Thursday, August 21, 2014

Q: My wife and I just walked away from a short sale.

I couldn’t believe we waited six months and gave the short sale lender everything they wanted and they still wouldn’t close.  What is the matter with these people?  Don’t they want to sell these places?

A:  I wish I knew the answer to that question.  I’ve been involved in several short sales and like many brokers, I hate them.  They require far more work and effort than a regular sale and many times they fail.  I always tell clients I work with that they can expect it to take at least six months and that they will have no control over the outcome or the transaction.  I won’t have any control either.  Being a bit of a control freak, that drives me crazy.
It would make sense, from a logical point of view that the banks would want to sell these short sales, get some money out of it and move on.  Not true.  I have come to believe it’s some sort of plot.  That sounds paranoid but there is no other explanation for a lender to spend many months sitting on these properties and then refusing to do necessary work ( septic failure for instance), or delaying the closing for no reason. 

For investors paying cash, with no emotional attachment, short sales can be a real bargain. These are buyers who will fix up the place and rent it out or turn around and resell it. But for folks wanting to live in the house and anxious to get settled in, it can be maddening to wait so long.  I wish I had an answer.  There is truly no sense to it and I’m sorry you’re so frustrated. 
Before entering into a short sale, ask yourself if you can really wait out four to nine months.  Be sure you have your financing ready to go as soon as you get the acceptance from the seller’s lender that they will accept the offer.  Also be sure you understand that you will have no control over the process.


Thursday, August 07, 2014

Q: My husband would not accept the counter offer from the sellers for a little bit higher price.

He just got stubborn and thought the sellers would back down.  Instead, the sellers accepted somebody else’s offer and we lost the house.  I don’t ever want to go through that again.  What can I do to get him to be better prepared for the next time we make an offer?  At least I hope there will be a next time.

A:   First, he needs to understand that this is a fast market.  For certain kinds of properties there are often bidding wars.  A well-priced property will sell in days so he can’t be too stubborn about shaving a few dollars off the price if he really wants a home here.
   More important is understanding that this is not a contest to see who can hold out the longest.  It’s not a competitive sport, it’s buying a home.  While he is trying to “strategize” (his word) someone else will buy the house. I’m sorry to say that I’ve seen many buyers who get tangled up in one-upmanship.
    I think it’s also helpful to put that price difference in perspective.  He was trying to cut $4,000 off the price.  At the current interest rate that would have saved only about $20.00 per month on the mortgage payment.  That’s about the same price as six lattes a month or two glasses of wine at most restaurants.  I think having the home you want is far more important, don’t you? 
   Stubbornness can really backfire for buyers in a seller’s market. Of course, since I only represent buyers, I don’t like this kind of market.  But the best way to approach an offer is to know the highest price you would be willing to pay for the home.  If there are no other offers you might be able to offer a bit less.  Otherwise be prepared to pay asking price. There are still some bargains out there, but they may not be the location or type of property that you’ve been hoping for.