On August 1st, 2008, I took a listing on a short sale that I thought would sell quickly. It had one heck of a view, the bank was only going to be shorted about $15,000, and at the time, my client was even willing to sign a promissory note for that amount.
Great news! We had an offer in within 3 days. This was the one for this client and the offer was a full price plus closing costs. The bank was going to make out great, this was a slam dunk… or so I thought.
It's eighty days later and the bank is making promises that it was in the final stages. The buyer has now walked as they felt the house had dropped in value in those 80 days and was no longer a good deal. (And they were right, 7 more homes came on the market in that area, 2 priced less.)
So, back on the market we go and now the bank was going to be losing $30,000 because of their delay in responding. It took us a couple weeks this time, but we got another offer. Now this one is not a full price offer, but close. This time the bank was going to lose $35,000 if they accepted this offer. But, once again, they delayed and delayed, having to order another BPO they said because it had been more than 90 days since the last one. (Well of course it was, because you were so slow on responding to the last one.)
Once again, around day 45, the buyer walked because the bank kept making promises of tomorrow, tomorrow, tomorrow, that never came to pass once 5pm rolled around despite me being on hold. (It was apparently time to go home.)
Finally I found another buyer and it was a cash offer, but it was about a $60,000 loss for the bank, but they were ready to close that day. The bank took their time again and we were finally ordering the HUD last Friday when the buyer found a better deal next door by $15,000 and it wasn’t a short sale. They could close in 7 days. (HE JUMPED)
So basically over the past almost year, the bank has thrown away $60,000 and maybe even more now that the home has been sitting vacant for almost a year and needs some repairs before it is livable again.
So, here is my proposal to the government.
Imagine if they had an answer for that first buyer within 30 days, they would have only lost a few thousand if they had countered the offer. Heck, the only reason we listed the home that low is because we knew the owner was going to have to at least short sale it for the commission plus a few thousand and in order to get an offer we had to make it less than the competition. But, if they had a process that was less than 30days, I’m sure I could have gotten them an offer that would have only lost them about $5,000. But, instead, here we stand with a home that is worth $60,000 less than it was last August.
So, please, stop letting the banks beg you for money or don’t let them lend another dime until they fix their own internal problems that are causing the loss. The new HVCC (Home Value Code of Conduct) makes it so appraisers have to include short sales and REO properties in their appraisals. That isn’t fair to a home owner that is willing to sell their home immediately and not take 90 days to say “Yes, we will sell it to you” and then another 45 days to close.
The system is broken. Throwing money at the problem isn’t the fix, the fix needs to be taken care of internally and the only way to do that is to cut them off until they fix their own problem. You don’t keep giving a child with an addiction to money, more money, do you… thinking the addiction will stop if you give in to them?