I’ll have more to say about this either later today or tomorrow, but, after four months and one day, our effort to buy a short sale property has officially come to an end as of about ten minutes ago when our realtor was informed that we’re coming to pick up our earnest money deposit and withdrawal the offer that we made back in May.
What a clusterf#@k!
For those of you new to the story or in need of a refresher, here’s the sordid history that we’ll try to put behind us as quickly as we can:
May 12th – Would You Buy a Short Sale?
Jun 12th – Our Short Sale Offer – One Month Later
Jul 12th – Our Short Sale Offer – Two Months In
Aug 12th – Our Short Sale Offer – Three Months In
In short, the last developments were that the bank finally responded to our offer on Friday with a counter-offer, providing a 72-hour deadline for a response (that, in this case, does include weekends) and, if no response was forthcoming by said deadline, they would promptly “close the file”.
This particular counter-offer was actually higher than the aborted counter-offer the bank made last month and, even if we were interested in accepting it, there would appear to be only two chances of the paperwork being put together and submitted before the 11:00 AM deadline – slim and none with slim having just left town.
We had contemplated making a counter-offer to theirs (which, by the way, we never did see in writing) but, at this point, it all seems like an exercise in futility and about the only thing to feel good about at this point is that we already decided to walk away from the deal earlier today, hours before we found out that it couldn’t get done even if we wanted it to.
Some advice for anyone who happens to come across an attractively priced home fore sale where “short sale” is listed as a special condition – RUN THE OTHER WAY!
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
Isn’t it about time for you to move again Tim?
That thought has crossed our minds…
well… there you have it.
Tim,
If you really consider data like these:
http://i47.photobucket.com/albums/f187/norakemetrics/economics/us-history-home-values.png
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/Fed%20Balance%20Sheet%209.9.jpg
It is a wonder why you would want to buy even a short sale home right now.
You must believe that the gross majority of failing mortgages and even “about
to fail” mortgages are being held back in a way which creates something a million miles away from “free market” for housing and that it is only a question of “when” interest rates will go up and we know what effect that will have on
home prices too.
Given that why do you even bother considering buying home now??? A
rented home is a home too! :^)
Care to elaborate on the economic (not personal/emotional if there is one)
side of your thinking???
—
Note from Tim: This got hung up in the spam filter for the last hour…
If it were an investment property, it would be a simple decision right now – don’t buy. But, when it comes to a place where you’re going to live for the next 10 or 20 years and you find the right property, that makes it much less of a business decision and much more of a personal decision to be made by both my wife and I.
BTW – the curve in that first chart has already come down quite a ways…
Consider building if this home was actually one of a kind and not otherwise available. As you probably realize, you’d be nearly through that process by now if you had. You certainly won’t have trouble finding a builder who’s available.
“…it is only a question of “when” interest rates will go up …”
I have been in the inflationary camp as well for the last 2 years, only to see the deflationary trend to prevail. Peter Schiff, who has been crying wolf for the dollar for a while and definitely “was right” about the mortgage crisis, has lost a lot of money for his clients because of the wrong timing of his inflationary call.
In a nutshell, while the predictions of the Treasuries debacle make a lot of common sense, why do you think it is not possible for the Fed to continue to expand its balance sheet in order to balance on the edge between the inflation and deflation for foreseeable future? Investors in T-bills seem to have absorbed recent >$1T expansion without a blink.
Why then would they react differently to another $1T foray into borrowing from the future?
These are the answers that I, as an “inflationist”, would really like to know.
– My condolences on the termination of your short sale deal, Tim
Lost money? Quit talking out of your rear end. Only someone who bought “all in” in the fall of ‘08 lost anything. I followed his advice and I’m way way way up. Things went “down” only for a brief period in the winter of ‘08. My oil trusts have nearly tripled since March ‘09. Gold is at an all time high today. Nothing goes straight up or down.
This “boy who cried wolf” had me in gold at $670 and oil at $50/bbl. I bought australian and canadian dollars last march based on his “crying” and they’re way up since then.
He’s not a swami. He doesn’t predict what will happen tomorrow. But hey, you keep buying those treasuries.
I’m aware of several short sales that have gone OK, and I hope to close on one next Monday. It’s not clear if it will really close, but our bank is the problem, not the seller’s bank.
Some of the keys to a successful short sale seem to be:
1. The buyer has no particular timeline – willing and able to close quickly or wait indefinitely.
2. Either the seller or the seller’s agent has experience or insider relationships so their calls get returned by the seller’s bank.
3. It also helps if there has been a failed sale before you, so the seller’s bank has already done an appraisal and decided what they’re willing to accept.
Even if these factors are all present, it’s still somewhat of a crapshoot.
Update: Just got word that the property did not appraise, so the sale will not go through as planned. The appraiser chose some truly sadistic comps, and as you can imagine there are plenty of those in Phoenix.
I think we will cancel the current contract and make a lower offer, which probably will not be accepted. But again, this was the buyer’s lender tanking the deal. Seller’s lender was pretty responsive.
