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

Many times a house will be listed as a short sale before bank approval. This is due to many banks not even considering a short sale unless the house is under contract to sell. The seller must meet the requirements for a short sale, and the bank and other lien holders must be satisfied with the selling cost. I once made an offer on such a house that was accepted. Four months later the bank had not approved the sale and I requested (and received) a release from contract. The house is still listed for sale 9 months later. So when contemplating a short sale it is better to consider one that is already bank approved.

I should clarify. The first mortgage broker we went to, ordered the appraisal for a different loan, that we don't qualify for, after he assured us that we would qualify for this specific loan. When he drug his feet for over 2 weeks, to get us the application, we shopped for a new loan. Only after we had a new mortgage broker, he told us we didn't qualify for this specific loan. This was even before we told him we got a new loan. During this time, the appraisal was done and sent to us. We then forwarded it to our RE agent and the new mortgage broker, to do something about the discrepancy. Now, our RE agent got the appraiser to change the numbers on the appraisal. From a bit of online research, it seems we are not the only people that appraisals for their short sale, have come in over contract price. I have not read in any circumstance, that I could find, has the appraiser been asked to change their original numbers. I would think that an appraiser would be in fear for their license, as this constitutes fraud.

You should get your earnest money back. Did he give you a signed, executed copy of the contract? If not, you didn't have a valid contract. You could hire an atty, but contracts are normally limited to actual damages, and if you get your money back, you have no damages. You could file a complaint with the Real Estate commission for your state, but the most they would do it probably give him a disciplinary letter.