I'm going to make this as short, but comprehensive as possible. I currently live in NJ, but am moving at the end of the school year to SW FL once our house here closes.

A few weeks ago, I found a property that was listed as a SS, but had been removed from MLS by the listing broker about 2 1/2 yrs ago. I was told it had a pending contract for the entire time period since the MLS contract & that's why it wasn't showing up on regular MLS listings. My agent (BA) took me to see the house when I asked if we could view it, which indicated to me the contract wasn't all that firm. 

After viewing property, I asked BA to call listing agent (LA) to ask if I could submit an offer. I heard him make the call. He told yes, so I submitted a contract the following week. The contract lingered for over a week, w/no word from the LA or seller. BA stated he could get no reply either way, supposedly, even though I subsequently learned, both agents are in the same office, which I think is a key factor in this situation. My contract expired. Being fed up with the entire situation, I contacted the seller personally, only to be told he had the contract, but that LA was supposed to get together w/him to discuss contract & never had, so he was still waiting to hear from LA. In fact, he was very happy to hear from me and is actively engaged in working with me to buy the home, whereas (from what I understand) he just didn't want to deal with the whole issue.

Now, here's where it gets interesting....
I've been in contact with the seller continuously for two weeks now, so I know what is going on from his end, as well as mine. We are both of the opinion there's a scam going on here, just not sure if my agent is involved, too. Here's the real deal on it. LA took the listing, knowing seller is in financial distress and then says to the seller, "Hey, I know a guy I can refer you to, who will buy the property. I've referred several other sellers to him too." Seller meets the guy via LA & signs a contract. LA removes property from MLS as a pending w/contract, instead of leaving it open on MLS for other viewings, offers, etc. This was 2 1/2 yrs ago & still no sale. Since the initial contract, the buyer has re-signed a few contracts with the "buyer" he was set up with - the most recent being a few months ago at a price $200K below what the initial contract was for. During this 2 1/2 yr period, seller lost 80% of his business, closed 4 of his 5 stores, divorced, etc, so to say he was distracted with other things & not really paying attention is putting it mildly. Plus I think he's been emotionally overwhelmed with everything in his life lately & just couldn't deal w/this, too. He built the house & has a strong sentimental attachment to the property.

It seems to both myself and seller that both realtors are dragging their feet on this, so that is why we're not sure if my agent (BA) is involved, too. Plus the BA seems inordinately interested in the conversations between myself and the seller and the information we've since found out from the banks, etc. Also, seems with the time lapse since initial contact, the MLS listing may no longer be active or under contract or that the other offer is no longer valid since both mortgages were in foreclosure and I was told by both banks that foreclosure status voids any previous contracts. We suspect the initial "buyer" was keeping the property under contract to force it into foreclosure so he could get it for a song, along with the help of the LA (who was keeping it off the MLS). Seller and I think they were looking to flip the property so they could both make more money on the deal and it seems this may be something they've done in the past together.

Here are my questions and if I'm not asking the right ones, please let me know and advise.

Who do I go to since both agents are working in the same office and both seem to be dragging their feet on this? Who would you suggest I speak to in order to explain my situation and give both agents a "push" to motivate them to participate, since the BA especially seems to not want to do any work on this and says he has "little involvement" with SS's. Please let me know what my next move should be and if I should go over their heads with this.

Is it true that with both mortgages being in foreclosure status, any previous contracts are null & void? I was told this by both mortgage holders when I spoke to them, but you guys work this business, so I'm asking you since you probably have knowledge, too.

Do I need to hire an attorney to proceed with this process or is the BA supposed to help get this deal done? WHO exactly is supposed to help close this deal and what is their role - how involved are they, how much & what are they responsible for handling to get the sale done? Do they negotiate the terms of the SS for me?  

Knowing the story now, would you recommend I hire an attorney and can they be more instrumental in closing this sale than the realtors? How much should it typically cost in SW FL if anyone knows? 

Seller's haven't paid HOA in 3 yrs, 1 quarter. HOA fees are roughly $16K. I've spoken to HOA. They maintain they want all the money before they will release the lien or they will work out a payment option with someone to pay fees - I got the sense they thought I should pay it. What is typical here? Will they usually negotiate to a portion or waive it entirely just to get a new property owner in?

