Board-certified real estate lawyer Gary M. Singer writes about the housing market at SunSentinel.com/housekeys each Friday. To ask him a question, click here.
Q: We are no longer able to pay our mortgage due to a hardship. After doing a lot of research, including reading your columns, we decided to try a short sale. We listed the property, found a strong buyer and submitted all the required paperwork to our lender. Now the lender wants us to auction off the house. What gives? – Shirley
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A: In a short sale, your lender is accepting less money than it is owed to release your property from its mortgage. Short sales are supposed to be sold for market value to ensure that the lender recoups the most money possible.
Lenders historically have relied on a report from a real estate agent called a broker’s price opinion, or BPO, to help determine market value. In an effort to make sure the short sales are sold for the highest prices, lenders in the past six months have started turning to auctions.
The various parties involved are told that they must submit to this new procedure or the short sale will be denied. Once everyone signs off, the seller’s real estate agent will be asked to re-list the property and hold an open house to let potential bidders view it. An online auction company then holds an auction, with the initial buyer’s offer as the highest bid.
via:http://www.sun-sentinel.com/business/realestate/house-keys-blog/sfl-singer-housing-questions-link-20140221,0,6112559.story?track=rss
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