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Short Sale...Dirty Dealings?

Posted by jiggreen (My Page) on
Wed, May 26, 10 at 8:52

Hi! I will try to make this as brief as possible, but it's going to be tough!!

My husband and I are trying to purchase a short sale property, but I believe that there is some fraud going on involving this property. The house has been listed (off and on) for the past 4 months as a "short sale" at the bargain price of $104,900. Other homes in the neighborhood have sold between 140k and 170k. It is in excellent condition and is extremely underpriced. Here's where the situation gets pretty wonky. The real estate agent works for a small (unknown) company. When our agent contacted her a couple of weeks, she told her that there was a contract already in on the property, but they are taking backup contracts (and that there were no backup contracts already). We decided that we wanted to take the chance that the first contract would fall through, so on May 21st we put an offer in on the property for cash, at full list price, with no contingencies. My realtor's cover letter requested that the listing agent respond with the status of the sale/first contract and if there were any other backup contracts before ours. The realtor responded only with this message:

"Date: Friday, May 21, 2010, 1:18 PM

Hello
I received the offer you wrote on ####### Road. Thank you very much. I'll be in touch.
Mindy"

She answered none of the questions my realtor had asked of her, and has not yet contacted my realtor. In researching the listing history of this house, my agent discovered that the house had been listed on and off since February. On May 11 the house was taken off of MLS and relisted 20k higher. Several hours later, it was put back on at orignal 104,900k price. That same day, it was once again taken off MLS and relisted 20k higher. The next day it was taken off and put back down to 104,900. Coincidentally, May 11 was the same day that Bank of America sent their appraiser out to appraise the house for the short sale. Additionally, when we originally inquired about this property, we were told that it was under contract, and that the contract was 2 months into the short sale process, with no other backup contracts. The MLS now shows a (new) contract date of May 11.

Last night I looked on the MLS for the listing and couldn't find it. After a little bit of sleuthing, I discovered that the listing was removed on May 22, ONE DAY after our offer was submitted to the agent.

I know there is something quite fishy going on here. I'm thinking that possibly this no-name little real estate company has an investor (or group of investors) trying to purchase this home at a rock bottom price? And that potentially they are going to turn right around and sell it for 25-50k more...instant profit, if they can get BofA to agree to the short sale price? (and then rip Bank of America off!) And that possibly everytime they get a backup offer, they pull the house off the market in order to buy more time for the short sale process? Does this seem like a plausible (and illegal!) scenario?

I would just walk away from this whole convoluted mess, but this house is perfect for us. It is close enough to our current house that my daughter's life would not be affected too much by the move, and that is very important to me. I want this house!!!!!!!!!!!

Sorry for the length of this posting...I wanted to try to detail the issue. What, if anything can we do to find out what is really going on with this property? And would we have any recourse?

I would be grateful for any feedback.

Thanks!


Follow-Up Postings:

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RE: Short Sale...Dirty Dealings?

I would talk to a real estate attorney; especially if you are that convicted about getting the house!
Good Luck!


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RE: Short Sale...Dirty Dealings?

Unfortunately this sound par for the course for a short sale.


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RE: Short Sale...Dirty Dealings?

If you don't want the back and forth, delays, poor communication, lack of information etc - then I would stay away from short sales and bank owned properties. These are all par for the course, especially if a large institution is involved.


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RE: Short Sale...Dirty Dealings?

IF you honestly feel there is something fishy going on you have two options. One is to contact Bank of America directly and tell them what you know and what you suspect and deal with it from there OR walk away and find something else.
Sometimes the left hand doesn't know what the right is doing till someone steps forwards and points out the obvious!


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RE: Short Sale...Dirty Dealings?

Sounds like the business of a typical short sale to me also. There is no guarantee that the house will even sell in this range. You may wait 4 or 5 months to find out the bank won't even accept the "underpriced" full price offer.

I have yet to have a buyer/client close on a short sale. Most of my buyers find something else before we even have an answer from the bank on the short sale. The last short sale fell thru after 7 months because the homeowner filed bankruptsy. (end of short sale) Keep looking and forget you submitted the offer. IF it comes back to you, then be happy, but I wouldnt count on it.


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RE: Short Sale...Dirty Dealings?

"The last short sale fell thru after 7 months because the homeowner filed bankruptsy. (end of short sale)"

The bank will now foreclose (bankruptcy can only delay it briefly) and the place will be REO.

At least then you only have to deal with the bank without the owner being involved.

It still takes a long time though.

Banks have never been good at disposing of REO, and with the flood of foreclosures it has only gotten worse.

An attorney is the best person to have dealing on your behalf with banks on REO.

The banks pull fewer games and at least answer the phone.


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RE: Short Sale...Dirty Dealings?

Loving this house would be like being in love with Jesse James. It's only going to end in heartache.