What programs are available to buyers to help with costs and what determines who is eligible for them? Do I need to apply or is that something that comes with these kinds of deals?

On a contract for sale, does a spouse always have to sign for acceptance of the offer? If not, will the lender accept the offer without the spouses signature or will it bite me in the butt if I don't have it??

I have no problem working as hard as possible to make this happen for my family, but I'm getting really tired of feeling like both the BA & LA are trying to take advantage of someone who doesn't know their way around and would really appreciate your advice and suggestions, since you seem to knowledgable on this topic. I really appreciate any help you can offer me.

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  • Hi Carla,

      have you tried reaching out to the Broker of the Agents?  You and the seller are customers of the Broker and the Agent is just that, an Agent of the Brokers.  You and the seller need to take this first to the Broker and allow them the opportunity to make this right.  If the Broker is not willing to do so then I would certainly escalate this...but I would start there.  Unfortunately most agents are working outside the office these days and the Broker may not have a clue what's going on.  As for the contract, anyone who is on the deed needs to execute the contract and be available to close.    THe HOA will usually negotiate but not all.  There aren't any buyers incentive programs these days.  The only 100% financing that I am aware of are USDA loans and only available in certain areas (Martin County nearest to me).  Let us know how it goes...by the way, what area in SW Fl?

    • Thanks for the info Keri. The property is in Sarasota County. All in all, I think I can get this done. Thus far, everyone except the brokers have been very encouraging and cooperative - well, except for a couple of attorney's who were not the right people I needed to speak to anyway (Thank goodness for small blessings lol). Actually, the rumor I keep hearing from some other sites is that there are supposed to be some buyers incentive programs, but most of the lenders aren't encouraging them. They got the money free and clear from the gov't and want to hold onto it for their own gain. I'll let you all know how things go as we progress. Regards!!

  • I am well versed in short sale flips. It looks like your suspicions are correct. The listing agent is working with the investor buyer to prolong this as long as possible so that the investor can get a great deal. However, they put the seller in risk of being foreclosed upon because they are probably low balling the listing or by prolonging this, the lender will deny all new offers and just foreclose. Usually the listing agent will get paid by the investor or the investor will re-list the property with the agent.

    To answer your questions:

    1. You go to the broker of the listing agent and tell your side of the story. The seller needs to approach the broker as well and tell his side of the story. I tell you this as both agents work in the same office and work for the same broker. You are hoping that the broker either re-assigns this transaction to another agent or takes it over.

    2. What the mortgage holders are saying is that their foreclosure supersedes any contracts between seller and buyer. That is correct. However, you want to persuade the mortgage holders to accept the short sale rather than foreclose on the property.

    3. & 4.  No, you don't need to hire an attorney. The listing agent either handles the short sale negotiations or they give it to a 3rd party to do so. The buyer's agent can only relay information from the listing agent to you. Bryant is absolutely correct when he says the seller should look into legal recourse as it seems the listing agent is not doing their job. Right now, bring this matter up with the listing agent's broker and see what is going on and what resolution the broker provides.

    5. HOAs in California are brutal. I can't convince them to lower their fees in order to release the lien. I don't know how they are in Florida. The HOA wants to be paid. It can be paid by anyone. I shove it onto the buyers, but everything is negotiable.

    6. As a buyer, I ask that the seller's lender pay for everything, no matter what is customary for your area. For example, if it customary for the buyer to pay title insurance, I shove that cost onto the seller. You also should try to come as low as possible on a short sale purchase offer as possible in order to better negotiate with the seller's lender. For example, if they don't pay the 16k HOA fees, yet they accepted your offer which was 20k less than what you were willing to pay, it becomes a wash for you.

    7. The seller's wife needs to sign off any short sale forms if she is on the loan. If she is not on any loans, then it is up to title as to whether they need her to sign off anything. You might want to see if you can approach her as some ex-wives do not want to deal with the ex-husband but are more than happy to work with a mutual third party or if she realizes your struggles. Maybe even bribe her to work with you.

    Good luck

    • Satar, Thank you.

      1) You've confirmed my suspicions, but also reaffirmed my thought on involving the broker directly. I do not trust the listing agent one iota to work this deal without trying to sabotage it so the initial buyer can step in and "salvage" the deal with another, higher offer or some such thing. 

      As far as the seller goes, he is on board with me and fed up with the LA at this point and feels the same way I do about his motives.

