So many buyers call me asking me for a list of foreclosure property or ask about short sales thinking they're going to get a real deal. I try to explain to them how it works and the fact that no one is guaranteed a "deal" when purchasing one of these properties. In fact, I've seen many foreclosed and short sale properties where the bank won't budge on price and the prices are simply too high for the condition of the property. On the foreclosed property I handled in Country Club Hills, the mortgage holder was ready to reduce price right when we got an offer. That fact made the lower offer more acceptable to the bank since they were thinking of reducing.
Banks don't always understand the current market - or maybe they don't care
I recently showed the property I had written about before in my Orland Park short sale post and was shocked at how this Orland Park short sale listing had deteriorated since I showed it to my prior buyer clients. The grass was overgrown and filled with weeds. What once showed as a majestic home now looked run down.
When I entered the home with the new set of buyers we were greeted with a terrible mildew smell. We found mold growing on one of the walls in the sub-basement and the smell was terrible down there. Yet the bank was sticking with it's price that no one felt was right for today's market. So the house has sat and gone downhill.
In the beginning I thought it was worth the list price but viewing it now I feel it is overpriced. Yet it remains on the market with a notation that the bank will only accept full list price. I'm sure time is running out and this home will go into foreclosure at some point.
A buyer called me about a short sale property...
and wanted to see it immediately. I had never worked with this buyer before and she was telling me how she didn't like the listing agent and didn't trust him. I told her I would show her the property since the other agent stated he would not represent her as his brokerage did not allow dual agency.
I contacted the agent and he informed me that a decision was going to be made soon which meant we were coming in at the end of the short sale cycle. There were multiple offers on the table and I informed my buyer of this. Yet she still came up with a lowball offer. I told her with multiple offers it was probably not going to be accepted but she stated that she understood. In fact, she was all rush-rush about it and when I was unable to answer the phone one time when she called she said something to the fact that she guessed I didn't want her business! I was with another client and that statement forewarned me that this might not be a client I want to work with.
Sure enough, I called her a few days later to tell her that her offer was too low and was not accepted. She seemed upset at first but then gave me another address she wanted to view. Again, she seemed overly excited and everything was "drop what you're doing and show me this house - NOW!"
We went to view that house and one more in the same day. Her mother came along as now she was going to purchase the property and pay cash. Then they were going to work out the financing between themselves.
I wasn't crazy about the house they viewed and thought the 2nd home had more potential. However, they all agreed on making an offer on the first home I showed them that day. I wrote up the offer and collected the earnest money check.
When I faxed the offer in I was told by the listing office that funds had to be verified so I called the buyer (the mother). She was very upset because she had purchased with cash in a different state and didn't have to verify anything. I told her they would not review her offer if she didn't follow their rules. That's when I found out it wasn't truly a cash deal but she was getting an equity loan on her home, which was paid off. And I learned something - you cannot get any kind of pre-qualification or verification for a home equity loan for some reason.
At first I thought there was something fishy going on but I talked to another loan officer who told me that's how it works with most mortgage companies and equity loans. So we had a problem and the buyer was getting angry at me. I had a loan officer talk to her over the phone and pre-qualify her (he was aware of the whole story and did this as a favor). We then used his pre-qualification and sent it in with the contract.
Once again, it was a lowball offer and I had to inform her that they accepted a better offer. She was very irate and yelled, "Nobody ever says no to me!" That was it for me, I was not going to deal with these buyers again.
We were talking homes listed under $100,000. The offers were actually under $50,000. The few bucks of earnings were not worth the headaches of going on multiple showings, writing up multiple lowball offers and dealing with these people. I have no idea if they've found anything or have started offering more money or if they just gave up.
However, I believe they blamed me for them not getting these homes. It was almost like they didn't believe anything I told them (just like they felt with the original agent they worked with). These people wanted it all their way and did not feel the need to follow rules. I only worked with them for a couple weeks so it's not like we forged a close relationship but there was no reason for them to not trust me as I explained everything to them. I just don't think they liked what they heard.
I just got a call this week from a buyer asking about foreclosures...
and I once again explained how foreclosures work and how they're not necessarily a good deal. I told her that I had no "foreclosure lists" and that foreclosed properties were listed with all other homes on the market in our MLS. I asked her how much she could afford and that's the search I created for her. I explained that if there are any foreclosed listings that they will come up in the search. She seemed to understand but I truly feel her price is too low for the areas she wants to live in.
Unfortunately, this is not an investor but a family who wants to live in a certain area but can't afford to purchase an average home in those towns. So they're looking for homes that are foreclosed or need work since that's all they can afford. I set them up for an e-mail search and we'll see if anything comes up.
Recent first-time buyers told me to take short sale listings off their search
I explained how short sales work to these buyers after showing them a few properties that were listed as short sales. I told them my prior story and how long they might have to wait and they finally made the decision to remove all short sale listings from their automated search. They found a great home in Tinley Park and are now happy first time home buyers.
I now explain the truth about short sales to home buyers, whether first-time buyers or experienced buyers (short sales are in all price ranges), and most don't want to deal with them. And that makes me happy because I have become bitter with the experiences I've had trying to sell them.
I have read in many different real estate forums and blogs how other agents no longer show short sale listings. It's unfortunate for sellers that are trying to avoid foreclosure but until the mortgage holders make these kinds of sales easier and quicker I see more and more agents shying away from these listings.