I have sitting on my desk right now, a commission check for a short sale that we actually closed escrow on. Way back in early March I announced I would begin listing short sale properties. As it would happen, all 3 of those initial short sale listings received offers. The first home, located in Phoenix never had a chance. Countrywide almost refused to even look at, because the underlying mortgage had PMI (private mortgage insurance). As a result, Countrywide was getting a better deal to let the home go to foreclosure, which it finally did in early October. That home is currently listed for $34,000 less than both of the offers I received.
The second property was an investment property, funded through ING Direct, and while we received a good offer, one which we probably could have successfully negotiated to close, the owner of the property, upon fully understanding his tax burden, chose to remove the property from the market, and live in it.
The third property is in Scottsdale and has the same owner as the above. It should have closed escrow. In fact, we may still get it to close, but it has been a nightmare. The first offer we received for the property was for full asking price on April 4, 2008. In mid-May, the owner moved out of the property, and subsequently stopped caring for the home. The pool turned green, the landscape died, roof rats moved in, water was leaking from the hot water heater, termites began tunneling — well, you get the picture. During this time we received, presented, and negotiated 3 different offers to Chase Bank, but they took a ridiculous amount of time to finally approve the deal. The final remaining buyer inspected the property, which was no longer to their satisfaction and canceled in August. We are still hoping to find an investor buyer, and do have 3 more offers on the table (for considerably less money than the previous 3), but the chances of success here dwindle with each passing day.
For this last failure, nearly 100% of the fault can be placed squarely on Chase Bank’s shoulders. We called and talked to them at least weekly and often daily. In fact, we still talk to them constantly (twice today). The property in question, when in the condition it was in March is a good home, with tremendous views, and an oasis style backyard. Someone is going to get a very good deal. We just hope it doesn’t foreclose before we can broker that deal.
Along the way, I’ve taken a few more short sale listings, with a bit more success. A colleague in my office brought me in on a Phoenix listing in May which had fallen into a short sale status. This listing is the one that just closed escrow. Looking at the timeline, we received the first offer in June, which canceled in August after I went through 2 non-responsive short sale negotiators at Everhome Mortgage. Almost the next day (it was like a gift from above), we received a new offer over our asking price. This offer was received September 5, and closed escrow on November 13, 2008. We needed 2 more short sale negotiators at Everhome, but the second one was very good to work with. She actually seemed to know what she needed, and how to move a file forward. Honestly, she was refreshing to work with, as once the file hit her desk, we closed a complicated transaction in 5 weeks. I really couldn’t have asked for more.
Last Friday I received full approval for yet another short sale transaction from Countrywide. This transaction was at least as problematic as the others in terms of gaining traction toward getting the approval. Just like at Everhome, the file moved around from desk to desk at Countrywide for weeks at a time, with apparently no one taking an interest to look at the file and get it done. We faxed in a full price offer on June 14, 2008, and the approval finally came back on November 21, 2008. During that span, after numerous calls and complaints, we were finally escalated to “The Office of the President”, where apparently the best Countrywide short sale negotiators work. This helped a little, as I finally had the phone number of someone that I could get a hold of. But it didn’t really speed up the process any. For reference, the file landed in the Office of the President on October 3, and it took until November 21 to get approved. Somehow, we’ve kept the buyers in the transaction and pacified this entire time, with inspections happening this week. The home in question is less than 2 years old, with the owner living in the home and taking care of it, so I’m optimistic this one will actually close.
Why did I share this mountain of pain? To offer some real world examples of what to expect if you are considering a short sale. If you are considering purchasing a short sale property, and would like to get into the home quicker than 6 months from your offer date, you might be disappointed. If you are selling a home via short sale, be prepared to do mountains of paperwork repeatedly. Updated copies of bank statements, proof of income, and tax returns were asked for at least 3 times, and once 5 times. For tax returns I kept faxing in my same copies, with the original fax transmission dates as an attempt to “rub their nose” into how pathetic the repeated requests were (not that it helped any). For banks that claim to keep very detailed records, they had this incredible habit of losing anything that wasn’t sent in within the previous week.
I should also mention that in each case, the banks that approved the deals reduced my commission. Thus, I have spent months and months working on the most complex real estate transactions you can navigate, for less money than I would otherwise receive/expect. Why would I work harder for less? Because my clients need me, or someone like me. Am I the best short sale negotiator? I doubt it. But I can rest easy knowing the transactions that didn’t close weren’t the result of my failure.
Is there any good news here? Short sale departments at the banks are staffing up significantly. You can expect the file to get passed around from a junior negotiator to a senior negotiator, but it should at least receive some attention. The junior person makes sure the file at least passes the basic litmus test, but the senior person is the true decision maker.
Would I take another short sale listing today? Only if it were in a neighborhood with essentially no foreclosure competition. Knowing the likelihood that it will take months to get approved, the property needs to be special enough to keep a buyer on the hook, which means a great price, very good condition, and no other distressed sales to compete against that could potentially close sooner.
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Hi Steve. Just wanted to say that the banks are probably losing more money than they need to due to being both stubborn and slow. My husband & I were down here in mid April to visit family and while on a walk, came across a property. We got our agent to come out and show it to us and it was just awful. There was evidence of past (possibly current) termites. The house was full of trash, old food, cat litter, etc. The carpets were trashed, some broken windows, fixtures that weren’t broken were outdated (pink toilet anyone?) The lot was a good size, but completely overgrown with weeds and the trees were dying from lack of water. The pool wasn’t green (yet). We loved it. It was a short sale. They had it listed for $425,000 and we came in low at $365,000. We had financing in place, stellar credit and no contingencies (except inspection of course). The owner, of course, accepted our offer in 48 hours. We have never heard from the bank and as far as I know, it should have gone to auction in early November. I will keep checking on the assessor’s website to find out what they finally sold it for but I’m betting it’s a whole lot less than we offered. As a side note, my husband ran across another property while on a business trip down here. It was investor owned, in good shape, in a great neighborhood for way below what identical houses had sold for previously. From the time he first saw it to closing was less than a month. The investor still made his money, the agent got paid, we got a great deal. That’s how it should work. Thanks again for your great site. Happy Thanksgiving!
@Kelly, thanks for sharing your experiences. It’s just too bad that the deals that get done quickly can’t be the norm, and not the exception.
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