Looks like Gawains Ghost knows what he’s talking about in matters real estate.
Hi Tim:
Sorry to say this, but you had an unfortunately typical short sale experience: wait and wait for a bank to reply, only for the bank to make unreasonable demands. The sad part is that you will very likely see the bank foreclose on this property within a few months; when it finally comes back on the market, the bank will have to settle for even less than your current offer.
Well you can now go play some low ball. Play the numbers, just low ball house after house with a very limited offer time. Eventually someone will bite and you got yourself a deal, or at least a deal today. We are planning to play low ball in a year or two when we think we are at or near the bottom. Keeping this plan in mind helps me accept the near zero interest rates I am getting today, when I could move the cash to AU and make 6% in a savings account. But I think American home prices are falling faster then the dollar so it is not a bad waiting game. Jobs will never come back, but higher mortgage rates will eventually, so housing only has more downside. The investment question is weather to buy rental property for seniors, or agricultural property for the coming food inflation. Anyone have an opinion on which way to go?
My brother listed and sold his house on a short sale 5 months ago. The bank sat on the paperwork for 4 months, so the buyer finally walked away. Now he’s back to squatting, living rent free until they can prepare the house for sale again. Open houses, realtors, showings….You are right. What a clusterf**k. If these clowns at the bank would have just said OK, the deal would be done long ago.
We submitted an offer on a short sale. The house had been sitting empty and on the market for 6 months with several price reductions. Ours was the first offer the house had received, and we agreed to the current asking price of $260 (we’re in California, and that was a pretty good price). The bank sat of the offer for two months and then verbally countered with $100k more. We declined and have refused to look at any more short sales since. The house is still sitting empty, and the realtor hasn’t bothered to change the MLS listing because she knows the house won’t sell at a price the bank will accept.
This was only the latest tale of woe in our dealings with short sales. We’ve found too many sellers just trying to get an offer to hold off on the foreclosure auction, so we’d learned – the hard way – to check how much was owed, and how many (and which) banks were involved. We didn’t bother with asking prices that were too low compared to what was owed.
Our realtor says that his experience is that you cannot predict which short sale offers will get accepted and which will get rejected. Good offers get rejected, go to auction, and end up selling for $50k less than the offer!
Frankly, I don’t understand why ANYONE who is underwater on their house still bothers to pay the mortgage. They could stay for an awful long time rent-free since the banks don’t seem to be interested in selling anything at a price that would actually sell. I thought I was smart by renting a few years back, since I knew I couldn’t afford anything at the height of the bubble. It stings to realize I’m paying rent every month, when I could be living in a McMansion for free.
Hi Tim – sorry to hear about your painfully slow experience.
I suspect there is more than meets the eye to the delays experienced when dealing with the banks and short sales.
Banks are busy, but not over 4 months behind as you experienced. I’m guessing they are also intentionally stalling, to defer the day of reckoning. By prioritizing and short selling only their most expensive properties (the top), booking them as if they were their worst (the bottom), and using mark-to-market (they lie, hoping nobody sees their books), they are able to make their portfolio look better than it really is (fraud), in hopes they can stall long enough for prices to recover.
This won’t clear itself up anytime soon either. This whole process could easily go on for 2, 3, 4 or more years, while the bad debt is purged from the system. Until banks are forced to list their debt using actual accounting, not make-believe books, this problem will continue.
Good luck finding a home. I hope your next buying experience is better.
On the contrary. Right now there are over 9000 short sales *with offers on them awaiting approval* in Vegas alone, and another 6000 short sales listed as “available.” The bank offices that handle these approvals used to handle a tiny fraction of that annually. Add to this the securitization issues, meaning that the short sale actually has to be run by some unknown number of investors. I knew when the new short sale “guidelines” requiring an approval within 2 weeks came out that the banks were not going to comply. I tell clients to be pleasantly surprised if they get an answer sooner than 30 days, and be prepared to wait 6 months.
But yes, I have seen anecdotal evidence that banks are stalling booking their losses.
I hate to say I told you so… so I won’t.
Good for you and your decision to walk away because you were never going to close on the house for a price you thought reasonable.
Short sales are not in the best interest of the bank. They will hang onto the property for as long as humanly possible, which I is why I don’t believe there will be a wave of foreclosures.
I tried to warn you about deals like this, Tim. What probably happened was the bank got an appraisal or a price opinion from some idiot who overvalued the house. That’s why they raised the counter-offer. Strange that that it had a 3-day deadline, including weekends. Usually a counter-offer applies only to business days.
They must have thought you were frustrated, perhaps desperate, after waiting for four months. Either that or they intend to foreclose, list the house at say $20,000 over the presumed appraisal value, and decided to force you to a decision. I think you made the right one.
There are other houses on the market, a lot of them. You should be able to find a deal.
Yeah, we learned the hard way.
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[...] our attempt to purchase a short sale property has come to a disappointing conclusion (see this item from Monday for full details), the catharsis of sharing a few parting thoughts on the subject [...]