Can Bank get out of a Short Sale contract?

jjaazzy

LoanSafe Member
#1
We signed the contract to purchase an "Approved Short Sale" and agreed to the price listed on the Real Estate listing, we figured that was the "approved price" the realtor told us it's Approved and we should be able to close in 3 weeks. Easy... Right? NOOOO! Well as you guess we are on day #84. When our mortgage company wanted to arrange for inspection. The appointment was cancelled as the bank needed to do theirs first, fine. That was completed and then we heard nothing for 4-5 weeks. Then we heard the 2nd Mortgage company approved the sale. Great! Now we hear the 1st mortgage holder, BOA wants to do another inspection. For what reason would they need a 2nd inspection/ appraisal? Real estate is picking up in this area. But they had not been able to sell this house for the past year and dropped the price several times and the house is not getting any better sitting there. They have extended our close by date on the contract to almost another month. Today we are at day #84. Can anyone speculate what is going on? Can they get out of this contract?
 

Kenupstate

LoanSafe Member
#2
There is no reason to believe Bank of America approved the deal.If they had they would not need to be doing an inspection now or more likely it was an appraisal.Just because the realtor said it was approved means nothing,someone at the bank may have said it looks good and should be approved and the realtor took that to mean it was ok.This is very common for short sales,sometimes they go for 6 months before any answer.
 

JustSharon

LoanSafe Member
#3
jjaazzy:

Sorry you're going through this. Banks drag their feet like crazy in a short sale deal. I have yet to figure out whether it is just incompetence or they have some other agenda. Don't be surprised if the BOA changes the deal at the very last minute, like adding conditions or deed restrictions, etc., etc. Watch out for this at the closing. Take your time and read all the paperwork. They may sneak something in that wasn't in your original contract.

Also, realtors lie, exaggerate, and are incompetent also. It is entirely possible that the realtor "misunderstood" what BOA told them -- if anything.

I tried to buy a short sale a few of years ago. The listing realtor did everything possible to delay the deal -- starting with not having keys to the house and failing to show up for appointments. I had never before heard of a realtor who didn't answer her phone or return phone calls. Constantly "mail box full." Couldn't get in touch with her even by calling the realtor's main office. Our own realtor got us into the house anyhow. We decided to put in a full price offer -- all cash, but put a very short time by which the bank could accept it. We didn't want to be held up too long waiting for approval. I told our own realtor that something was very wrong with the listing realtor's behavior and that I suspected something illegal. As it turned out, I was right. The listing realtor put in her own bid and got hers approved while holding ours out. So she bought the house. She did very little to the house and listed it for much, much more than she bought it for. Meanwhile, the market tanked. Four years later and she still hasn't sold it. All this time, she's been paying a mortgage, insurance, taxes and utilities. Oh, and I think the agency she was with got rid of her. Ah, karma!

If you manage to actually close this deal, congratulations! BOA can get out of the contract by dragging the whole thing out until you finally give up. I assume that you have a drop dead date in your contract. If so, you can get out of it if you want to. If you've got the stomach for it and the deal is that good, then hang in there.

Good luck
 

OverandDone

LoanSafe Member
#4
We put in a bid on a short sale for full price and have been waiting several months. I think the bank would rather foreclose because then they get all the money instead of just part of it. I mean how hard is it to say yes or no? We are pretty much about ready to walk away from it. It seems like a big waste of our time.
 

driftwood

LoanSafe Member
#5
I agree with JustSharon on this... we started looking for a home back in Oct and made a couple of offers on preapproved short sale homes. If the listing agent is telling the home is already approved don't take their work for it. Some sellers are using the short sale as a negotiating and/or stalling tactic with their lender some are definitely not approved ahead of time. One case in particular we made the first offer on a home even before the listing agent published the listing. That was back in Oct. The listing agent and seller claimed to have a lawyer involved already negotiating with the bank we even agree to pay half the lawyer's fee in our offer. The home is STILL showing as pending and we haven't heard zip from the seller except to have updated prequal letter and down payment funds verification. There were several other short sales where I contacted the selling agent about a property on day 1 of listing and the agent dodged talking to me almost as if they really didnt want to sell the place. So while I cannot say for sure what they were up to, I would suggest never trusting what a selling agent tells you about a short sale.
 

jjaazzy

LoanSafe Member
#6
Thank you Kenupstate, justsharon, overandone and driftwood, for your input.

Justsharon, serves her/him right, Karma.......well delivered.

Several mentioned the fact they are doing an appraisal. Well they already did one back in Febuary now they want another, what for? When we scheduled ours it cost 595.00 so now they will be out this additional money. I didn't understand the need for the first one but figured it had to do with paperwork, but two?

Realtor says they can't get out of the deal or raise the price.

Justsharon; Don't be surprised if the BOA changes the deal at the very last minute, like adding conditions or deed restrictions, etc., etc. Watch out for this at the closing. Take your time and read all the paperwork. They may sneak something in that wasn't in your original contract...... Can you give me an example of what to look out for.

driftwood; If the listing agent is telling the home is already approved don't take their work for it....... So how do you find out?
I really didn't know what "Approval" meant.... It could have several meanings. I looked it up on google and found an article that says that they (bank)had an offer for this price, price and deal was approved but the deal fell through for whatever reason. I then found other info that said the seller (person who purchased the home and is loosing it) will agree to that price. It is a loaded statement.
Realtor says that there is a negotiator assigned to the deal that is an Independent that is not bank, realtor, seller or buyer associated. They are requesting the 2nd appraisal. My thoughts are maybe something is missing on the first appraisal???
Agent says she has closed deals with the rep at the bank and that she is confident it will go though... but other statements she sounded not so confident.

