I recently closed a short sale listing in my own neighborhood in Westlake Village, California. The homeowners had a family business go under, so after exhausting all other avenues to remain in their home they were able to work out a cooperative short sale with the primary lender.
While doorknocking the other day, a homeowner expressed displeasure that I had listed and sold a local home through a short sale. "How could you do that to the neighborhood?" she asked. "You just cost me my equity!"
Needless to say, even while I kept my composure, I was taken aback by her accusation!
"Look, Mrs. Homeowner", I started, "let me share with you what a valuable a service I did for the neighborhood by helping our neighbor short sell their home! I saved us all from having a blighted, vacant home in our midst!"
"Oh, real-ly," she crooned, rolling her eyes. "A valuable service, you say."
"Yes, a valuable service! Let me tell you how it works: This home didn't just go into pre-foreclosure yesterday. This poor family has been struggling to put food on the table and gas in their car for several years. Do you think a homeowner who is in dire straits is able to spare any money for the upkeep of their property? Can you imagine that there was a good amount of deferred maintenance going on?"
"Well, yes, I guess so.." she said softly, shifting her attention from pruning. "I noticed the yard didn't get mowed very often, and that gutter on the side had been hanging down for a long time."
Ah, she's softening up, I muse. "Well, they had a very rough time of it. I was happy they chose me to help them because I've known their family for a number of years and genuinely cared about the outcome for them. The seller researched short sales and knew from my sales record and company team that I have a good deal of expertise it doing them successfully. So, back to what could have happened versus what did happen."
"So, now it's obvious the home was not being upkept, but it was clean and occupied. If the banks and the lienholders had not cooperated with us - me, the seller and the new buyer, the home would have ultimately been sold on the court house steps. Usually when that happens, the homeowners are so humiliated they abandon the home completely, leaving no one to water, mow or clean the pool. Are you familiar with the term "Blighted?"
"Yes, I have seen homes in other neighborhoods that seem to be vacant and abandoned! I hear sometimes hooligans have big parties in vacant homes!"
"Well, just think if that had been here on your street!" I exclaimed. "So, once a home is abandoned, it's a long time before a new family actually can purchase it and move in."
"Why, if they go down to the courthouse steps, anyone can buy it!" she said, smartily.
"I can see why you might think that, what with the news reports and all the hoopla about buying foreclosures in the last few years. But , that's not how it works in reality. It's not easy to buy a foreclosure, because there are no licensed realtors involved to look out after the buyer's interests. It's the wild west in foreclosure land, and the only people who are really successfully buying them are investors. At that point, the home will sell for MUCH less than it would have in a short sale, because it's abandoned and the available pool of ready buyers is much fewer. Did you know a foreclosure buyer at the auction has to pay for the home in cash?"
"No, I didn't know that!" she confessed.
"In 95% of foreclosure sales, the home ends up going back to the bank's inventory because either they set the opening bid too high, or no investor was interested. So, that carves out another 3 months, at least, before a new family will be moving in. The bank has to go through a whole set of sometimes slow and ineffective measures before the home is ready to market. In the meantime, it becomes more and more blighted, sitting there empty with weeds overtaking the yard and more deterioration going on."
"Now, compare that scenario with what I was able accomplish by selling the house in a short sale. Sure, the price ended up being less than what you would have sold your home for. Not considering the deferred maintenance going on, a buyer will usually get a 5 to 10 percent discount for buying a short sale. Listen, they deserve a little discount, considering they have to jump through hoops and endure a long wait - without any guarantee the home will successfully close. They pass up on other buying opportunities in the meantime. That discount is well-earned." I helped her scoop up her yard cuttings and carry them to the dumpster.
"Did you meet the new owners?" I asked.
"No, not yet. Are they nice?"
"Oh, very nice! They are replastering the pool and have plans to reface the front facade with new stucco and landscape the yard with new foliage and planting beds. It's going to be a jewel of the neighborhood!"
My new friend sighed and asked the one question I knew she would, I hoped she would!
"Well, that's all nice, dear. But didn't the sale make my home's value go down?"
"Are you planning to sell in the near future?" I smile. Be silent until she answers, I think.
"Well, actually, I am, that's why I was so upset! I'm downsizing since my husband passed and was thinking of looking for a smaller place."
"Well, I assure you, your home's value will not suffer because of this short sale. Our area isn't dominated by them, and that's what an appraiser will consider when setting a value for your home. We have had strong sales recently. There may be buyers who would want to discount their offer for your home because of a nearby short sale, but in this market there are plenty of other buyers eager for a home like yours. Would you like to show me your home? Maybe I can give you some selling tips!"
"Yes, that would be lovely, dear. Why don't you come in for some tea?"
Ok, I admit, I now love door knocking!
Happy knocking!
Kathy Smiley, Realtor
"Results That Will Make You SMILE!"
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