Ellicott City Realtor Catonsville Realtor

Lately I have been helping a family purchase a home.  Their current home is already sold, and we found the perfect house for them - it's in a great neighborhood that they want to be in, and it has a large in law suite.  Just before we wrote our offer, the Listing Agent told me the home could go into foreclosure.  When I asked what that meant, she said the Sellers were just a payment behind.

After receiving our offer, the Listing Agent called me to tell me that the Sellers couldn't come up with a counter offer, because they didn't know how much they owed, and they needed a little more time.  I asked the Listing Agent if she didn't have all of the necessary information, why list the home in the first place?  She replied that when she listed the home, it still had plenty of equity.  The home had been on the market for 66 days.  Now, she wasn't sure that the Sellers could afford to take less than the asking price (which was $40,000 to $50,000 over market).

Because my clients loved this home, we decided to wait one week for a response.  In that time, the Listing Agent was supposed to find out how much the Sellers owed in order to come up with a counter offer.  However, the Listing Agent called back to say that the Sellers owe more than the asking price and that their attorney has advised them against a short sale.  If the Sellers are behind on their payments, and they owe more than their home is worth, they are looking at two options:  short sale, and foreclosure.

When I last spoke with the Listing Agent, I asked her when had she been at the home?  She said that she had just been there a couple of weeks ago.  It was interesting to find out that she was unaware that the Sellers were not living in the home, and that it had apparently been vacant for some time.

Our MLS service requires that an agent disclose in the listing if a home is in foreclosure, pre-foreclosure, or is a short sale.  Clearly, the Sellers may have been less than honest with the Listing Agent, but a competent and experienced agent would likely have picked up on the other clues that the Seller was not being truthful.

This situation has me wondering a few things:  Why would an attorney advise a client to go into foreclosure instead of working out a short sale?  How is it possible that there was "plenty of equity" at the time of listing and now the Sellers owe more than the asking price?  Were the Sellers lying to the Listing Agent?  And if they were, how did the agent not see the writing on the wall?