Short Sales, Loan Modifications and Bankruptcies, oh my!

What else could go wrong with a short sale? How about last minute loan modifications?
Example: (Based on a real situation)
Seller lists home with Realtor as a short sale. Buyer puts in and secures a contract to purchase the home through a selling agent. All inspections are done, financing arrangements are made and appraisal is done. Four months into the transaction, it is finally time to close. The morning of closing, the sellers do not show up to sign the documents. Some panic ensues and the seller's Realtor finally reaches the sellers and is told they will not be selling the home since they just worked out a loan modification and will be keeping the house!
What does the buyer lose? Technically they would not lose their earnest money deposit, but would lose any money they paid to secure the mortgage or for independent inspections. The biggest loss of all though, is the loss of the "great deal" the buyers thought they were getting,
as well as the time invested in the transaction. Perhaps moving arrangements had even been made, utilities transferred, boxes packed, etc, etc.

Another event that could trouble a short sale situation is if the seller files for personal bankruptcy. Once the filing is legal, lenders are forced to cease all action until the case is worked out through the bankruptcy proceedings. This is less common than loan modifications, but it can happen.

Both of these scenarios are more likely in the case of an occupied property, specifically OWNER-OCCUPIED.

If you are seriously looking to buy a short sale home, I would suggest eliminating the ones that are still occupied. And of course, as for ANY short sale- prepare to wait.

If you don't want to wait, and possibly miss out on the great deals that are closing every day, start looking at foreclosed homes instead! My website has an updated list of 59 homes in the local area, a third of them in the beach areas of a popular vacation destination!

http://www.mypinellasparadise.com/