Wednesday, December 5, 2007

Short Sales are hard. Very hard.

I recently had a short sale go down the drain after months of hard work, with a very reasonable offer on the table, for no good reason. The people making decisions for the bank are more concerned with their own portfolios than they are with the bank's best interest. "Hey, if we close this short sale then I take a loss in my department. But if we let it go to foreclosure, the REO Department takes the loss. Hmmmm..."

I had a property that needed more than just a little TLC. I discounted the price accordingly. Here's what happened while it was listed:

Offer 1: $270,000: Presented late in the evening, and then rescinded first thing the next morning.

Offers 2-4: I had 3 Realtors tell me their clients were going to offer us $250,000. None of them produced an offer in writing.

Offer 5: $250,000. In writing. With a Lender's Pre-Approval letter. 20% Down Payment. This was a good offer which I immediately presented to the banks to get their approval. You can read Jay Thompson's post to show what was in store for me next. (I suggest reading the comments, too.)

Offers 6 and 7: I had 2 more Realtors make verbal backup offers. Both said they would go a little above $250,000 if they had to, but their clients preferred to offer $250,000.

At this point, you don't have to be much of an analyst to figure out what the fair market value of this property is..

I communicated all of this information to the banks.  And what did they do?  Nothing.  They waited until the day before the Trustee Sale to let us know they weren't going to approve our contract.

Today, Maricopa County tax records show that the bank (HSBC Bank, USA) purchased the property at the Trustee Sale for the bargain price of $305,000. Fortunately they were also able to pay higher attorney fees and court fees for the privilege of waiting. They get to carry the property on their books for an extended period of time as well. And now they'll get to put the home back on the market, where it will most likely fetch less than $250,000, since the market has trended downwards over the last couple of months.

Great job, HSBC Bank! I'm sure your shareholders are proud.

Your despising bureaucracy and lack of common sense Realtor,

Chris Butterworth

[tags] Short Sale, HSBC Bank, pre-foreclosure, foreclosure, Fletcher Heights [/tags]