale or take my chances on the steps. We have no emotional ties to this house. Our reluctance to buy at the steps was always in relation to clean title but now that that title company has done all their due diligence that looks to be sorted.

Am I missing something, all help/comments welcome

Thanks

[Brandon Hoffman]

The seller committed to you and removed the home from the market. You've kept the home off the market for this long and I assume you're happy with the home and price since you waited this long. Go ahead and buy it and don't gamble on it.

[EZICIT]

Originally Posted by Whereto?

. . . we called the listing agent and made an offer through him. The house was taken off the market the next day. We offered list price. It turns out that the house is due to be sold at auction in 2 weeks time. The realtor said this is an automated process and the auction won't go ahead. He said that at the auction, the bank wont accept anything less than what we were going to pay. I can either go ahead with the short sale or take my chances on the steps. Am I missing something? Thanks

- Short sales are unregulated, so the owner can handle the listing/sale any way they want.
- Unless your deal is formally 'pre-approved' by both lenders, that list price was set between the owner and the Realtor. In other waords "I agree to list my house for $200k". Then you agree to buy it for full price. Then, I (the Property Owner) have to submit the whole thing to the Lender(s) for approval.
- Did the Title Company confirm that the house is, in fact, 'Bank-Owned'?
- Whomever the owner really is, can accept any offer at any time, unless you have a binding contract for sale & purchase.
- On the one hand you seem to think that you do have an executed contract. But then say, 'they' are still offering it for sale (auction).
- Can't be done! That would give you grounds to sue for specific performance!
- There's something wrong here!
- Either your contract has 'escape clauses' in it for the owner. Or your Realtor is either uninformed or being less than candid.
- Find out from the Title Company who the Owner of Record really is.
- Keep in mind that, unless you have fully completed the short sale process, they are not bound to you. So, they could, in fact sell it out from under you.
- If I really wanted the house and had the cash, I'd complete my 'Due Diligence' asap, and register at the auction. If they perform as promised by your Realtor - "No harm-No foul".
- If they try to sell it out from under me, I'd be the first bidder in line.
Hope this helps . . . . .

[rjrcm]

Originally Posted by EZICIT

...
- On the one hand you seem to think that you do have an executed contract. But then say, 'they' are still offering it for sale (auction).
- Can't be done! That would give you grounds to sue for specific performance!
- There's something wrong here!
...

Ezicit, Since the OP mentioned auction at courthouse steps, I think s/he meant that it is scheduled for a foreclosure trustee auction sale. This is not unusual for a short sale. An executed contract will not automatically stop the foreclosure auction sale.

[MovedfromFL]

Isn't the auction price often set at a price that is the balance owed on the loan? (in which case there wouldn't be any willing bidders since the price would most likely be way above market value)

Then would the property go back on market as a foreclosure (and at a new, lower price)?

[marmac]

yes

[HDL]

Someone I know had their home in foreclosure with 2 short sale offers and was led to believe by the bank and their Realtor that since there were offers on the table, the bank wouldn't proceed with the sale. But they did. That was 1 yr ago. It's all a crapshoot. No one really knows what the banks will or will not do, and they're lying if they say they do.

Here is all we do know:
a) Realtors are hungry and of course your closing is important to them as they have spent time and money trying to sell this home. There is nothing wrong with needing a sale.

b) "They didn't tell you about the auction". The person that I spoke about above had their auction date moved probably 6 or 7 times in a 6 mth period. So I can understand why this Realtor chose to keep quiet. Though I don't condone their decision, maybe they felt you couldn't handle this information well from their dealings with you over the past 6 or so mths. It's tough to say when none of here know you or this Realtor.

c) What you offered on the house has absolutely nothing to do with what the house will auction for. Get that idea out of your head. You should go down to the county recorder's office and do a search on the address and find the info on what the owners OWE on the mortgage and the late fees and penalties, etc. It is normal for the bank to BID this amount at auction. Check to see ALL liens that are filed on this home. Since the home is in short sale, that means that the sellers/owners owe more than their mortgage(s). I don't have time to get into all the nuances, as their can be 2nds and HELOC etc. which can be the reason that the home is upside down. The house could be worth $100,000 and the 1st is $80,000 with all the fees and the 2nd is $25,000, so the auction price 'might' be a good deal. If that were the case, you would want to bid $1 over the lender's bid ($80,001) if you were the only other bidder.

But while I was writing this response, MovedfromFL posted short and succint , and there is a great possibilty that you could buy it on 'terms' (i.e. with a mortgage) for less after it is REO. The Realtor telling you that the bank won't accept less than what you offered 6 months ago is ! Prices are down from 6 months ago in most areas and no one knows what amount the banks will accept TODAY! My guess is less, but there are not enough details in your post to know for certain.

Does buying REO screw the Realtor? Yes, unfortunately it does, but you have to do what's best for you financially in the long run. Only you know what that is and how much more of this RE you can take. If you don't get this home, you may have to go through many more months like the prior 6 to find the home of your dreams.

Best wishes in whatever it is that you decide to do !

Originally Posted by MovedfromFL

Isn't the auction price often set at a price that is the balance owed on the loan? (in which case there wouldn't be any willing bidders since the price would most likely be way above market value)

Then would the property go back on market as a foreclosure (and at a new, lower price)?

[MovedfromFL]

I'm watching a short sale now that has been listed for about 1 year. The price has gone from $200k to $129k. The balance owed on the mortgage is $300k.

Get ready to eat it, bank. If you don't accept my cash offer, you are going to incur the foreclosure expense and then have to sell it for even less!

[Norsky1]

Last year in our short sale purchase we went through 3 "scheduled" auctions at the court house. It is an automated process and our auctions got delayed and delayed, then we closed on purchasing this short sale.