Ronald McMansions asked about the state of short sales.
When HAFA was rolled out as the government’s answer to short sales, the servicers said they’d be pre-approving candidates, but I still haven’t seen, nor heard, of any around here.
So it’s been more of the same drawn-out approval process.
Bank of America is still a disaster zone, with no consistency whatsoever, and lengthy delays. Chase has been better, and from what we can tell, one of the reasons is because when a buyer bails out, Chase keeps the file with the same negotiator. Bank of America seems to start over every time.
But I think it has a lot to do with the competency of the individual negotiators – some can handle a bigger workload than others. Same with the listing agents, and I have yet to see a short-sale negotiator that made any difference in getting them approved faster.
Some stories:
1. We have documented the purchases by LGS of 1-br condos to use as rental properties in a particular La Mesa complex. Last year he paid $75, 000 for an REO, and $60,000 for a short sale, which took 11 months to get approved. In the end, he had to bring in an extra $1,800 to pay the short-sale negotiator vig, and $2,200 to pay off the second mortgage holder.
In August, 2010 we offered $60,000 cash on a third condo for which that the seller paid $155,000 on 2/1/07. There were two purchase loans; the first was $124,000, and the second was $15,500, and both were funded by National City. The first lender approved our price in December, and alloted $1,500 to the second lender. But the second had already been sent to collections, and they refused – they wanted $6,800. LGS offered to add $2,000, similar to what he paid last time, but the second denied that too. The deal died last Friday.
The first lender is foreclosing today, and the opening bid is $142,000.
2. In May, we made an offer of $820,000 on an approved short sale, but we backed out a week or two later due to discomfort about the process – but sometimes price will fix that. We came back a month later and offered $790,000, but the mortgage had transferred from GMAC to Saxon. Whatever the deal made there must have been motivating, because Saxon delivered official written approval of our lower offer within 30 days.
3. A year ago we made an $1,000,000+ offer on a BofA short sale that seemed to be in line with the comps. Four months later it was denied, and BofA said they were going to foreclose instead. But then they postponed the trustee sale three months in a row, so I called the listing agent about giving it another try.
He said, “What the heck”, so I sent an offer that was $100,000 lower. BofA approved it last week.
4. I heard this story from another agent. Their short sale was approved, but the sellers weren’t very cooperative, which is typical. They turned in their escrow papers the week of closing, which included their “statement of information”, the form used by the title companies to help determine if any outstanding liens belonged to the sellers, especially when they have common names. Title found that the sellers had a $19,000 tax lien! Because the sellers cried poor-mouth, the buyers and both agents had to split it three ways.
Generally the short-sale process is about the same as it’s been – long and unpredictable.
Anectdote #4 = ACK! That kind of thing would drive me insane. I’d have to double my blood pressure medicine to put up with that during the workweek.
If banks really want to sell properties as short sales all they have to do is…
1. List low to get offers
2. In the house description list requirements to place an offer
3. In the house description state the currently accepted offer amount
4. In the house description state how long until the currently accepted offer is accepted.
5. Have all offers sent to the bank first to review who then kicks it back to the listing agent. (Bank maintains database of offers received and is at “arms length” from the listing agent)
If the steps outlined above were followed buyers would feel much more comfortable placing offers.
Unfortunately what I wrote won’t happen because it puts a defined sales date on a property. Since banks don’t need to sell because they’re operating on tax dollars they’d rather just wait and hope for a better day.
We had an offer accepted on a short sale for 520K. After about a month the bank came back to us and asked for another 25K. We were so mad, we walked. We just didn’t want to deal with it.
We successfully completed a short sale purchase (all cash) of a La Jolla condo this summer. The only complaint was the indeterminate wait (3 weeks for 1st lender approval, 2 months for 2nd lender approval), only to be rushed into a 1 week escrow (with many hundreds of pages of documentation to review and approve) to beat the 1st lender’s pending foreclosure sale. Amazingly no jerking around on the price and no surprise fees. The first lender approval was probably sped up by a prior accepted offer that had fallen through.
From the MLS today:
An email to all Sandicor Participants and Subscribers.
