A Short Sale Saga

Some may recall, that during our house hunt, we pursued a short sale, twice. Here is a brief timeline and recap of the latest developments on it:

A flipper bought the home for $550,000 in March of 2007. At the time, she thought she was getting a great deal. With a first ($440,000 with National City and second lien for $55,000 with Countrywide). House was put up for sale in October of 2007 listed at $579,000 (then dropped to $550,000). She had worked out a deal with them to lower her payments while she tried to sell the house.

February 2008 - We submitted a written offer and negotiated with a seller on a short sale. Unfortunately, the bank would not approve the sale at our offer price (approximately 20% below asking). The seller did receive bank approval at 14% below their list price, and they immediately re listed the home (before we even responded that we wouldn't increase our offer price). We feel like we were played so that they could bring an offer to the bank and get a "bank approved" figure.
August 2008 - We resubmitted for the Short Sale that we tried for in February in the hopes that the bank would be more willing to negotiate now that 6 months have passed. We even paid $300 for an appraisal. The bank would not negotiate. We believe the home is now going into foreclosure.

According to Melissa Data and the Sacramento Bee Homes Sales Database, the home sold in June 2009 for $359,100. I was confused since it was way below what the first lien was.

I then checked the El Dorado County Assessors office, and the new owner is National City Bank (the first lien holder). The home hasn't shown up on the MLS yet. It was already in serious disrepair by the time we made our second offer (which was less than our first).

Side note: One part of this saga that really confused me was how an appraisal could come out at asking price....even though a home had been on the market for over 6 months at that price. A home is worth what someone will pay for it. If no one is willing to pay that price, then in my mind, it is not priced right. (Conversely, recent stories of homes not appraising for asking, even though there are 3 legitimate offers over asking....means a home is worth more than asking).

Having seen the home come through on both Melissa Data and Sac Bee, made me somewhat suspect of their data. It was my understanding their data did not include sales back to the bank. Thus any statistics (median price etc.) that are derived from these sources, will not be an accurate reflection of the market. Initially I thought perhaps the house was bought at auction, but the assessors office confirmed that the bank now owns the house.

I will be very curious to see how much the house actually sells for. I am guessing between 375k-425k depending on the shape its in (our last offer in August was $425,000 if memory serves me right).

Bank should have taken our first offer (pretty sure was more than what they were owed at the time). Obviously they had our best interest at heart ;) even though it didn't feel that way at the time.