THE UNDERBELLY OF THE SHORT SALE AND FORECLOSURE WORLD - A REAL ESTATE AGENT'S PERSPECTIVE
I never planned to get involved in short sales and foreclosures. My preference was the senior population, hence my SRES designation. Early in my career, I signed on with a referral company. The leads I received brought me into contact with the seedier side of the real estate business.
I met some really great people who just didn't have the income to buy more traditional properties, and justifiably, were attracted to the rock bottom prices of distressed homes. Who wouldn't want to get a good deal? For those with only 100K or so to spend on a house in New York, a short sale or foreclosure was truly the only option.
From time to time, people would tell me that they were successful in purchasing one of these investors' specials, and I think it's possible to get lucky. However, my experience with Long Island's rather large inventory of short sales and foreclosures has proven to be a real test of perseverance and endurance.
First-time homebuyers are always unaware and are often disillusioned to find out that the low asking price listed is intended to generate multiple offers. Especially in the lower price ranges, houses will almost always sell for full asking price or more and, of course, cash is king.
The bank will wait to make a decision until there are several offers on the table. Prospective buyers need to be counseled to begin with their "highest and best." There may not be an opportunity to put in a higher offer. This purchase practice differs from the customary negotiation process of conventional housing. Unfortunately, it is usually not until they've lost several properties, loads of time and experienced heartbreak that they begin to understand this concept, Even so, in desirable neighborhoods, investors will win out every time.
Even without tenants, these properties can be almost impossible to get into. Less than reputable agents will refuse to call you back, hoping you'll get disgusted and give up. Obviously, if it's a house in halfway decent shape, dozens of people are going to be interested. The agent knows the property will sell quickly and is probably saving the house for one of his own clients in order to double-end the deal.
I had one foreclosure specialist tell me that purchasing a property in Nassau County, a very nice area within reasonable commuting distance of New York City, was simply not possible. Assuming there is nothing wrong with the listing, which can cause even investors to lose interest (i.e., title issues or unusually high taxes) there are always buyers ready to snatch it up quickly. This professional further stated that, in order to be successful, I needed to go to Suffolk County, where my chances of finding a distressed property for my clients was much greater. With the sheer number available, and their even greater commuting distance from NYC, Suffolk County's short sales and foreclosures are considered less desirable.
Just as frustrating is when these super deals are bought so quickly by those in the real estate business, they have not even been advertised to the general public. This certainly smacks of insider information and in other fields, would be considered a problem and against the law.
Corporations advertise properties with special 888 phone numbers to call. At these seemingly shady places of business, it is impossible to find someone to speak to. Even the reception area is set up with voice mail. Leaving 25 messages won't help a bit. They have no intention of getting back to you. The listing agent's name is fictional. If, by luck, someone answers your ring or you creatively find your way around the labyrinth that is commonly known as a phone directory, be prepared to hear that no one exists by that name. If you naively point out that this is the name listed on the MLS, you may very well be asked, as I was, for the number of years you've been working in the real estate business.
There are agents who purposely give you the wrong code to a combination lockbox and show no remorse whatsoever if you happen to complain about the frigid, rainy or snowy outdoor temperatures. Mentioning that your clients include a young couple carrying a baby and Grandma who can not stand for long and periodically needs to use the wet steps as a resting place elicits a very weak apology. Other agents make you participate in a treasure hunt just to get inside the home. You'll need to dig up the Sentri lockbox buried beneath the oak tree in the backyard to find the piece of paper on which the sought after combination is written for the second lockbox which was placed on the front door.
Tenacious to the bitter end, I'm surprised I haven't been able to sell more of these homes. But the system is difficult to penetrate and unless I aim to spend my days on the courthouse steps, getting to know the regular investors at auction and finding my place in a system in which I was warned "I'd be eaten alive", I'm not likely to have any more luck in the future. I suppose I'll just concentrate on my niche.
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