Buying a Short Sale Home

So I recently had buyers who wanted to purchase a great "short sale" home. The list price was $150,000, and that's what the buyers offered. Once fixed up, the home will value closer to $190-$200k. Great price, uh. But alas, it is a short sale, so we wait 1 month before we get the short sale approval.

The listing agent then advises me that their seller is really selling to an investor, who in turn is selling to my buyer! Okay, I advise the lender - Wells Fargo - they say nothing. The buyers proceed with the appraisal, inspection, get all resolved, and on our way to closing, the Lender, Wells Fargo, advises that they will not fund on this property, as they don't like the amount of money the INVESTOR is making, uh? What does that have to do with my buyer? And we are driving to the closing! The Lender further states that there is no way they will lend on this property, period, unless the investor pulls out and we buy directly from the owner/seller. Unfortunately, the investor has already closed on this property, 4 hours earlier.

Thankfully, we were able to find another lender, who processed quickly, and closed 11 days later. But beware, if you are buying a property from an investor who is buying as short sale, have a backup lender, just in case!