Barbie and Blaine didn’t get the home they were trying buy! .
WHY YOU ASK? Because it was a short sale. It was listed at a ridiculously low price. My guestimate was that the house was worth about 280,000, even in current condition and in today’s market.
But it was listed for 230,000, and was by far superior to any other 230,000 home around. Superior in square footage, landscape and upgrades. But it was FILTHY dirty, the pool was 1/2 empty and green, and the carpet was not likely to clean well. It had sold in July, 2006 for 388,000.
Sounds like a deal, right? Wrong! We waited 4 weeks to hear from the bank for approval of the short sale. We waited and watched as their 2 backup homes (which were both bank owned REO), sold to someone else. We waited and waited, and kept being assured by the listing agent that the bank would approve our offer. We had a 30 day deadline for the bank to respond (per the listing). On day 30 the agent said she needed just a few more days.
On Day 33 she called to say the bank countered us back at 285,000. Oh well! Ken and Barbie upped their offer to 250,000. The bank said no deal. 285k or not at all.
Now we’re starting all over again.
Yesterday, I talked about who should be looking at bank owned properties, and who shouldn’t. The same rules apply to the short sale situation. If you have a DEADLINE, don’t even consider it. If you’re emotionally attached to the outcome, do yourself a favor and don’t even try. If you can’t qualify for what should be the right price for the property, then don’t set yourself up for a let down.
If you’re looking for rental property, or don’t care whether you get it or not, then there’s some good bargains out there. If you’re looking for the perfect “dream home” then it’s probably not a beat up crappy foreclosure. Out in the suburbs, there’s some like new foreclosures at 2005 prices, but you still have to play the hurry up and wait game.
Why is it bad for the sellers? Jon Bunn who writes an excellent real estate blog in Northern Virginia asks a few good questions and addresses the seller side of the same coin:
How would you feel if you awoke tomorrow morning to find that the house that you are competing with in re-sale has dropped their price 70k below yours and is selling it as a short sale? Nothing new, so after a few curse words and frustration you decide to drop your price 40k lower and so do 3 other surrounding homes.
You wonder why people keep visiting your home but no one is putting in an offer. You begin to feel that the sky really is falling and that it is the President’s fault.
QUESTION 1# How would you feel if you found out that the short sale that caused everyone else to lower their price had a low dummy price to get offers and that the bank wasn’t willing to accept it in the first place?
The seller no longer cares. The seller just wants out and isn’t making any money on the listing any way. They are just trying to save their credit a few points compared to a foreclosure.
QUESTION 2# How would you feel if you found out that the reason you aren’t getting any offers is because there are 6 contracts that are pending on the short sale and have been frozen while waiting 5 weeks for the bank to respond?
There really are people buying at this time. There is a good chance that you aren’t getting an offer because buyers already have contracts on other homes so they are FROZEN. They can’t put out multiple offers. They are also afraid to pull out from the short sale because their lucky side tells them that they could get a steal.
Believe it or not, we are paying a steep price for these types of transactions. Short sales are not bad on their own. Nor are all Short Sales listed at fake prices. But prices that a bank has not approved are detrimental to our market. It hurts neighborhood values which cause more foreclosures and short sales which ties up the only people that can help fix the issue: BUYERS (not government).
If you’ll remember in the “gossip column” Frank was waiting to hear about his offer on a Bank owned repo. There’s now 9 offers on it. It’s been 54 days already. That’s 9 buyers sitting it out right now, waiting to find out if they get to buy that 1 house. Frank was the 1st offer that was tendered on the property. How many other REO’s and Short Sales are being listed at ridiculously low (even by today’s standards) price that are just being used to jack up the price for the bank in a bidding war?
I’m betting there’s THOUSANDS of buyers who have an offer sitting there being ignored by the bank while the bank waits for a better one to come in. Frank and I don’t see any way that he’s going to get the house. It was listed at 120,000. That’s what he offered. My guess is that the bank is holding out till they get 150,000 bid. I’m not sure if I’ll live long enough to find out the final price.
Yes, prices have dropped substantially since the heyday of 2005 and 2006. There’s great deals to be had. But the banks are shooting themselves in the foot, and extending the “crisis” with stupid games. Frank now has offers out on 3 other properties that are listed just a little below or at market. All he wants is a good rental that won’t have negative cash flow. He offered another 10,000 below the listing prices. His is the only offer on all 3. One of the 3 will probably come thru. But we’re not shopping the “fake” price short sales or bank owned anymore. Neither should you.
And finally, I agree with Jon, that listing agents should not be allowed to put short sales in the MLS till they have an agreement from the bank as to what the bank WOULD accept. Anything else is just a fake price. Any lawyers out there interested in a good cause based on the laws of “TRUTH IN ADVERTISING”?