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Douglas Trudeau , Assoc. Broker
Prudential Foothills Real Estate
64 N. Harrison Road, Suite 160
Tucson , AZ 85748
Mobile: 520-954-2209
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Home Buyer Beware, Short Sales Are Not What You Expect

We have all heard, “Every village has an idiot.” Well, that’s not true. Our mortgage lending industry has deprived a lot of villages. I don’t mean loan officers. I mean the people at the main office out of touch with how transactions are completed in different parts of the country. If you have never been frustrated, try involving yourself with a short sale. What’s that old say, “The only thing that is definite are death and taxes.” You can add “Short Sales are definitely frustrating.” You have to laugh while going through one to maintain your sanity.

Let me walk you through an experience with a short sale. Finances changed, the housing market declined, so a reader referred someone (the Seller) to me for a short sale. Innocent enough on the surface.

The Seller has been the easiest part of the entire ordeal. The Buyer and her Agent were great. The Buyer’s loan officer and team performed extremely well. The Title Company did an outstanding job. All the ingredients for a fun, enjoyable, terrific sale, right?. Oops, forgot the Sellers Creditor (the Bank) who provided a response on an acceptable price from a previously failed offer on the same property.

The current Buyer comes along and offers nearly $2,000 more than what the bank said was acceptable, which included covering buyer costs. Hooray, we have a great deal the Bank is getting more than they originally said they would accept. They must be happy. One would think, right? Not so fast, the Bank comes back with the higher price and won’t cover buyer’s closing costs. You’ve got to be kidding. I don’t understand. You’re getting more, but, you won’t cover closing costs. That doesn’t make sense.

The buyer comes back and offers more to cover the closing costs and meet the new higher price. Now the bank is looking at $7,500 more then they said they would accept. No, “…we don’t cover closing costs.” I told them, “Great you just blew the only deal in town that would get close to your price.” Three previous offers were all low balls. This was the best they were going to get. The rigid rules didn’t allow enough flexibility for the Negotiator to say yes. Five minutes after hanging up on them, they call me back. OK, we’ll accept the deal. However, the closing date has to be in 22 days. Have your cake and eat it too.

Anyone who knows real estate knows it takes 30-45 days to go through inspections, get the appraisal, double check everything and close. Normally 30 days. I had dealt with the Loan Officer before, and had every confidence he could pull it off. Called him, he said he could do it. Fantastic, everything was put into high gear. We’re rolling, everybodies happy. I keep close communication with the Bank, Seller, Buyer’s Agent, Escrow Officer, and Loan Officer. What do you need, what can I do, how can I help? Everything is going great. Pressure is on to close in 22 days. Went as far as getting a Letter of Authorization for the Bank to talk to the Escrow Officer. Normally the bank will talk to the Escrow Officer eagerly. Why the letter? I didn’t want to take any chances. Better to error on the cautious side.

Seven working days before the close the Escrow Officer lets me know she is not getting what she needs from the Bank. I call, e-mail and fax the Bank with the needs of the Escrow Officer. Recording each attempt. Nothing. Six days, repeat, nothing. Five days, repeat nothing. Four days before closing I fire off a fax to the Bank that any delays are being cause by them, not anyone else. No response. Three days…nothing. Two days before, I finally get hold of the supervisor of the Bank’s negotiator. Her immediate response was to put me on hold. Next voice was the Negotiator. He acknowledge receipt of “all” the messages for the past week. He doesn’t understand the request. I am so frustrated that I forget to tell him that the Bank is getting an additional $5,500 because the Lender won’t allow the Bank to pay closing costs now.

I get an e-mail in minutes from the Escrow Officer that she finally got what she needed from the Bank. We’re back on track. Everybody signs one day before closing, the sale recorded on time, and the Escrow Company got the funds sent to the Bank in time.

I don’t blame the Negotiator for the problems encountered. Its the system within the lending industry. These poor Negotiators are dealing with transactions from all over the US. They are overwhelmed. The requirements and demands are different in New York than in California, than in Florida, than in Arizona, and so on. Lazy inept management are not doing their job to help the Negotiators and give them the training, support, and flexibility they need to close these deals. Its bureaucracy at its highest level of incompetence.

Yesterday I played golf meeting a young man who just bought a short sale. He commented that it wasn’t the deal he thought it would be. His story was similar to mine with frustration and disappointment. I asked him if he would do it again. His response was an adamant, “NO.”

So, Buyer beware. Short sales may not be the best deal for you. Gotta go now and check on a Short Sale offer for one of my Buyers. Here we go again. Somebodies gotta do it.

This entry was posted on Tuesday, May 27th, 2008 at 7:20 am and is filed under Tucson Real Estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Hi Doug,

Just had a very similar experience with a short sale….how did you get the supvisor!!!! I have always been put on a terminal hold on the phone every time I have asked for one!

June 10th, 2008 // ANne

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