Recently, I received a few calls from some real estate investor friends of mine here in North Carolina venting their frustration with working out short sales with some lenders. It seems some lenders are stalling in making any decisions as to whether they will release a mortgage for less than what is owed. If you have a buyer waiting for a decision from the lenders, believe me, they will not wait around very long.
It seems some lenders may be unwilling to short sale the property thinking that the Federal government will purchase these bad loans at par, thus no need to take a loss by short selling. What has been your experience?
In September of 2007, we made an offer on a pristine home in a golf community in Wake Forest, North Carolina. The lender sent out a local real estate agent for a BPO (Broker's Price Opinion). The BPO figure was way above the current payoff and the lender refused our offer thinking they could sell the property and not take a loss.
If I recall right, the BPO was for about $680,000 with a payoff of approximately $600,000. We offered $535,000 and I was turned down. I don't need to tell you what has happened to the price of real estate since September 2007. I drove by the home last week and guess what? The home has not sold. It has been vacant since April of 2007. I sometimes wonder if the lender wished they had accepted my offer. I am beginning to see this scenario more and more, especially in the economic environment we are in.
I don't know who coined the phrase, "Cash is King", but it is certainly true in the real estate market we are currently experiencing. I have been talking with other investors who are waiting for the market to bottom out. The problem is that no one knows when that will happened.
I told them that if they can buy today and make a reasonable profit, then by all means buy today. But the greed factor is too great for most of them. They want to wait a little longer. I would prefer inventory and keep cash at a minimum because there are so many uncertainties in our economy today that can affect the value of our dollar.
I am also hearing rumors about the possibility of a Real Estate Resolution Trust. If that happens, I hope the Feds turn to professional auctioneers to help liquidate these properties. No doubt the Feds will suffer a loss but not as much of a loss if they use bank employees or attorneys to auction these properties.
For more information about real estate auctions, go to my web-site http://www.cansellnow.com
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