I bid $440K on a short sale. I was told my offer was second over a $380K all cash offer. When the cash offer fell through the listing agent said we could revise our bid to $380K since the bank had already accepted that. It seemed weird, but how could I pass that up? So I resubmitted the bid at $380K only to be told later that my $380K bid was submitted alongside a $420K bid to the bank,  which was lower than my original bid.

So what's the scam here? Why would they intentionally try to sell lower than my bid price (twice).

I recently found out there were tenants there too, and the seller was trying to keep it quiet. Do tenants affect a short sale (since the owner is supposedly recieving rent payments)? Could that have something do with what's going on? Could they be looking for someone to buy with tenants (which I am not willing to do) but can't let the bank know about them, so they have to get my bid out of the way by tricking me?

 Anything I could do about this?

Short sales are so tough and frankly, I hope the legislators start creating some new laws to govern them.

The problem with short sales is that the bank has total control. As you experienced, the bank had an all cash offer, they love those, so they agreed to the lower price. Then that fell out and, in my opinion, that listing agent never should have told you what to offer. That decision should be yours and yours alone as long as you have comps that show you what other properties in the area have sold for.

Then another offer came in better than yours and the bank, naturally, took that.

You should also know that banks have 60 days to reply to your offer AND they can continue to accept other offers while you are waiting for your reply!

See? The bank has all the power and you, the buyer, have to wait and can't always know what others have offered for the home.

Are you working with a buyer's agent? You should be. All buyers should be working with an agent. It won't cost you a dime and you'll have someone to advise you.

If you want to avoid these hassles with short sales, search for homes that are foreclosures or regular sales.

Just to clarify, the offer that came in higher than my second offer was submitted at the same time by the listing agent. She asked me to lower my original offer because the offer she really wanted to win wasn't high enough. My first offer was still the highest. The listing agent just tricked me into lowering myself into second place.

So I don't think that's a problem with short sales in general, or even the bank having all the control. I'd like to use the word fraud, but I don't know if it really is.

Is it? Wouldn't the bank want to know this?

So in a short sale the banks have to respond within 60 days?

I thought I had heard about things taking up to 6 months?

The banks don't have the do anything.

They can respond to your offer whenever they want too.  It doesn't matter if your offer has now "expired"  they can still respond.  However, it does mean that if they signed off of it - didn't change anything - you ARE NOT in contract with them because they went past the time you gave the bank to accept your offer.