Thinking about buying a short sale in Phoenix (or anywhere else)?
It’s not for the faint of heart.
Or anyone that wants to apply logic, reasoning, common sense or business fundamentals to the decisions that banks make on short sales.
Here is a real life situation that is coming to fruition today in the wild and wacky world of real estate short sales.
Almost 10 months ago, someone offered $172,000 on a short sale listing in Chandler (a suburb of Phoenix). Six months later, the lender finally accepted the offer. Problem was, the original buyers had grown weary of waiting on the bank and found another home ”“ they had already purchased another property (and shame on their agent for not withdrawing their offer at that time. Welcome to my world).
So the property goes back on the market. Two days after that, we had clients that submitted an offer. They offered $175,000, with $35,000 down and a 30 day close. That’s a strong offer by any measure.
The lender, apparently ignoring everything that happened in the preceding six months and having already approved an offer at less than what our clients were offering, basically started their ridiculous approval process all over again.
Fast forward 3.5 months to today. Despite the extra $3K our clients were willing to pay, despite the previous approval, despite all logic, our clients offer is still not approved.
And roughly 20 minutes from now the home will be foreclosed on.
What’s the opening bid set at, according to the Trustee’s web site?
Yes, that is $24,550 LESS than the offer the bank has had in their hand for the last three and a half months.
The listing agent for this property has tried to get the foreclosure auction postponed. All the players (except the bank) have done everything possible to extend the foreclosure so our clients can purchase the home.
The bank’s response to why they aren’t extending the foreclosure in an effort to sell the home at $175K?
“The short sale process has taken too long, so we won’t postpone the foreclosure date.”
Well no kidding. 10 months is absurd. But check me if I’m wrong Sparky, it is YOU THE BANK that have caused this interminable delay. It is YOUR PROCESS that completely and utterly sucks beyond all comprehension.
So today you might sell the home for $150K. Sure, I suppose it could be bid up over the amount either buyer already offered. Good luck with that. Most foreclosures in Phoenix don’t sell at auction and end up reverting back to the bank. Then they’ll sit on it for months before they put the home back on the market ”“ probably at a list price of $150,450.
“But wait Jay, I don’t understand. They had an offer for $175K. Why would they foreclose on the home and take a bid at $150K?” the astute reader may be asking themselves.
I don’t understand it either. It’s incomprehensible. It makes zero sense. Then again, we’re trying to apply logic, reasoning, common sense and fundamental business practices to a bank. And that my friends, is an exercise in futility that will drive you insane, or make you want to buy t-shirts like this for all the banks and short sale department employees:
(My apologies if you find the above graphic offensive. I find the bank’s short sale processes offensive and it was the best expression of their apparent attitude that I could find.)
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