7.15.2 Lender Approval Listings. Compensation offered through the MLS to cooperating brokers on listings which require lender approval (commonly referred to as “short sale” listings) is for the amount published therein unless the listing broker indicates on the MLS the following: (a) the fact that the sale and gross commission are subject to lender approval; and (b) the amount or method by which the compensation offered through the MLS will be reduced if the lender reduces the gross commission. This section does not allow an additional reduction from the commission offered for items such as a short sale negotiator fee or other administrative costs of the transaction. Any reductions from the commission offered for such items should be factored in as a reduced amount the listing broker initially offers to a cooperating broker and may not be made a condition of the offer.
The Compensation to Buyer’s Broker field (CBB) is an unconditional offer of compensation from the listing broker to the cooperating broker. The confidential remarks are not to be used to reduce the cooperating broker’s compensation for the use of a short sale negotiator or any other third party fee.
JTR – when I got that Realtor email i laughed because it was 100% about protecting agent’s commissions, and not questioning or addressing the ‘negotiator’ fees.
Glad to see the system is working for the client, not.
clearfund, it’s funny but we always snark that it’s “all about the money.”
Well, I finally cracked open California Real Estate Principles and it is so blatant.
Page 4
“With the high cost of real estate comes the potential for high profits in the selling of real estate.”
(A little bit of math on the commission for a $500k home.)
“As you can see, the real estate businesses is a profitable one.”
The fricken book that teaches Realtors the trade dangles making teh big money right out of the gate, not any of the values that Realtors bring to their clients. No wonder the business is full of sleazy operators (guys and gals like Jim excepting.) It’s all about the money, they say so right int the very first chapter. The trade of real estate is being sold to new recruits like ads to housewives to make “$8000 a month working from home!”
It’s like teaching lawyers how to chase ambulances instead of to have a respect for the law.
Is it any wonder there is so much questionable behavior in the the industry?
Speaking of questionable behaviors and bringing value to the client… anybody sees any “creativity” with this particular short sale …
Single Story 2700 sqft + Pano Ocean Views + Pool + Upgrades + Great schools in 92011 … all for just 700K (last sold for 1.3 Million) !!!
http://www.redfin.com/CA/Carlsbad/6721-Camphor-Pl-92011/home/3745692
Thanks for the info, JtR.
That place on Camphor was an absolute steal IMHO.
pemeliza-Looks like it sold for almost exactly what neighborhood comps are. It sold for $720,000, and Redfin’s autocomp number is $721,827. So, unless the view or condition is above average for the neighborhood, they got a fair deal, but not an “absolute steal”. It does look like most of the comps are two stories as opposed to one, so there’s that at least.
Geotpf, that side of the street has some of the best views in the area. There is a substantial dropoff down to the next street below which makes the views superior. The view that is pictured is from the backyard. It is a sit down ocean view not a peekaboo view. The comps coming up on redfin are on the other side of the street and back up to a slope. As I said it is my opinion of course but I think that given the upgrades, 720k is probably a 1999-2000 price for that property. How many other properties in that area are selling for 1999-2000 prices?
From the confidential remarks:
No more offers are being accepted as of 10/12/10. Multiple offer situation. All short sale terms and conditions including commission are subject to lender’s and seller’s final approval. No kitchen appliances,wine cooler, or outdoor grill convey.
There were multiple offers when the house was listed at $850,000, and he lowered the LP to $750,000 a week after marking it contingent. The listing office represented the buyer who got a $130,000 discount off list price when there were multiple offers?
It is one of the best views in area – I’d call it a steal, and another example of how the listing agents can skew a short sale in their favor.
It sold for $911,000 in 2002.
Call the police, it’s a robbery.
It is infact a Robbery and something needs to be done.
I have been trying to buy one on Ocean View side of that street/hood for the past 2 Years+. Nothing under a Million. It truly is one of the best streets in 92011. For a sit down Ocean View like that one the most recent sale comp is for 1.33 Million (Barberry) in the past 30 days.
Here’s another example in CV, two 3,600sf listings in Huntington Heights came on the MLS yesterday, one at $1,399,000, and the other at $820,000:
http://www.sdlookup.com/MLS-110006775-5063_Seachase_St_San_Diego_CA_92130
At least the agent got back to me about showing it, here’s what she said:
hi. I have 2 offers tonight sight unseen higher than asking and both all cash..
One we are accepting, and sending in tomorrow morning to stop the foreclosure sale scheduled for Feb 8th.
we will see what happens next
I will keep your email and info and let you know if we can market the property further…