      2)I believe the lenders will work with me on this. Both of them sounded encouraged to know of a potential SS when I spoke with them last week and have agreed to set aside the foreclosure providing the contract comes through, which I believe it will.

      3 & 4) When you say "give it to a 3rd party, what type of 3rd party are you referring to specifically? Since I've never handled something like this, I'm not familiar with what other parties may handle this type of thing.

      5) I have a proposal I'm going to make to the HOA for an upcoming mtg and see what they come back to me with, but I think it should be workable. I am willing to pay some of it and may work with the seller or lender to pay the remainder. 

      6) My offer is meeting the listing price, but lower than I had expected to pay, plus the property is worth it. I'm willing to go a little higher if the lenders won't agree to my initial offer. I left myself some "play" room, in the event I needed to, so I feel I'm good there.

      7) I got ahold of the wife today and feel she will work with me and sign the documents for me. She was very kind on the phone and expect to hear back from her tomorrow.

      Thanks again for the advice and suggestions. Carla 

      • 1. Anytime a listing agent says "I have a buyer..." without telling the seller what this buyer will do, then that is a big red flag! At least I tell my sellers what's going on.

        2. They usually will. You just need the seller to find someone to help with the short sale negotiations.

        3 & 4 - Usually a listing agent will conduct the short sale negotiations themselves. If they don't know how or don't want to do it, they usually get another agent/broker to help them or give it to a law firm or title company or whomever is willing to negotiate the short sale for a fee. However, I bet on this short sale, it is a negotiator of the investor buyer who is doing the negotiations.

        5. With the HOA, see how low they are willing to go. Then ask the seller's lender to pay for it and see how the seller's lender will respond.

        6. Listing price means nothing on a short sale. Here is a blog I wrote on how to buy a short sale that maybe can help:  How to buy a short sale

        7. That's great. The major concern I see between ex spouses is that they don't want their financial information be known to the other party. So you might want to let them know that you will keep all info private as you collect the information for whomever is negotiating the short sale.

        Feel free to ask any questions.

        • Satar, First, let me just say thanks again. I may want to call or email you about this if that is ok with you. Let me know...

          1) I also want to let you know that I am the buyer (not the initial buyer of 2 1/2 yrs ago & the one still holding the supposed current contract though). I am working with the seller very closely. He wants to get rid of the house now and I think I've got him engaged in the idea of my buying it because he raised his family there and he wants to see it go to another family. He's really soured on the initial buyer now due to the delay and dishonesty, not to mention the significant loss of $200K on the price.

          What bothers me is that nobody told me or him there was a process to getting a bank approved SS, so we have to start there and hope it flies. The seller also knows he can trust me, as I have been very open with him about every aspect of this since the first stages of it, including my suspicions of the LA being in cahoots with the initial buyer/investor.

          2/3/4) Seller and I are both of the opinion the LA is being dishonest, so neither of us trust him to help us  get this deal done. Because we aren't sure the BA is being honest either, I think we both prefer that I handle as much of this myself as I can, which I don't mind doing because it's interesting and I am learning a lot in the process.

          Seller has already given me Letters of Authorization to speak to all lenders, HOA, attorneys, and will do so with any others. So far I am doing ok, but there's definitely a learning curve, which I am comfortable with, but it takes time to figure out the proper channels and processes so that is causing me some delays, as well.

          I think at this point it's a pretty safe bet to say the initial buyer/investor is out of the picture unless he and the LA come up with a contract tomorrow by noon, which is the deadline the LA was given to do so. 

          5) First contact with the HOA is full price only. Presenting my proposal tomorrow and will see what comes of upcoming HOA Board mtg on the 15th.

          6) Again,that dreaded failure to get bank pre-approval on even putting it up as a SS.... Hope it doesn't bite me in the you know what. LOL Great article and very informative for someone like myself who has never done this before or has no clue what the steps are. Will be using that as a reference tool. TY 

          7) Actually, I would like to see if I can negotiate this myself. Seller trusts me already and I am willing to work with him so we come to agreeable terms that work for both of us. I think the wife will be much the same. Promising to keep finances private is a great suggestion. I wouldn't have disclosed anything anyway, but it's good to get that out on the table so it doesn't come to be a concern for either of them. He's been very honest with me thus far about everything, too, so I don't think he's real concerned that I will abuse his trust.

