I just completed a video about short sales, but I wanted to discuss them in more detail. In the past 3 months my partner and I have seen over 100 homes in the city of Irvine between $355,000 and $455,000. Less than 10 were equity sales. We learned very quickly after our first couple of offers that we had been thrown into the lion’s den. We have learned some valuable lessons that I would like to share. First of all, most of the short sales are being priced way under market value. This is a brilliant move. Buyers get very excited when they hear the prices on these properties and their agents write lots of offers. The properties are then overbid, not by just a couple of thousand dollars, but at five plus percent over the listed price. The buyers can hardly believe they have to bid so high.
That is just the beginning. Once you have submitted the offer the wait begins and I mean wait. We are still waiting, after having an offer in on one property for over 12 weeks. It seems to me that the banks should be better equipped to move these sales along, but, then the banking industry’s business model has never made sense to me. I really thought this go-round (after the 1990’s debacle) we would see a more intelligent approach to a major market issue. Instead, we are mired in a complete mess. While the banks take an exorbitant amount of time to respond to offers, the buyers begin to lose interest in the property. Can you blame them??
In many cases the buyers begin to wonder, if the agent with whom they are working is really doing his/her job. The longer the wait, the greater the disillusionment.
Because the process takes so much time, many buyers drop out of the process. As buyers drop out, new buyers are still making offers, all on the same property. The listing agents on these properties are well aware of what your or my offer is, what the terms are, and what they need to do to to write an offer (for one or more of the unrepresented buyers) for the property. Do you think we have a chance??? Not likely. I do not want to imply that short-sale agents are a bad breed. Most are very capable and good agents, but the process lends itself to the situation. A double commission is very appealing and there is no crime in a short-sale agent writing an offer that will be accepted by the bank over mine or yours. It is just completely frustrating. We have no competitive edge, at all.
So, if it is a short sale you are looking for……..Beware…………………..Short does not mean short and sale does not mean sale.
It is my opinion, if you want a property, to search out an equity seller, with whom you can work directly and get an answer in a reasonable amount of time. Now I am going to make a rash statement: I think you should buy the equity sale home and pay slightly more. Over the next 5 years, it is not going to make a difference. You will have a home you love and not have had to live through the Short Sale Nightmare.
Enter the next interesting aspect of the sale. Although our offer was submitted to the bank 12 weeks ago, we have not heard a word, well I take that back. Yes, we have. Upon our constant “checking-in” with the bank’s agents, we have been met with “We will let you know, as soon as we hear something” and a couple of days ago I asked the agents how many buyers had decided to pull their offers and find another property. ”About 6, I was told.” I got excited as that meant we would now be down to about 3 buyers. Wrong!! An additional 6-9 new buyers had entered the arena, several of them are personal clients of the agents representing the property. Guess what that means? It means we have a snowball’s chance in( a certain hot spot) to get the property.
The short sale agents know our offer, know its terms and now have a clear picture of what must be done to craft an offer that the bank will accept and we will be out of the picture.
It really doesn’t matter, at this point, as we were successful in obtaining a property
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