A Tale Of 2 Short Sales

Foreclosures, Short Sales, Tax Foreclosures
1

Here’s a tale of 2 short sales, both of which it appears I mayhave lost out on… wondering what is it that I’m doing wrong…??

I’m a small time investor, I have 3 multifamilies currently. I’ve owned 2 of them for about 20 years. I’m in Massachusetts.

First short sale, it’s listed on MLS. Price is listed for $189K, a duplex. I go directly through the listing broker, and make an all cash, no contingency offer, for $165K, exactly 10% less than the asking price. Listing broker says it’s a good fair offer. I get a signed P&S agreement from the owners, and the broker takes a $500 check deposit from me, and cashes it. Then we sit back and wait, and wait, and wait… about a month later, the bank finally comes back and says a second BPO states the property is worth $195K, and that’s their counteroffer to me. During this time, a second real estate investor comes in, and submits an offer, and the real estate agent takes the offer and submits that to the bank as well. I counteroffer at $170K. After waiting 2 more months, never hearing back from the bank, the real estate agent tells me the bank has decided to pursue the other investors offer. Even though I still have a signed P&S with the owners… I was never done negotiating… What the heck???

Second short sale… Another duplex in NH listed on MLS for $149K. Great price for a relatively newer duplex, that needs no work. I call the listing broker a couple of hours after it was posted on MLS. Listing broker says it’s already under agreement, and they are not accepting any additional offers. I push the matter, and decide to make an offer for $152K, 3K over the listing price, all cash offer, no contingencies. Listing broker says that he won’t even submit the offer to the bank whatsoever. Won’t even tell the bank that an offer has been submitted. Now here, I have the first short sale above, where the listing broker is submitting a second offer to the bank, and the second short sale, where the listing broker says they won’t even mention the offer. The complete opposite of what happened on the first short sale.

Obviously I’m new to short sales, and apparently I’m screwing this up royally… I’m looking for the right way I should have pursued these short sales? Does a listing broker have an obligation to submit all offers to the bank? Can I report them to the Real Estate Board?

Once I have a signed P&S agreement and accepted deposit with the owners, can the bank just ignore that and not even negotiate faithfully with me, and just decide to go with another offer?

I’m having an extremely difficult time finding multifamilies, in a decent area, with any significant cash flow in Mass or Southern NH. I have plenty of cash, fantastic credit… yet I can’t buy anything… months of effort down the drain. Very frustrating. Would love any and all suggestions and feedback.

2

I’ve had similar results when trying to buy short sales. I’ve put in about 8 - 10 all cash, no contingency offers over the past 2 years and have waited sometimes MONTHS with nothing happening. My feelings now are to let the banks choke on them. I do better buying direct from owners.

3

You just described the reason why I hate short sales with a passion. The banks are a bumbling bureacracy that I haven’t the time nor the patience to deal with. Good luck, but there are easier ways to do deals and make money in this business.

4

Hi,

I have done a lot of short sales, however I do not allow the banks (Lenders) more than 30 days, 30 days no answer I'm out of there, it's just not worth the time and tying up my desire to acquire properties because lenders are procrastinating!

Part of the problem is an already listed short sale, lender has already done a BPO and has created a “Retail” mind set, looking for market value or market minus repairs for price, now short sale listings are constantly adjusted by lenders willing to work with legitimate “Hardship Cases”!

Most lenders look for listing agent to “Except all / Submit all” but the lender is by no means obligated to negotiate with you! The lender is entitled to try to get the best money possible for there property! Seller (Family in Distress) signing contract has no bearing on the deal as there instructed to sign and except everything and submit it to there lender, they have no say on what’s excepted or countered as they are cooperating with there lender to get out!

If lender put’s property on market as agreeing to $149k and an offer for $149k is made, “It’s Sold” as that was the amount requested and approved and that was what it sold for, there not going to negotiate or except a higher offer when they have told the “Listing Brokerage” they will except $xxx,xxx.00 for the property!

If you sell one of your properties and except and sign a contract, would you turn around and void the contract knowing you could end up paying attorney’s for litigation let alone plaintiff’s damages and attorney fee’s for $3k ???

Go after REO’s or go after the foreclosure default notice properties before there listed, then your initially in control, you create the hardship package for the in default sellers and if your fair with the lender may have better chances of success!

                 GR