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Short Sale and Bank Owned Property Questions.

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Short Sale and Bank Owned Property Questions.

Old 08-28-2011, 02:59 PM
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Default Short Sale and Bank Owned Property Questions.

My wife and I bought a bank owned commercial space earlier this year and it went super super smooth. I used the seller's agent (the bank's agent) and I did my own due diligence -- with the help of an attorney. I showed the seller's agent all the comps and he redid the BPO (Broker's Price Opinion) to bring the value waaaaaaaay down to be closer to what my offer was (we were pretty far apart on the price at first, but thanks to my doing careful research we got the property for the price we wanted) accepted and everything was done in about 30 days. I still talk to the seller's agent and we all couldn't be happier with the whole experience.

Fast forward to current time. My wife and I find a great house that we really liked. It was a short sale, but the sellers and the lenders had a mediator, so everyone was on the same page. We agreed on a price and got all the paperwork in -- then... the sh!t hit the fan and just like that we were out of the loop and another buyer "came in and got it". I did some sneaking around and spoke with the seller's agent (I had a buyer's agent this time) and he got REALLY nasty -- with the whole, "It's gone it's gone, no more, it's sold" -- Now mind you it showed as "accepting backup offers" in the MLS at the time. I believe that our offer was higher than the "current" offer and we're in the "backup" position (I don't think we'll get it... but I threw it in as a "backup"...

Anyway... I'm hearing tales that with short sales it is VERY VERY VERY common for sleazy agents to call their "friends" and say, "Hey, Joe... these people and the bank are willing to sell this for $xxx,xxx -- I couldn't believe that they would let it go for so little -- let me know if you want me to get you in on it?" In other words, they use people like me as the sucker to drive the price down with my offer, and when or if it gets accepted, they bring in their "friend" to buy it.

BS or do you think it's the way it is? And if so... what can be done to keep it from happening, if anything?

Sorry if I rambled... hopefully that made sense.

Thanks,
Pete
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Old 08-28-2011, 03:11 PM
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the sale is public record keep an eye on the couty tax acessor web site for the update on sale price
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Old 08-28-2011, 03:12 PM
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I'm sure it happens all the time. I sold a house in 2003 as soon as I listed it. Found out later that the buyer was a friend of the realtor, then they sold it 9 months later for 10K more than they bought it. I needed a quick sale to buy the house I am in now, but I still think the realtor was not exactly working for me, like they are suppose to.
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Old 08-28-2011, 04:40 PM
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Sorry to hear about your situation, but it is becoming the "normal" way to do business.

My wife's nephew is a realtor and is involved with short-sales (these days, who isn't?).

He has sold more units to his family and friends (to flip and/or to live in) than to outsiders.

Happens all the time...
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Old 08-28-2011, 04:47 PM
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Short sale fraud is a big problem. Recently read an article about it:
http://money.cnn.com/2011/06/28/real...sing/index.htm
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Old 08-28-2011, 04:59 PM
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It is VERY WRONG but in this economy it as brought the worst out of many.
. Beginning of the year I picked up a short sale house, I got a GREAT deal and everything went so smooth the person I worked with is well known for being HONEST and I think that did help.
Hope your next one goes better.

Bryan
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Old 08-28-2011, 05:11 PM
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c'est la vie.... I loose deals all the time - and I am sure there is some funky back door dealings going on... But what are u going to do? File suit ?

Sucks but I suggest u move on to the next deal....
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Old 08-28-2011, 05:47 PM
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It is called "flopping". An agent prepares a BPO and lists the property. A buyer quickly comes in to buy it and they flip the property for a profit. Google it and you will see how some agents are making a living. BTW, true flopping is illegal.
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Old 08-28-2011, 06:33 PM
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Unreal! And I even reached out to the mediator to let them know that something didn't smell right. Didn't really seem to care... I wonder if they were in on it too? Oh well... like said here, another deal will come along...
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Old 08-28-2011, 08:23 PM
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Default Short Sales...

Originally Posted by OldPete View Post
Unreal! And I even reached out to the mediator to let them know that something didn't smell right. Didn't really seem to care... I wonder if they were in on it too? Oh well... like said here, another deal will come along...
Oftentimes, the mediator (negotiator) is really working for either the Realtor or investor in the short sale deal. One of the very common scams going on here in Fl is the option contract deal where a realtor identifies a short sale property, and has his buddy investor execute a sales option contract giving the investor exclusive right to purchase the property at a fixed price for a year. Realtors second buddy does the BPO, and the related negotiator negotiated the short sale with the bank, All the while, they take backup contracts and use those to support the original selling price in negotiations with the bank.

The bottom line is that all the parties are essentially related, as participants in a back end deal with the investor, where they profit from original sale to the investor (commissions), and then get a piece of the action when the investor resells for his profit.

Illegal as all get out in my opinion, but very common. This is the scam being run by the followers of the :Short Sale Kid, Short Sale Riches etc, where they sell you a :business" consisting of forms, DVD and a bunch of hype. The only ones they actually follow through with are those willing to engage in the described scam. The others just feed their cash flow though sales of the "program".

Unless you are working with licensed realtors, full transparency and disclosure, and no "third party interest", stay far far away.

DAL
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Old 08-29-2011, 07:18 AM
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Do you think it is best to go directly to the listing agent or to use a "buyer's agent"?
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Old 08-29-2011, 11:12 AM
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Originally Posted by OldPete View Post
Do you think it is best to go directly to the listing agent or to use a "buyer's agent"?
I would go direct..... This way the listing agent gets all the commission... They will be hungry to close your deal

Problem is that you wont be able to do as much due diligence without a broker.... I have MLS access in SFL if u need assistance

Last edited by triplenet; 08-29-2011 at 11:42 AM.
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Old 08-29-2011, 11:33 AM
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in the current economic conditions people are doing whatever they can to make $. Is it right, no but sometimes karma works wonders. Wife and I just recently lost out on a home. Unreal deal, sold in 05 for 560K, listed now at 190k, bank owned. Agent for seller ignored us, wouldnt return calls blah blah blah. Found out another buyer came in behind us and scooped it up. No big deal to us tho since we already have one home, we were just going to move up a little. Found out yesterday from a realtor friend of mine, the house sold and the new owners have just discovered mold infestation. Now they and their brother in law (sellers agent!) are stuck with it.......
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Old 08-29-2011, 02:31 PM
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Personally, I think that you're going to be giving yourself lots of headaches pursuing "short sales". The bank owned properties are the ones that will be the easiest, in my experience.
With the forclosed properties, the liens, and second and/or third mortgages will be gone, and you won't have owners and "mediators" involved.
With the short sales, you're dealing with people and banks that are losing money, so they'll drag you along hoping someone else comes along that'll pay more.
Good luck.
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Old 08-29-2011, 02:46 PM
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Originally Posted by Jus Teasin View Post
With the forclosed properties, the liens, and second and/or third mortgages will be gone, and you won't have owners and "mediators" involved.
.
I agree... but would say that liens and mortgages would need to be satisfied at closing on a short sale......

REO's are quick and easy - just make sure you know what you are buying...
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Old 08-29-2011, 02:52 PM
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It's the coming to the terms to satisfy the liens that takes so long, is what I meant.
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Old 08-29-2011, 06:02 PM
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My understanding is that with short sales, if there is a mediator, all the parties already know what they are going to "get". The pain comes from short sales when nobody (seller, bank, etc) have any idea of what they want or what they are going to get.

The problem I'm dealing with is that almost nothing is REO where I'm looking... they usually get bought in the short-sale status...

I really appreciate all the input.

Pete
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