Monday, June 23, 2008

Bank bungles another short sale

Two of the most talked about subjects over the last year have been "Who's to blame for the real estate downturn we're in?" and "Short Sales / Bank-Owned Properties". I'll discuss whose fault it is tomorrow. Today I'll write about another short sale contract we attempted.

I've written about short sales and bank-owned listings before: Short Sales are hard. Very hard., If I were a bank, If I were a bank – Part 2

Last week I finally received an official "no" from another bank on a short sale contract where I represented the buyer. We presented a market-value offer to the bank, then waited 2 ½ months for the bank to obtain a BPO (Broker's Price Opinion) and an appraisal, both of which came in within $2,000 of our contract price. The bank needed to postpone the trustee sale date for 30 days, because they were out of time and hadn't yet accepted our offer. Then they waited 27 more days to say no. That's 3 ½ months it took to say no to an offer which was within $2,000 of the value given by 2 different sources hired by the bank! But that's only part of the insanity.

It makes even less sense when you look at what has happened in that particular neighborhood during this time. Many short sale listings have gone through the foreclosure process, and are now back on the market but at a lower price. This means that once the bank completes the foreclosure process (and incurs extra expenses), they'll have to re-list the property at a reduced price as well. My guess is that we'll see the home back on the market on about July 15th, for a price of about $229,000 (compared with our contract price of $243,000.)

It makes no sense at all when you consider the bank's stated reason for not approving this short sale: They didn't like the way the homeowner allocated his money. They are upset that he was able to pay off his HELOC but did not pay down his 1st mortgage balance. Excuse me, but when did banks decide that being punitive to their borrowers was more important than making sound financial decisions?

Your believing the banks' poor decisions are slowing down the recovery Realtor,

Chris Butterworth

[tags] short sale [/tags]