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Short Sale Turned into Foreclosure - ADVICE

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Short Sale Turned into Foreclosure - ADVICE

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:2

We have an accepted offer on a short sale home in our area. We submitted the offer in January, it was accepted by the owners the second week of February, and by the bank holding the mortgage the first week of March with a closing date no later than April 1. After having the water turned on before the appraisal two weeks ago, it was discovered that nobody had winterized the home and there was some pipe damage. The bank asked us to submit an estimate from a plumber for the repairs.

The bank accepted the estimate this week and was preparing the amended purchase agreement (with them paying for plumbing repairs) and did one last title search. (We ran one in February and it came back clean.) Apparently the owners filed for bankruptcy last Friday and the home is now on it's way to probate and foreclosure. This was done by the sellers with no notice given to the listing agent and/or bank holding the mortgage.

Our realtor has told us that this basically means our offer is no good anymore, we should get back our good faith deposit and move on. The listing agent, however, has a meeting with the bank holding the mortgage on Monday to try and figure out a way to get the sale of the home approved by the bankruptcy judge?

Has this ever happened to anybody? Any advice? I realize this is the danger of working with short sales, but before walking away completely I wanted to make sure all of our options were exhausted.

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April 04 - Midwest

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nshlovesvm
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Here's the thing though, it is not currently in foreclosure. It is a short sale. The owners and bank agreed to sell it at a loss so that the owner can just get out from under it. The owner is in no way trying to get the house back. They moved out of the house five months ago, they didn't trash it or anything and they have been easy to reach anytime the listing agent needed to get in touch with them.
With bankruptcy pending it locks up the title so that it can't be sold unless the bankruptcy judge allows it to happen (according to the listing agent). We just want to know if anybody has seen this happen and what the outcome is. We really want this house because we are getting it about 15% under market value and we love the neighborhood. If we walk away the chances of getting another deal like this is slim. Thanks for the help.

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April 05

FriendshipProperties
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In most cases I have seen, a bankruptcy only pauses a foreclosure for a few weeks at most. Once the bank gets court approval to continue with the foreclosure, they can sell the property.

* I am not an attorney. Contact an attorney for legal advice.

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April 04

Michael Emery, "MikeEmery"
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That is one heck of a mess.

Let's assume the bank begins foreclosure proceedings immediately. In Minnesota there is a 6 week period where the bank advertises the foreclosure action, prior to the sheriffs sale. Then the homeowners have from 5 weeks (unusual) to 6 months to 'redeem' the home from foreclosure. Essentially (in this scenario) you would be locked out of buying the home for 7 plus months, if not more.

Even if the listing agent were able to salvage the deal via bankruptcy court, my guess is this will take months and months and cost you way too much money. My advice would be to move on and find something else. That listing agent is one tenacious person. I would've canceled that contract after what the sellers did to them.

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April 04

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Question Short Sale Turned into Foreclosure - ADVICE

Latest answer by nshlovesvm
April 05

In Home Buying
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