Buyers: You're NUts if you try to Purchase a Short Sale!
Despite our best efforts, Susan and I have not been able to post on this blog as regularly as we would like because our direct work with our clients comes first. My company, however, posts an amazing blog at www.WestcoeRealtors.com and i wanted to include an article that I thought was particularly informative. The article deals with short sales. Most people not directly involved in our industry fail to understand the inner workings of a short sale. And so, in the post below you will get the general sentiment of most real estates regarding short sales: THEY ARE A COMPLETE WASTE OF TIME. Read on for further explanation!
Buyers: You?re Nuts if you try to Purchase a Short Sale! March 19th, 2008 ? Real Estate Blog
(Riverside, California)?In this blog, I try to give you real estate advice and insight into the occasionally bizarre world of professional real estate?and generally this advice takes the form of either philosophical or educational content. Today, you get both regarding short sales.
First, the philosophical. YOU ARE NUTS IF YOU TRY TO BUY A SHORT SALE PROPERTY.
Second, the educational. YOU ARE NUTS IF YOU TRY TO BUY A SHORT SALE PROPERTY.
Now for the explanation. I wrote on this subject in my February 21 blog (scroll back on recent posts to read), but this such a current, yet pain-in-the-neck subject, I need to add to my earlier comments.
As a refresher, just remember or understand that a short sale is far different from a bank repo/foreclosure. In the former, the bank is not the owner, but will have the major say in whether they decide to lose money by selling for less than is currently owed on the property. In the latter, the bank already owns the property, and must come to grips with their loss, as they now have no choice and MUST sell the property.
OK?so why are buyers nuts to get involved with a short sale? Well, lets tell a little story first.
You wake up one morning and see that you are out of milk. Being interested in saving money like anyone else, you scan the paper for a store who may be having a sale on milk?.and low and behold, while you know that generally a gallon of milk runs about $4.00, here is a market that is advertising that gallon for $.99 cents! Wow! Sounds too good to be true, but you want to save the money, so you drive across town to this store to grab your great milk bargain.
Upon arriving at your destination and making a bee-line for the dairy department, you see a sign that says ?See the manager regarding the .99 cent milk.? You go to the checker to find out where the manager is, but first you wait for them to be finished with their current customer. Then the checker tells you the manager is in the meat department?and when you get there, they say no, the manager is in the produce department?and then produce sends you to the bread department, etc. By now you are getting tense, so you insist that they page the manager. They finally agree to do so, and ask you to wait over by the managers office. And you wait, and you wait, and you wait some more, when finally the Assistant Manager comes over. You explain your quest for the .99 cent milk, and the Assistant Manager, who admits to knowing nothing about the .99 cent milk, excuses themselves to call corporate headquarters to get to the bottom of our milk dilemma.
Well, guess what? You wait some more, since a call to the store HQ takes some time. After all, a discount like this is not taken lightly, so many calls must be made. Finally, just about the point you are ready to swear-off milk and change to soy, the Assistant Manager returns, and apologizes profusely?BECAUSE THE MILK WAS NEVER AVAILABLE FOR .99 CENTS. IT WAS A MISQUOTE BY THE STORE TO THE PAPER! The fake-smiling Assistant Manager asks if you would like to shop at their store for anything else, but with pulse pounding and head throbbing, you decline and head dejectedly home.
And guess what? The next day, you pick up the paper, and see yet a different store advertising milk for .99 cents. And wanting to save money like we all do, you head down to that store, only to have roughly the same scenario repeated again. Yet, here is the real question?WHAT ARE YOU GOING TO DO WHEN YOU WAKE UP FOR THE THIRD DAY AND SEE THE SAME AD?
When you can sanely answer that question, you will now know what to do with your real estate short sale?because the scenario is the same.
Our business is rife with real estate agents who have no qualms about advertising a property for sale that can never be had at the advertised price. No way, not gonna happen. The seller doesn?t care about the listed price, since they are receiving zero from the sale?and the existing lender hasn?t approved the price because they are generally so stupid, they will not talk with anyone until it is too late. SO?the unscrupulous agent puts a price on the home that will make everyone pant (.99 cent milk, for example), and then waits for the buyers to pour in?buyers who have no idea that the only reason they are there is so the agent can ?switch? them to another property when they realize this home is really not available at that price. Even if the buyer writes an offer on the home, by the time the lender eventually gets around to deciding what they will really take for the property (and trust me, it is way higher than the .99 cent advertised price!), you are tired of waiting and it may be too late to make the sale at the higher price anyway since the lender will generally not stop the foreclosure procedure. In the end, you are left with a really bad taste in your mouth, and a decision to make:
WHAT ARE YOU GOING TO DO WHEN YOU SEE AN AD THE NEXT DAY FOR ANOTHER PROPERTY AT A PRICE TOO GOOD TO BE TRUE (.99 cent milk)?
All real estate agents understand the above, and that is why they generally avoid short sale listings like the plague. The last thing a professional Realtor wants to do is get you, the buyer, involved in a property that not only will you never get, but will taint your mind as to the real prices that make sense in this market. However, the problem at times is that you, the buyer, cannot resist the .99 cent milk?and at some point you must come to the conclusion that the milk (and property) simply cannot be had at that price.
So, as a buyer, what do you do? Easy?work with a professional (like Westcoe, but of course, I am biased) and get a grip on pricing reality. Avoid the ?come-on? pricing of most short sales, and let your agent guide you to the well priced homes. Contrary to the agent who created the bogus price on the short sale property, a true professional has your best interests at heart. Let them do their job?WHICH WILL GENERALLY MEAN STEERING YOU AWAY FROM THE GARBAGE SHORT SALE HOMES.
Or, you can fall again for the .99 cent milk ad?in which case, bless you?you deserve what you get. At some point, you need to see the real picture?and we at Westcoe would be happy to help you avoid any more ?bad ads.? The decision is yours.
