First and foremost, I'm a big proponent of short sales. Done right, short sales can be a win-win for everyone involved. The lender lowers their loss, the seller avoids foreclosure, and the buyer gets a great deal.
So this is one that left me scratching my head and if anyone would like to explain please chime in.
The story goes:
I had a property listed and after some time on market we eventually settled ended up at $129,000. How did I get to this price? Well after the first offer went south the negotiator advised me to lower it to that price and let him know how it progressed.
Another offer came and wen while we tried to get the first (Chase) and second (Resurgent) to play nice with each other and agree on who gets what. After some mediation I did get the first to approve a higher payout to the second and in comes a third offer. Now the second decides to 180 on me and wants even more money.
The buyer who really wants the house arranges to borrow the additional funds. All is well until Chase comes back and says that the home is price too low they have a BPO that supports a higher value (don't get me started on BPO agents, there are a lot of people running around doing these who have no business establishing value). Odd, considering I priced where my negotiator from Chase asked me too.
Ultimately with the second digging their heels in and not responding and the first deciding they wanted to increase their net, the buyer decided it wasn't worth it and moved. My seller who had run the emotional gamut 3 times in a row decided to throw in the towel.
Well I decided to attend the auction just to see exactly what the lender was going to net.
As bidding progressed the home eventually sold for $98,100.
The net for the short sale offer we submitted to the lender was $110,931 to Chase with the sellers willing to sign a promissory note to the second.
The rocket scientist in loss mitigation cost themselves an extra $12,831 and Resurgent got a big fat goose egg.
I've told clients that banks don't want to foreclose because it costs them more money than a short sale many times, but I'm starting to wonder if the monkey's in loss mitigation know that.
Brian...
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Hi Brian,
I really understand your frustration as we are in the same boat here in Reno, Nevada. I had a neighbor that was foreclosed on, but, before that happened he got an offer on his property for $425,000 - the bank turned it down and took the house. The SAME buyers came back and offered $375,000 - the bank turned it down. Again, after months of the house sitting, the SAME buyers came back with an offer of $350,000 - turned down. Guess what - they made another offer and got the house for $300,000. Makes sense doesn't it???? By the way, as I live in the neighborhood I had a pretty clear idea of what the house was worth when the sellers went into foreclosure and that was about $400,000. What are the banks doing with all this TARP money????