While everyone is spending a lot of time pointing fingers and talking about how we got into this housing mess, I feel compelled to tell the tale of this short sale.
A short sale is where the house is being sold for less than the loan amount. It is supposed to benefit the seller (not being foreclosed on) and the bank (not having the high cost of foreclosure).
Short sales, though, require tremendous amount of paperwork and – this is the key – the cooperation of the bank. Many banks do not have adequate departments and employees set up to handle the huge increase in amounts of short sales – thus making the process a bit challenging for everyone involved.
This little house my colleague was selling was listed in the lower $100,000s. The first offer on the house was for full asking price – about $10,000 below what it would take to pay off the loan. This was a good offer. The seller agreed to the price, and the paperwork was completed and submitted to the bank.
My colleague spent hour upon hour on hold with the bank to get a chance to talk to someone about the offer. A case manager was assigned, but my colleague was not allowed to connect directly to him. All correspondence was via fax or phone message. The bank lost faxes and documentation of phone calls from the agent. No messages left for the bank were returned.
Once he was finally able to connect with someone weeks later, he was required to submit additional paperwork – paperwork about as thick as a phone book. Finally, everything was in and ready to go. They just needed to wait for the approval from the bank.
Weeks went by. Phone calls to the bank. Sitting on hold. No response from the bank on the offer.
Months went by. Phone calls to the bank. Sitting on hold. No response on the offer.
After almost 3 months, we finally had approval! Hallelujah! Time to move forward! But, oh, wait, in the meantime, those buyers were tired of waiting and moved on to another house.
Well, all that work shouldn’t be in vain because normally once you have the first approval the second one comes much quicker – so back on the market the house went.
Second offer. This time $10,000 lower than that first one. Paperwork was filled out and submitted to the bank. Hours of sitting on hold with no contact allowed with the case manager. Again, months later there was an approval! But wait, those second buyers by this point had moved on.
Third offer. Hopefully, it’s the charm even though it is $23,000 below where it started! Seller agrees, paperwork filled out and submitted. Wow, after only about a month we had a bank approval and the buyers hung in there!
So, on to the escrow….
One day I was covering for my colleague, and someone from the bank called and said, “Unless we receive the funds by tomorrow this deal is no longer valid.” WHAT??
I responded, “I believe there was a repair needing to be approved; let me find out and how can I reach you back?”
“You can’t. You can only call the 800 number.”
“I can’t request you or dial an extension?” I asked.
“No, and if funds aren’t here tomorrow the contract is no longer valid.”
Wow, I thought as I hung up, they had been working months and months on this and the bank (I actually think it was a loan processing service set-up to deal with short sales) was willing to have it go back on the market? Interesting.
It turns out the bank had lost the paperwork on the repairs. But somehow my colleague worked magic via that infamous 800 number, got the repair approved and an extension on the close of escrow.
Things were moving along toward closing until another curve-ball came in, this time from the buyer’s lender within a few days of closing. They would not lend on a home where paint was peeling, even on the fence, and a few other minor repairs had to be made.
At this point in time no one was willing to let this go on a few chips of paint – so the lender and both Realtors met over at the house, bucket of paint and brushes and tools in hand, and made sure that property had no peeling paint and the repairs were done!
Remarkably, the loan came through, the bank signed the papers and the home closed – 227 days after being listed.
When all was said and done, if you added up the hours spent on this, the Realtors made less than minimum wage. But it is now one less house on the market, happy buyers have a home and happy seller is out from underneath the financial burden.
A success! Now how many more to go???
Lara Wells Osborn is a Redding native. After traveling and working around the world she has returned to Redding with her husband and three children. She is a real estate agent with Coldwell Banker Westside. She can be reached at 530-276-3026 or by email at email@example.com