Short Sale Purchase - How much longer?

Question

Hello All,
          
          I've been reading alot of posts on this forum and find much of the information very helpful to someone who new to the realm of real estate purchasing/investing.  
          
          Wanted to get some input on the timeframe of purchasing a Short Sale property
          
          -I placed a bid on a short sale property in Chino Hills, CA, that fell out of escrow 3 times - each time the price was lowered.
          -Per the listing agent, the short sale has been approved by BofA/Countrywide
          -Offer was accepted on June 9, 2009
          -I went into escrow on a SFR on June 12, 2009
          -Since i've gone into escrow, i've recieved the title report and had an appraisal performed 
          - Listing agent stated that BPO was also performed
          - I've submited proof of funds, loan approval, and signed the seller disclosure documents
          
          Whenever I ask my buyer agent  what the status is (twice a week), I'm always hearing that "Everything on our side is complete, we are waiting for the bank" or "It could be any day now".  This has been ongoing for about a month and a half - quite frankly, my patience is wearing thin. One would figure that the banks want to get these houses off their books.
          
          Can anyone give any input on how long Countrywide/BofA typically takes to close a short sale transaction?  Is there anything I can do to escalate/expedite this process?
          
          Any advice/input/feedback would be greatly appreciated
          
          Thanks in advance,
          
          Stephen

David Marasco · Answer

The question to answer is who approved it?  Did the seller/owner approve the purchase contract?  I would get a clear understanding on what exactly was approved and by who.

If no approval has been given by Countrywide then it may serve you just to sit and wait.  Countrywide, at least through my experience as of late, has been EXTREMELY slow in their short sales.  We've been working on one for almost a year and we have FMV offer pending on the table.

Basically, what you'll need to do is decide how bad you want the house.  If it is the house that you are sold on then I would continue to do what you are doing.  Remain in contact with the agent/seller as much as possible.  Also, if you put up a deposit be sure that it is protected should you decide to rescind your offer.  Last thing you want to do is pay for someone else's ineptitude.

Hope this helps

Scott Hubbard · Answer

Justin is right...  Your agent has failed to protect your interests and probably just made you spend money on an appraisal that might need to be reordered.

I doubt it is true that the listing agent had an approval.  BOA will only issue an approval letter in the name of the buyer and these are non-transferable meaning that your name cannot be substituted with prior approval from BoA.  Your agent should have requested a copy of the approval letter issued in your name prior to going to escrow.There have been instances where BOA has issued an approval if this loan was FHA/VA.  Then HUD would issue an approval letter in the name of BOA that can have a buyer to named. If this is the case, then your agent still should not have had you go into escrow til the lender issued an approval letter in your name.  Plus, this would not take 2+ months to get.

Again, I concur with Justin, contact the listing agent to produce the approval letter or threaten to complain to the ADRE.

Justin S. · Answer

It looks like this agent has misled you and/or lied to you.  If the short sale is approved, then it should have been sold to you 30 days after your offer.  BofA/Countrywide shorts take a very long time.  Easily 3-4 months long.   It look like you paid for an appraisal on a deal that may not even close.

Call the listing agent tomorrow and ask for the approval letter if they claimed it is approved.  The BPO would have been done before the approval letter, so either the agent is inexperienced or continues to mislead you.

Jon Holdman · Answer

Has the bank actually approved the sale in writing?  Do you have a copy of a document signed by someone with a title at CW/BOA?  If you just have an approval from the owner, you don't have anything.

One would think banks wanted to get properties off their books, but one would be mistaken.  Besides, short sales aren't on their books anyway.

What's the situation with the seller?  Are they a homeowner who fell on hard times?  Or an investor who's deal didn't work out?  If its the former, you have a shot at eventually getting a deal.  If the latter, I'd look elsewhere.

Do you have earnest money outstanding?  Are you still under a contract?  That is, did you put some deadlines in the contract that have already been passed?  If so, go look for some others.  I just checked the MLS.  A short sale I put an offer on in March is still there.  Checked again, and another I offered at the same time, this one supposedly with an approved short sale, is ALSO still there.