Flawed system scuttles real estate short sales
Letter to the Editor
By Inman News, Monday, February 7, 2011.Re: 'Survey finds holes in foreclosure help, avoidance' (Feb. 1)
Dear Editor:
I am a Realtor in western New York. I have been involved with several short sales in this area with Bank of America, Met Life and more. I can't believe how terrible the system is. One home has had an offer on the table for almost 10 months, with no real response as of yet.
This is the second time an offer was made and did not work. The house has a real value today of maybe $95,000 on a good day. The previous offer was for $100,000. The appraised value was $105,000 two years ago and a recent appraisal brought in the value at $97,000.
The offer was rejected because the lender said it had a broker price opinion (BPO) at $153,000. The lender took that BPO over a qualified appraiser's value at $97,000, and that deal of course died simply because it wasn't worth it and no bank would ever loan on the inflated value.
This just shows how flawed the process is. This home could have been sold, with the lender taking a minimal loss, over a year ago. It's frustrating for all, to say the least. This is just one example and this is why I, for one, won't touch a short sale again.
The worst thing is (in my experience the lender) won't let you talk to someone with authority to discuss a shortcoming in the process.
Dave Malta
Broker
Dave Malta Realty Ltd.
Webster, N.Y.
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Submitted by Alexis Eldorrado on February 7, 2011 - 6:48pm.
Alexis Eldorrado
Managing Broker
As a downtown Chicago real estate broker, I have had my fair share of short sales and foreclosure
sales. They account for about 20% of my closed business. However, I can relate to your description of what is happening in western New York.
I was just interviewed by the Associate Editor of the Illinois Assoication of Realtor's magazine for an upcoming article addressing short sale transactions.
My experience, in one of these instances, was a literal showdown with the lender one hour before the scheduled closing. We have dual agency in Illinois, and I was representing both sides.
Out of the blue, the lender wanted their client, the seller, to put in $9,000 to close the deal based on a bank statement he submitted 30 days earlier, in order to waive the deficiency for him of which they had already agreed to waive.
I had to call both attorneys to stop them from going to the closing and also had to tell the buyer not to wire his funds because we still did not have an approval due to the showdown.
I literally had to force the lender to talk to their client so they could understand firsthand that he was unable to put any money into the deal, which, of course, they knew all along.
Our efforts prevailed, and we did close the same day, four hours later, without the seller putting any more funds in.
These are certainly historic times. Things have to get better and fortuantely the majority of my clientele are not in a financially distressed situation. My range of mid to high-end downtown Chicago condo buyers and sellers are a relief when I compare it to the efforts put into financially distressed properties. However, I am well-established and worked very hard for over a decade to be well-positioned today. My hat is off to those whose specialize in these properties.
Eldorrado Chicago Real Estate LLC
150 N. Michigan Avenue, Suite 2800
Chicago, IL 60601
773-588-7777
Alexis@Eldorrado.com
www.Eldorrado.com
Submitted by James Muller on February 8, 2011 - 10:10am.
Unfortunately , many of the Realtors whom register with the Lenders to list these properties are frequently not familiar with the neighborhood of the property and furthermore , are not qualified to properly appraise value.Compound the fore said with Appraisers whom know how to appraise value but again are not familiar with the subject neighborhood and are forced to draw comps from a "fire sale" or another neighborhood nearby which may be "apples and oranges"! If this were not enough ,add to this Lenders whom outsource the servicing to "body shops" who are over their heads and not in a position to respond proactively to viable offers and you have a recipe for a very broken system!
James S. Muller
Managing Partner of Austin E Realty LLC
Submitted by Steve Brunette on February 8, 2011 - 6:10pm.
Can you believe that we bailed some of these lenders out? I've had similar situations and wanted to crawl through the phone line to get my hands on the ASSet manager on the other end.
I had one situation where we had an offer on a property at a price slightly higher than the appraised value. After 4 months, the buyers became very frustrated with the lack of response and walked from the contract. When we notified the seller, their response was that it was too bad. They were nearly ready to accept the offer. Within 3 days, we had another buyer make an offer on the same property. Their offer was slightly higher than the first buyer, which had the offer that the seller was supposedly "almost ready to accept". Needless to say, another 10 months went by before we could get a response from the seller. They finally accepted the offer and we closed. It took 14 months for a decision that should have been able to make in a matter of weeks. No wonder they're losing money!
Steve Brunette
The Maine Real Estate Guy
Better Homes & Gardens Real Estate - The Masiello Group
Web: www.SteveSellsMaine.com
Blog: www.TheMaineRealEstateGuy.com
Submitted by Boy Kadubanen on February 16, 2011 - 4:00pm.
many of the Realtors whom register with the Lenders to list these properties are frequently not familiar with the neighborhood of the property and furthermore , are not qualified to properly appraise value.Compound the fore said with Appraisers whom know how to appraise value but again are not familiar with the subject neighborhood and are forced to draw comps from a "fire sale" or another neighborhood nearby which may be "apples and oranges"! If this were not enough ,add to this Lenders whom outsource the servicing to "body shops" who are over their heads and not in a position to respond proactively to viable offers and you have a recipe for a very broken system! Ida Hyuji
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