          Your blog answered my question of what a BPO is, but now that I know, how do I get the lender(s) to order this? There are two lenders involved and will they both want to do BPO's on the property?? Is that typical or will one suffice for both? 

          Also, I believe that neither seller has done the initial paperwork on this with the bank since there was no SS pre-approval. How do I go about starting that process or is it necessary to do paperwork for that part of things now that seller and I have a contract? The husband called the lender the other day and said he gave them all financial information, but I'm sure they will want copies of formal docs, true??  Does the wife now have to do the same thing? 

          Last thing for now if you know (or anyone reading this does).... Anyone have any specific advice for dealing with Citimortgage as the 1st lender and Fifth/Third is the 2nd?? Also, the 1st loan is for half as much as the 2nd loan, so does or will that present any particular problems for me that you can offer suggestions for when negotiating this??? Only lien is the HOA and that is only for a portion of the amount actually due them. Thanks!!

          • You can call or e-mail me anytime. E-mail is better as I am so busy during the day. However, text works too and I can call you when I have a minute.

            1. I know you are the latest buyer and not the first one.

            2-4. Don't do the short sale on your own. You are dealing with a 2 lien situation and there is so much to cover. You need to find a person who knows how to handle 2 lien situations. The worst case scenario on a two lien situation is where the 2nd lien wants 10k and the 1st lien is willing to give the 2nd lien holder only 3k AND they will not allow anyone to make a contribution to the 2nd lien for the difference. The first person who can help you in that scenario is the one you should work with. Regarding the first offer, just have the seller cancel. 

            7. Well you know, both Bryant and Wendy (site founders) are in your state. Maybe you can pay them to negotiate this for you or they can recommend someone to represent the seller and you in this transaction. However, I will see how the listing broker responds first.

            Again, get someone to do this for you. Understanding the paperwork, how to influence the BPO, etc. are just one of many steps and I cannot in good conscience allow you to jeopardize the seller's ability to short sale their property regardless if you are willing to do the work or not. Nothing personal, but even the self claimed "experts" in short sales are clueless real estate agents.

            • Ok, so I was given a referral by my agent today for an attorney who the agent swears is a tiger and has negotiated short sales before for him in the past. I sent her an email this evening, but have yet to hear from her. 

              I also spoke to the managing broker for the office of both the BA & LA, who assures me of full cooperation henceforth. 

              The seller cancelled the other contract Friday and as of today, it's official since the LA didn't meet the terms of the seller's letter to provide the required docs to him by the deadline. Still waiting on the wife to sign the sale contract and although promised, still no word from her this evening.

              When you say Bryant or Wendy can recommend someone to rep me & seller, do you mean jointly or separately? Is it in our best interests to have one party negotiate this or two separate. I prefer not to complicate this, so which is preferable? And is hiring Bryant or Wendy or someone like them preferable to an attorney? Since I don't know either way, your recommendation is valued.

              I have no problem getting someone to do this for me, but until today I wasn't assured of either agents cooperation, but having spoken to the managing broker, I feel better about it now.

              Thanks so much once again!! C 

              • I meant jointly. Seeing how you and the seller have already established a relationship, you just need someone to negotiate the short sale and handle the real estate transaction for you two. If the managing broker is going to help you, make sure the agent assigned to you guys knows how to handle a 2 lien situation where the 2nd lien wants more than what the first lien is willing to give AND the first lien is not allowing anyone to contribute to the 2nd lien. This will be your worst case scenario on this short sale and you need someone that knows what to do. So anyone who says they will just negotiate with the 2nd to take it or leave it, hasn't got a clue on short sales.

  • Carla. The seller is the one that needs an attorney. There really is not anything that you can do. It's the seller that needs to run to an attorney and have the attorney review whatever contracts the seller has that may still be in force.

    I suggest:

    Richard P. Zaretsky P.A. - Board Certified Real Estate Atty
    E-mail
    Contact Richard Zaretsky, Florida Real Estate Attorney (Richard P. ...
    Website
    http://www.florida-counsel.com
    Office Phone
    (561) 689-6660 x 107
    Fax
    (561) 683-1559
    Address
    1655 Palm Beach Lakes Blvd, Suite 900, West Palm Beach, Fl, 33401
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