Q: We are currently in the process of buying a short sale in Cape Coral, Fla. We placed the bid and after 10 weeks our agent said the bank accepted the bid but it needed $5,000 more for the second lien.
OK, we offered that the next day. However, today the agent called and said we now must pay the full asking price, which is another $35,000.
This is the best part: The home is listed by an agency that the seller works for (he is also a real estate agent), so basically the seller is the listing agent’s co-worker. I am at the point of walking away. Any suggestions?
A: As you probably know by now, my position is that short-sale buyers should essentially always be at the ready to walk away unless and until they have the seller’s bank’s approval — on terms that work for both buyer and seller — in hand. In your situation, though, there are some facts that suggest it might not quite be time to bail — not just yet, anyway.
There are a couple of mysteries about your situation. First, do you have your own agent? If you are working with the listing agent, then of course you’ll have a lot of concern and suspicion about what you’re being told, because of the agent’s tight personal relationship with the seller.
If not, then your agent can and should be much more aggressive in getting to the bottom of where these demands for additional dollars are coming from.
The other mystery is how you’re receiving news of these demands. You are being asked for more money, but you can’t tell whether it’s the agent or the bank that needs the extra cash. There’s only one way to resolve this matter: Get the bank’s written response to the seller’s short-sale application and your offer.
Generally, the bank will issue a response that either accepts or rejects the short-sale terms that have been proposed to them, or responds with an effective counteroffer requesting more money in terms of the listing price, more money from the seller (a seller’s contribution, which is normally requested in situations where the seller actually has cash in the bank or elsewhere), or some other change in price or terms.
You need to see that document.
It could be that the bank has asked for the seller to make a contribution and that the seller doesn’t want to play ball, so he’s hoping you’ll come up with it. In my experience, when that happens, and the buyer agrees to raise her offer, the bank will still come back asking for a seller contribution, because it wants the seller to put his skin in the game, given that he has the cash to do so.
Or, it could be that the bank has simply rejected the seller’s application for short-sale approval, and the seller and listing agent’s repeated requests for more cash from you are being made in an effort to get the bank to finally say "yes."
The problem with that is that you could say yes to the extra $35,000, as you did to the extra $5,000, and still hear a "no" when the bank sees these increased numbers, because no one knows exactly what number will actually hit the bank’s bottom line.
Finally, it is possible the bank is the one making these repeated requests for more money. But the long and the short of it is that you have no way of knowing whether you’re being nickeled-and-dimed by a shady seller or squeezed for more dough by the bank itself unless and until you actually see the letter from the bank, if one exists.
So that’s my suggestion: Get the letter from the bank. Then you’ll know from whence all these demands come. If you have your own agent, ask her to get it for you. If not, and you’re not getting anywhere with the listing agent, you might need to talk with his or her (and the seller’s) managing broker, to express your concern about funny business and get all the goings-on on this transaction out in the open.