I just bought a house after 3+ months of searching with cash-in-hand and after having 3 contracts on homes.

One was a short-sale (the bank ended up accepting a lower offer with inspection and finance contingencies simply because it was "the first offer they came across in the stack on the desk". I was heartbroken (and still am, to tell you the truth because I LOVED that house and it was $50k LESS than the one I ended up buying).

The second was a Fannie Mae REO that I put an offer in on...waited 2 weeks, then was told we had a "multiple offer situation" and to provide "Highest and best". 3 days later I was told we had the contract, but despite verbal acceptance 4 weeks then passed without a signed contract. We withdrew our offer after the fourth week.

I'm sure that some short sales end in happiness, but I haven't ever heard that story. Good luck!


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RE: Short Sale...Dirty Dealings?

Thanks for the responses. I know the number one rule in dealing w/ short sales and foreclosure is to not fall in love with the house and be prepared to walk away. Unfortunately I can't help but mentally decorating the house and picturing myself enjoying the beautiful yard and view :(
I am going to sit tight and wait it out a little bit, but continue to look around for something else (preferably NOT a short sale!!) Luckily, we are not in a position where we have to move, our own home is not even on the market yet...I want to wait to list it until we have a signed contract and settlement date. (I hate being in limbo, and couldn't abide the thought of being "in between" homes!)
Thank you all for the responses, I will try to emotionally disassociate myself from this house.

:) Jeana


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RE: Short Sale...Dirty Dealings?

Doesn't sound like anything funny is going on to me. And if an investor does buy it and turn around and sell it for more (not likely, since the market will barely support it at the lower price, which is why it's going through the short sale hassle to begin with), who cares? Are you REALLY concerned that BofA is going to get the short-shrift? I'm not. LOL

The other agent isn't going to invest alot of time and energy in your offer (or even responding to your requests for info) since you are in a backup position. She's going to wait to see what happens with the first offer, which will take months.

I also can't figure out why, in this market, you would be looking for a house when your's isn't even for sale yet. Have you started prepping your house for sale? Are you prepared to be the opposite of being "in between" homes -- having to pay two mortgages? Can you qualify for a mortgage on the new house without a sale on your first house? Many sellers won't take a contingency offer because it's taking a long time to sell these days, and if they do, it's with big kickout clauses to protect themselves...

Good luck with it all!


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RE: Short Sale...Dirty Dealings?

Xine,

I'm not too concerned about BofA, although dishonesty and not playing fair doesn't sit well with me. What I am concerned about is being a pawn in someone else's game. And if there is something dishonest going on with the first contract, I would like it to be declined by the bank. The home is wayyyyyyy underpriced, suspicously underporiced.........nothing in the neighborhood has sold for less than $140,000 (not even the towhomes one street over). And this home is in far nicer condition, on a larger lot, and newer than most of the others. I am prepared to up my offer to the bank, I just want a fair shake at it. I honestly don't believe that the agent/broker ever really intended to sell it on the MLS, I think everything has possibly been pre-arranged w/ the seller, including possibly cash on the side. (the seller purchased it as an 80/20 and HAD a second mortgage, which has mysteriously disappeared...she has been in dire financial straights and there was no way she could have paid that off on her own) I think the house might just be on the MLS to put a show on for the bank. Being encouraged (by the listing agent) to put in a backup offer is not fair play if this is all just a pre-arranged investor game.

As for my financial housing situation...My current house is prepped and ready for sale, I just won't put it on the market until I have another house to go to. (I have 2 large dogs and a cat and being put in the position to have to find a rental that will want my menagerie does not seem feasible) My current home has no mortgage, and the new home is to be a cash purchase...so no mortgages are involved on either side of my housing equation.


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RE: Short Sale...Dirty Dealings?

"I'm not too concerned about BofA, although dishonesty and not playing fair doesn't sit well with me."

The only metric in the adult world is legal or illegal behavior.

"Playing fair" is in the eye of the beholder.

"What I am concerned about is being a pawn in someone else's game."

By making an offer you have elected to play in "someone else's game."
There are a number of issues the bank will consider, many of them private to the bank.

Things like PMI to make up some of the loss come into play, but only for a foreclosure.
Unless the bank negotiates a deal with the PMI insurer to share the loss from a short sale.

The drawn out process for short sales and foreclosures only serves to further depress the value of the asset by limiting the available buyers.

I have purchased both short sales and REO.
In both types the foot dragging and inability to make a timely decision cost the bank extra money.
Even investors have their limits.
I forced a further reduction in the price of an REO after the bank allowed damage to occur by dragging their feet on completely winterizing an unheated house.

An early freeze damaged the DWV system.
They had turned off the supply and drained the lines (not well though) but neglected all the drain traps.

It is not an activity for the faint of heart or impatient (and the bank sets the schedule with very limited opportunities to move them along).



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