Tell the owners you are buying from your contract is going to be withdrawn since the property is no longer in the same condition. Put it in writing from your attorney. CC the lender. Be prepared to walk away. Water damage is insidious and expensive to mediates if it is prolonged. Major leaks wreck flooring almost as fast as they stain ceilings. Your best deal might be to withdraw, wait till the place is foreclosed, becomes REO, and then get a bargain based on the damage that will have occurred. If you can do the tear out and clean up yourself, and at least some of the repair it could still be a good deal. This type of house can easily become a money pit that will cost more to repair to habitable condition than it is worth. It will then be a 'knock down' for the land value only. Proceed accordingly. This is a business deal, so leave the emotions at the door. Be prepared to walk away.

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

I am glad you have the possible renter, and someone you know and trust, at that. I have a nurse I know doing a rent-to-own in my old house. With the house across the street in foreclosure and for sale at $69.9K (no typos), I worry that she will walk away from our agreement at $139K. The house across the street is a third smaller and the lot smaller, but with all the vacant properties, bank foreclosures, short sales and a rotten economy, I can imagine her deciding that she can get more house elsewhere if the fall in values in Michigan does not slow. I hope it works out with the renters you have in mind. It sounds like the perfect solution for you. One thing to keep in mind is how much your home appreciated and how much value you added by improving it after you bought it. If you end up renting for three years or longer, you will need to be able to show what improvements you made to the house so that you can offset whatever increase in value the house had since you bought it. With the huge capital gains write-off we now get when selling a house, I would bet that people are not saving the receipts like we used to. If you never expected to rent out your home, your record keeping may not be up to par. If you don't live in a house two of the last five years before selling, though, you lose that capital gains write-off. Then you need the receipts to show your improvements so that you can increase the "basis" you have in the house. Best wishes for a low-stress transition to your new home!

It is apparent that the majority of people on this forum are uneducated on the short sale process and loss mitigation companies (and possibly real estate in general). I am a local York, PA Investor typically purchasing and selling 50-60 properties a year. I am very active in the York Dauphin and Cumberland Counties. I typically find the majority of my properties thru short sale and I always use Sure Thing Short Sales to negotiate. (I refuse to use anyone else..) I've completed 30+ short sales with this company and have been 100% satisfied. They are always available, very quick to respond, and have a 24/7 back end system for buyers, sellers, agents, etc. to log in and see process of the short sale at any time of the day. The back en system also allows access to all documents pertaining to your specific short sale. They are very good with setting expectations and disclosing all items pertaining to a short sale. When it comes to pricing, Sure Thing Short Sales is the most cost effective compared to other negotiation companies across the US. If you research short sale mitigation companies in Pennsylvania or any other state you will notice a typical “minimum fee” that tends to be a minimum of $4,000.00 (and increases from there) A lot of the times these other companies will also request for the buyer, or whoever is paying for the fee, to pay outside of closing.. (mind you.. All Sure Thing Short Sales costs are ON THE HUD and disclosed to all parties) I've seen companies in york county charging as much at $8,000.00 for a $60,000.00 property -- now compare that to the services of Sure Thing Short Sales who would charge $600.00 for the same $60,000.00 property. Sure Thing Short Sales helps homeowners, realtors, attorneys, lenders, and practically anyone else who needs short sale services. Their fees for me have always been 1.000% of the purchase price... (buy a 30,000.00 home it costs you 300.00 ��' that’s a steal, especially considering at times Sure Thing Short Sales work on files for 90 days or more.) Don’t be sold by these realtors who “understand short sales” or “promise to complete your short sale”. If they do not have extensive training or past experience, the odds are the short sale will not get completed. Think of it this way.. When you hire a doctor you want to ensure they specialize in the type of surgery you are having done.. You want to make sure they didn’t just “take a class” and completed 3 or 4 surgeries. You would want an experienced doctor who has completed many many surgeries. Sure thing Short Sales in this case is your “experienced doctor” They completed so many short sales they understand the process, have the correct forms, the correct disclosures, and ultimately the contacts within the foreclosing lenders. I would recommend to view the website or contact the owner, Billie May (Call the office and request to speak with her.. she is down to earth and easy to work with). It may also be a good idea to research prior to calling something a “SCAM” - Sure thing Short Sales has always been a great resource in my investments, and I am sure they have many other people who feel as highly of them as I do.. Michael. Here is a link that might be useful: Sure Thing Short Sales of York, PA