What were they thinking when they declined my contract?!

A buyer who wanted to purchase one of my short sale listings last year contacted me and let me know he was interested in purchasing another one in that community. While doing the research I noticed that the short sale which was declined by Freddie Mac because the contract price was "too low," sold for 40k less at the courthouse! Did they just need to keep it on the books until after the first of the year or what? This is really hard for me to understand. Would someone please explain it to me? What is the thought process of the final decision maker on these?

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Comment by TOP END Properties on March 4, 2013 at 5:23pm

The Listing Agent did not properly dispute the value.  I had several outrageous counters from Freddie and got them all reduced to the offer price.  If you don't know how to dispute .. then some agents just take the banks word as if its in stone.

Comment by Sonia Shanahan on March 4, 2013 at 4:29pm

Of course, that makes sense. It was FHA.

Comment by Ben Benita on March 4, 2013 at 3:59pm

Do you know if there was mortgage insurance?  A high coverage ratio on MI can be a deal breaker b/c they get a BIG FAT CHECK when they foreclose.

They may have also been clearing the books and looking to get bad debt off so they could free up cash to lend out.

Banks all have "Loan Loss Reserves" which are funds set aside against bad debts, some as high as 9 times the loan amount I have been told.

Translation - If there is a $100,000 delinquent loan, some banks must set aside as much as $900,000 until the loan becomes performing again (that is $900,000 they can not lend out for additional loans)

Somewhat complicated, but I would bet it was one of these 2 reasons

Comment by Stephen Holmes on March 4, 2013 at 3:45pm


I had the same thing happen to me. Had an offer of $105k cash, Nationstar didn't take it, buyer walked. Now comps are selling for $85k 6 months later...brilliant work.....


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