Why Boise Short Sales Suck
Here’s an inside view of what it’s like to be a buyer of a short sale listing in today’s market.
I recently represented Jim and Susan (not their real names), in the purchase of a home in the Boise real estate market that was listed at $210,000.
The home was attractively-priced, Jim and Susan were renting with no home to sell, ready to buy, and were pre-approved for financing.
In other words, Jim and Susan were solid-gold buyers any seller should want to meet in our current market.
Jim and Susan made a full-price offer, subject to a home inspection, and offered to close within 30 days of lender approval of the short sale.
The property had $315,000 of mortgage debt against it, consisting of two loans from the same lender.
Within 10 days, the listing agent obtained lender short sale approval of our offer.
I naively thought we were good to go.
Then, I got a call from the listing agent, saying “we have another, better offer!”.
My first reaction was “so . . . . .?”
Then I realized that our RE-44 Short Sale Addendum included a provision allowing either party to cancel the transaction for no reason (mostly intended to give buyers an “out” if the lender didn’t respond, raised the price, etc.)
When I expressed my dismay/surprise, the listing agent replied “don’t worry, we will give your buyer a chance to submit their best and highest offer and compete”.
(gee, thanks!)
At that point, I called Jim and Susan and recommended that we not participate in the listing agent’s bidding war.
(I managed to restrain myself and not tell the listing agent what he could do with his listing).
If you allow yourself to be drawn into a short sale bidding war, you don’t know how much (more) to offer, then the listing agent tries to get the other buyer(s) to increase their offer, and it all turns into a three-ring circus.
This is yet another sordid example of how short sale listings are often illusory.
Listing agents intentionally list short sale properties far below market value to attract multiple offers or start a bidding war.
That’s a fool’s game if you are a buyer because the decision-maker is the lender(s); not the seller.
You’re much better off to find a clean, sharp home offered by a motivated seller who has enough equity to negotiate a fair deal with you.
Most buyers are unaware that only 1 in 4 short sales close.
If you want/need to buy a home and get moved in, short sales are a total waste of time and energy for all concerned.
That said, many of our listings in MLS are short sales and they are difficult to avoid.
April 3rd, 2009 Posted in Inside Real Estate
Print This Post
One Response to “Why Boise Short Sales Suck”
By rachel kusama on May 3, 2009
Our realtor, Cy with SandNSea out of Galveston protected us much the same way. We toured a short sale home, loved it, not only offered money down + closing costs but we have an approved loan to shop with.
The listing realtor upon getting out offer, the next day claims another one came in but “the clients really like yours”. Then the following day he calls asking if we would raise our offer (according to our realtor, he was trying to provoke a bidding war) – Our answer was “No thanks, we’ll just wait for the home to go dink or find another”
We aren’t in a rush to buy buy buy. We are on the hunt for the perfect home to raise our children and we aren’t willing to go above spending what we feel comfortable with.
Good job standing up for your clients, I bet they will come back to you for future purchases. I know we are sticking with ours, that kind of honesty seems rare.