Short Sale

After waiting a day and a half on pins and needles for a response to our offer, we received one that was both frustrating and completely unexpected. Though there had been no mention of a short sale in any of the materials or by the seller's realtor, her counter offer came back with a request for a short sale.

For those of you that may not know what a short sale is (I didn't before we started looking), it's a house where the seller owes more than the list price and leads to ardous negotiations with the bank. Apparently these types of houses are becoming a huge issue in the whole real estate market since its collapse. Generally the seller discloses this information and seller's agent advertises the house as short sale in the materials, letting the buyer know...hey, you're in for a long haul here, but you could stand to get a good deal, if you have nerves of steel and are extremely patient. Someone knowingly looking for a short sale would write an offer that is low, probably way lower than what the house is "worth", dig in their heels and get ready for a battle with the bank.

While it would be honest to disclose this information up front, there is no law in our area that requires it. Our seller claims she "didn't know" her sale would be a short sale. The long and short of it is that unless a seller is dishonest or in an utter and complete pit of self-denial, she should know her sale is going to be a short sale. If we knew, we probably wouldn't have made an offer in the first place. We certainly wouldn't have made such a reasonable offer.

This is hard, because we both feel emotionally attached to the house. I feel like it's my house and I stupidly kept showing the pictures to people. But waiting around to see what the bank does, even with our reasonable offer, means we're totally at the mercy of whatever timeline they decide. That means we have the potential to lose out on a fabulous housing credit if things take too long, which they likely will because most short sale bank departments are completely overloaded. It also means we might get to point where we have to move out of our current living situation, with no place to go, because negotiations have dragged on.

So, we've decided to tell our agent that we are rejecting the seller's offer for a short sale. We'll also ask her to investigate whether the seller is even close to being able to strike a conventional deal by negotiating up. Chances are that even if we offered her the list price, she won't be able to pay. If she was able to do that she probably would have just counter-offered with something higher.

As an honest person, I'm overwhelmed with angry feelings for this seller. She should have disclosed this information. I understand every one goes through financial problems and there are many suffering currently, saddled by properties they can't afford. But how do you go along paying your mortgage on a reasonably priced house for nine years not knowing you can't afford it? The answer is you don't. She's probably leveraged her value of the house well past what's safe, which could mean there's even more than one bank to deal with in this situation.

My little feelings of anger are amplified thinking about all of the lovely things filling the rooms of the house. I would never keep buying beautiful things and overextending myself knowing I couldn't meet my most basic financial obligations, I just don't live that way. I don't know this woman, so I shouldn't judge. But, her house has been on the market for nearly nine months listed under two agents, if she has half a brain and she's honest, she should have known.

She totally changed the rules of the game on us, a move that sends up huge red flags saying buyer beware, buyer beware! So, I'm sad today. We're turning down a chance at our beloved little house. But I guess we'll see if it's meant to be.