Ojoy & Dave- Thanks for the responses. The LA says they are waiting for the 2nd lein holder to process the package and approve. I don't know if this means the first lein holder already has, or if they are not even involved. He said it would be a minimum of 30 days as it takes them 7 days to just process the incoming fax. I know one of their banks is Home Street Bank, but I dont know if they have the 1st, or 2nd. We too have a rental home lined up. It's smaller than we are used to but has what we need so we can wait awhile, I'm just not looking forward to it. In the meantime, I hope rates stay low. We plan to continue to look at homes and if we find something else we really like, we will retract the offer and begin anew. Dave, Thanks for the advise. I guess we knew going in this might be the case, and we liked it enough to give it a shot. Now that we've been away from it for a few weeks, I've started to feel anxious and impatient about the process. I pull up the (really bad) RE pictures to remember why we are doing it, but I can't help but hope something else tickles my fancy so we can go about this the "normal" way. I get how investors can wait it out. Chances are, they are the really good deals and if it doesnt work out, there will be another. It's not so easy (at least for me) to imagine waiting months for a response. I am really curious why they went ahead and opened escrow and the agent seems so confident that it will go through though.

As I have said all along over the past couple years, banks are motivated by different factors than a traditional seller. A potential retail buyer (or "nester") is unlikely to know exactly what those motivating factors are. If the note has been sold on the secondary market, and many have been, then it's the note holder & not the servicer making foreclosure/short sale decisions. Possibly, there are other factors such as the current borrower/owner having other outstanding loans with the bank that adds another wrinkle. Or, it could be how the bank is handling their accounting that makes the difference between short sale & foreclosure. It's really a fruitless process trying to second guess what they're doing & even more so...why. In many cases, due to legal reasons, a lender will decide they need to foreclose & due to confidentiality restraints they aren't supposed to discuss those reasons with you, a potential buyer of the distressed property. Another potential reason to not accept an offer from a retail buyer...they have sold a "block" of REOs to an invester & the particular property you are interested in is contained within that block. The lender has to foreclose to clear title before completing the transaction with the investor. We're seeing many more block invester sales now than 6-months ago. Anyway, it really is wasted energy trying to project your logic onto an institution that has a larger picture as their focus instead of an individual sale. Cash or financing? Well, there's financing & then there's "financing". Cash is cash no matter where it comes from. If you present an offer on a distressed property accompanied by a Commitment Letter you're set to go when you find a property that suits your needs. If you, instead, submit a Pre-approval Letter...well, that's really not worth the paper it's written on. For instance, we have an open Commitment Letter from our bank that allows us to purchase property(s) up to a certain amount based on our personal guarantee (no collateral). After we close, we give a first mortgage to our bank releasing the personal guarantee portion of the Commitment for another property purchase. That loan may contain up to a certain number of these properties obtained via just personal guarantee at any one time. How do you get a loan with just a personal guarantee? Well, again as I've been saying for a long time here, it pays large rewards to develop a "relationship" with a bank over a period of years rather than always shopping for the elusive "lowest rate, lowest fees". All I have to do is phone my bank & tell them I'm submitting an offer on such & such property & need a check in whatever amount on the closing date...I've got 45 days from the funding date to provide a lien. We've earned the bank's trust. It's a win-win for both of us. brickeye, "Let them stew a few more weeks and put in another offer through my attorney." I can assure you nobody at the bank is losing sleep over your offer & they are certainly not in a "stew". Executive management at the bank is entirely focused on the big picture. How a particular property fits into that puzzle only the bank knows. That's one of the reasons David, me, & others harp here regularily that to purchase a short or foreclosure from a bank requires a completely dispassionate approach. Interjecting what seems logical to a "nester" or even the small investor is almost guaranteed to be not relevant to the bank. I stress, again, the bank's need to focus on not only a larger picture but a different picture entirely. The large lenders holding tens of thousands of these bad loans have set-up varying proccesses to move that inventory off the books. But, even so, at any given time a single property may (or may not) fit into the "guidelines". A property's classification can change overnight suddenly making it difficult, or impossible, to purchase. For example, the bank has multiple loans to the same borrower (CC, mortgage, HELCO, car, boat). A restructure agreement is reached with the borrower & foreclosing on the real estate is necessary to clear up title. Or, a borrower sues the bank. That would halt everything until bank counsel has had an opportunity to review the validity of the suit. There are just so many reasons a bank suddenly decides to not offer a short sale...it's impossible to list all of them. I'm far more amazed at how many are actually closing than the fact some get stalled out mid-process. /tricia

No personal experience, but things I've heard from others on the financial side: 1. If you want the bank (either of the mortgage holders) to write off the mortgage balances over and above the sale price, they will not do so unless you're behind on your mortgage payments. 2. Getting behind on your payments and doing a short sale will put a pretty hefty ding in your credit that it'll take a few years to heal from. 3. Banks (especially the 2nd mortgage holder) will sometimes negotiate something between you having to sign a note for the whole difference in sale price and mortgage and them forgiving the whole thing. Good luck. It's not an easy process.

I have sold several short sales (I'm a Realtor).As mentioned, the bank is the one that has control of the short sale, not the sellers. I have seen banks take months for approval and then require a closing within 24 hours of the official approval, usually near the end of a quarter. One of the most important aspects that can derail the bank approval of a short sale is the current mortgage(s) and other liens on the property. If there are other liens such as HOA fees or secondary mortgages and/or other liens (IRS for example) in addition to the first mortgage, each party has to approve the short sale. Normally the bank has the largest lien (mortgage) but that's not always the case. One of the issues I've found is that if the sellers have a very small first mortgage and a large second mortgage or HELOC, the bank will stick close to their pricing because they prefer to foreclose on the property rather than sell it in a short sale. There are reasons for this, but essentially they make much more money in the deal with a f/c. With a f/c the second mortgage/HELOC is wiped out and the first can ramp up their fees to make a tidy profit on the REO property sale. There are financial incentives for the bank to force foreclosure rather than complete the short sale. Naturally this doesn't happen with every short sale, but take a look at the existing liens. Your agent should be able to find out how many liens/mortgages are on the property and their approx balances. Last comment about short sales: they aren't always a 'good deal'. Depends on the condition of the property. Some sellers have quite a bit of deferred maintenance.