Foreclosure After Getting Short Sale Under Contract?

Question

Hello all,

Brand new, but I have been browsing this site for awhile now and am always amazed by the great info and expertise available here.

I am in the process of making an offer on a property that is available via short sale. Price is right, extremely strong market, etc. All good, right?

However, the property is scheduled to be auctioned at Sheriff's sale on March 10th. I'm hoping I can pull enough cash together for a nice quick closing, but if I fail to do so, is there any way that having the property under contract can delay the Sheriff's sale? There are obviously a lot a factors in play here, but if anyone has any advice, I'd love to hear it.

Wayne Brooks · Answer

@Cody Hannum I assume the owner has listed it as a short sale, and is looking at offers other than yours. The "bank" didn't open it up for offers, as the owner still owns it, and the bank doesn't look at offers, only whichever executed purchase agreement the seller submits. And of course whatever listing price the agent put on it is irrelevant in determining what price the bank will agree to. They'll do a BPO and be looking for something close to current condition FMV.

Cody Hannum · Answer

So I just wanted to update this thread. The average homebuyer always says "short sales are a nightmare and it takes forever to get an answer from the bank." Of course, I thought as a real estate "pro" (and I use that loosely) I would have no problem in telling the bank what was what and getting a deal done. Wrong. I was able to work with the attorney to postpone the sheriff's sale. In doing so, the bank realized that the property was highly desirable, and decided to make the property available for multiple offers. That was mid February. They are still accepting offers, the property is still active in the MLS. At a certain point, I have to believe their end goal is still sheriff's sale, as they have many cash offers over list price, from what I hear. The reason I think this is because, like Steve Babiak mentioned earlier in the thread, along with postponement there have been a ton of new fees added on, upping the payoff (from what I hear) to a number that will never even be close to met by buyers bidding based on list price. Hope that makes sense. If I am wrong on anything, let me know. If anyone has any creative ideas, let me know. Thanks.

Cody Hannum · Answer

@Raymond B. No, it is in the Beaver area. Although I am a believer that value can be found in almost any market, there are very few areas inside the New Castle city limits I would be interested in. The surrounding townships, however, are a different story....

Raymond B. · Answer

@Cody Hannum, Is the Property in New Castle, Pa? If it is, be careful. I would only make a purchase on the North Hill, or the Upper East Side of that city. Raymond

Steve Babiak · Answer

@Cody Hannum - the attorney for the bank just wants to see that the bank gets paid, with a last resort of seizing the real estate that served as collateral. Now, the loan backer could have reached the point where they want the arrears to be caught up or else they proceed to foreclose; this happens because in PA there can be quite a few postponements and delays, and the sheriff sale rules are such that if there is a postponement already in place then a second postponement can only be made by a court order from a judge - otherwise any other postponement leads to the case being stayed and that then puts the lender into a position where the sale has to be re-advertised and lots of additional fees end up getting tacked on. So the lender might not be willing due to this. The lender's attorney will tell you what the circumstances are.

Wendell De Guzman · Answer

Sure @Cody Hannum. Text me first though because I get a ton of phone calls from prospective buyers.

Cody Hannum · Answer

Wendell, This is very helpful. Any advice you can provide me would be awesome. Would you mind if I contacted you directly should I come up with any specific questions?

Wendell De Guzman · Answer

@Steve Babiak is right. Contact the attorney and see what he can do. I have the exact same situation with one house I am acquiring. The Sheriff sale is Feb 14 but I was able to delay it by submitting the shortsale packet to the attorney. I submitted the offer last Friday, Feb. 7.

Cody Hannum · Answer

Guys, Thanks for the replies. Lot of great info here. Will pursue the deal and post follow-ups. Thanks again.

Steve Babiak · Answer

Contact the attorney listed in the sheriff notice, and explain to them what is happening. They will tell you what you will have to do to postpone.