Also original contract had a close by date and when we asked about that date that is approaching, we were told the bank push it up 1 month. Should we consider this to be THE DATE? Again we have no proof that this happened, we didn't resign a contract to the new date. How can you go in and make changes to a contract without an agreement? Do we have a contract? What does this contract paper mean anyway? Thank you all for your input if anything I gather some intel and get to vent a bit.
 

JustSharon

LoanSafe Member
#7
Justsharon; Don't be surprised if the BOA changes the deal at the very last minute, like adding conditions or deed restrictions, etc., etc. Watch out for this at the closing. Take your time and read all the paperwork. They may sneak something in that wasn't in your original contract...... Can you give me an example of what to look out for.
Well, I am aware of one case where the bank included last-minute language in the deed that the buyer could not sell the house or finance/refinance for 6 months after the sale. Also, that the house had to be owner-occupied (could not be rented), but I don't remember for how long. The explanation from the (totally clueless) realtor was "oh that bank always does it that way." Most people probably don't even read the deed at closing and might not catch the change. So if you are not expecting something like this, it could really mess things up for you.

Since I was aware of this situation, I put language in my bid/contract that said I would not accept such conditions. The bank actually accepted my bid on that property (or so I was told) verbally. Since it was long past my drop dead date, I told them to do just that. So I don't know what (if any) written acceptance I would have received.

As for the date in the contract: In my opinion, if the contract is going to be changed, both parties have to agree. That's what makes a contract a contract, right? Just because the bank is delaying the closing, doesn't mean you have to agree -- unless of course you want to.
 

jjaazzy

LoanSafe Member
#8
Thanks justSharon, I don't know why they would care what I do with the property after they sell it and are finished with the property but we are looking for this to be a forever type home. But definitely thanks for the heads up to look for things like that, they should not be there and you never know what life throws at you and you should not be boxed in. Yea, this whole process really is..... weird. Wish I knew the inside scoop. I have a friend that has a family member that started their journey about 1 month before we did and they have a closing date set for this month, april . So If this new date they mentioned is true, then it went on schedule with theirs.
 

driftwood

LoanSafe Member
#9
Thanks justSharon, I don't know why they would care what I do with the property after they sell it and are finished with the property but we are looking for this to be a forever type home. But definitely thanks for the heads up to look for things like that, they should not be there and you never know what life throws at you and you should not be boxed in. Yea, this whole process really is..... weird. Wish I knew the inside scoop. I have a friend that has a family member that started their journey about 1 month before we did and they have a closing date set for this month, april . So If this new date they mentioned is true, then it went on schedule with theirs.
Generally speaking when a lender is placing those conditions as part of the SS they are doing so to prevent the current owner from gaining anything from the SS. I acquired an investment property from a SS about 18 months ago and the bank required so many additional conditions, none of them preventing me from renting the property but all of them intended to ensure I wouldn't be renting it back to the current occupant.
 

jjaazzy

LoanSafe Member
#10
We put in a bid on a short sale for full price and have been waiting several months. I think the bank would rather foreclose because then they get all the money instead of just part of it. I mean how hard is it to say yes or no? We are pretty much about ready to walk away from it. It seems like a big waste of our time.
So what happens to your contract if they decide to go to foreclosure, and what does that paper means anyway if they are moving dates and in your case look like they are going to ignore the whole thing anyway?
Well in my case we heard from the realtor, said that the process is taking longer cause they had to start over (? lost it? IDK) said that 2nd mortgage has agreed and that 1st will do so this month. She sounds optimistic said the process is being handled by a 3rd party that is not the bank or seller. I have a friend who's sister purchased 1 month before us and is closing in a week or so. So if that is any indication of our time line then the May date is probably good.
 

jjaazzy

LoanSafe Member
#11
Update for those who are going through this and are trying to get the gist of how this all comes together. I learned that the bank has to hire a Negotiator. They are the ones that look at the appraisals, and all paperwork to determine the price for the home. Each time a Negotiator is assigned they have 120 or 125 days (I have heard both) to close the deal, if they don't a new negotiator is assigned and the process starts all over again. So In my case I responded to a listing that had just reduced the price advertised as an "approved" price and gave a full price offer. Unfortunately it was in the last few days of that negotiator and so it got re-assigned a negotiator and the process started all over again and they rejected our offer and raised the price of the home 35% higher. I am on day 105, they don't have much time left to get this deal approved otherwise we start all over again. ..... here we go again.. or not!
 

Lshaw

LoanSafe Member
#12
Update for those who are going through this and are trying to get the gist of how this all comes together. I learned that the bank has to hire a Negotiator. They are the ones that look at the appraisals, and all paperwork to determine the price for the home. Each time a Negotiator is assigned they have 120 or 125 days (I have heard both) to close the deal, if they don't a new negotiator is assigned and the process starts all over again. So In my case I responded to a listing that had just reduced the price advertised as an "approved" price and gave a full price offer. Unfortunately it was in the last few days of that negotiator and so it got re-assigned a negotiator and the process started all over again and they rejected our offer and raised the price of the home 35% higher. I am on day 105, they don't have much time left to get this deal approved otherwise we start all over again. ..... here we go again.. or not!

Out of curiosity, what ended up happening here?