Hey Folks, it’s been a while, but I am back and ready to rant, I mean, write. In my last post, I talked a little about short sales and promised more, so here goes.
Short-sales can be a night mare! They aren’t always, and sometimes one can get a much better deal on a short-sale vs. a traditional sale or a bank owned property sale, but sometimes they can lead to great disappointment. Here’s a case in point, the short version.
Like so many others these days, Erik lost his job. While looking for work, he tried to get a loan modification or refinance to reduce his interest rate, but with his home being worth less than he owed on it, banks were unwilling to refinance, and without steady income, his lender was unwilling to modify his loan. In other words, the bank’s position was that although he couldn’t afford his current mortgage payment, his income wouldn’t qualify him for their lower interest rates, either, and they were unwilling to defer payments or do anything else to help him.
Erik fell behind in payments. He finally found a job about 100 miles away and had to relocate. He was going to rent the place out, but found that rents wouldn’t come close to covering his payments, so he decided to sell. He hired me to market his house as a short sale.
We put the home on the market and received an offer 2 weeks later for $310,000. The nightmare began.
I called his lender, Bank of America. I was put on hold, transferred around, given different numbers to call, and finally told to fax in the offer and other documents, including his income, asset, credit, expenses and a ‘hardship’ letter, explaining why he needed to short-sell. I was told to wait 72 hours for it to be ‘entered into the system’, then to give them a call to discuss.
I did so and when I called 3 days later, they had no record of it. The rep told me to fax it again and to give them 72 hours. The third time this happened, the B of A rep said, “Who gave you that fax number? Try this one.” This time they got it, and told me it would be reviewed and assigned to a negotiator.
Day after day I called, waiting on hold, explaining the situation, getting transferred, getting promises of call-backs, package reviews and resolutions.
The file was transferred to a 3rd party negotiation and processing company the bank had hired. I called them and found that B of A had only sent my name and the file number. No other short-sale info, and I had to start from scratch with them. They gave me a fax number.
When I called and told them I’d been trying to fax for hours, but their line was busy, the young lady I spoke to said, ‘Yeah, we get a lot of faxes. Keep trying.’ I asked if they had an email address I could send it to. ‘No, we can’t accept email for security reasons.’
After another day of trying to fax, I called again, and this time was told, ‘Yeah, don’t fax it. That line is always busy. Why don’t you email it?’ I emailed it and called back the next day.
Call after call, no one would or could help me. It’s ‘in the queue’ they would say. ‘You just have to wait. We have a lot of files to get to.’
3 months into the process, the buyer got tired of waiting, and withdrew the offer.
I put the property back on the market, and soon had another offer at $290,000. I submitted it via email.
A few days later, I got a call from a Bank of America rep telling me that they had pulled the file back and would be handling their own short-sales. This time, however, I could upload all of the documents online. It was easy enough to do. The tough part was getting a response.
I soon received an email with the name and contact info for the negotiator. I called and emailed. No response. I did it again, and again. No response. I called their general number for short-sales several times. The early responses were, ‘nothing we can do, you just have to wait for her to contact you.’ I asked for a supervisor. None were ever available, but I was promised, ‘I will escalate it and you’ll get a call back from a supervisor within 7 days.’ 3 times I called and had it ‘escalated.’ I’m not kidding.
I eventually called the office of the President of Bank of America. The person I talked to promised a resolution, and I was called by a new negotiator the next day. She was friendly and cooperative.
A few days later, I received a call from the buyer’s agent telling me that the buyer had found another property and was withdrawing the offer.
It had been over 5 months since I started the short-sale process.
The negotiator told me that a foreclosure sale date had been set for 3 weeks out, and that if I didn’t get another offer soon, it would be sold at auction to the highest bidder.
I put the property back on the market, and after a couple of weeks, got an offer of $269,000.
I called B of A, but they said it was too late. They were going to foreclose.
The property sold at auction for $214,000. That’s right, we had offers of $310,000, $290,000 and $269,000, and after wasting everyone’s time, they foreclosed for $214,000.
So, the bank received about $100,000 less than if they had their act together, I wasted my time and effort, several buyers and their agents wasted their time and effort, and Erik ended up with a foreclosure on his record.
This, folks, is why so many agents absolutely refuse to show or list short-sales.
I do still show and list them. I’ve got several on the market right now. Why? Although my case was not unusual, they aren’t always that bad, and some of the banks seem to getting better. Banks are realizing that it may be better for all if they process these short-sales, because foreclosures make things worse for everyone. I’ll explain next time.
There, I feel better. How much do I owe you?
PS. The winner in this situation was the guy who bought it at foreclosure. He painted, put in new carpeting, counters and fixtures, and sold it in 10 days for $282,000.