Short Sales Don’t Work — Part 4 of 4

In conclusion:

Again, there is enough blame to go around and I don’t care
about pointing fingers.  There is a
blatant lack of accountability at all levels in the system — from the
homeowners, the agents, the lenders, the investors, the bond ratings, etc. 

From what I can see, it looks like there are only a small
number of homeowners actually helped by going through a successful short-sale.  If it cannot be streamlined or
optimized, I would recommend remove the short-sale option entirely — have the
banks/lenders go directly into foreclosure as quickly as possible.

This will make sure the lender is losing the minimum
possible by not taking months and years to go through a prolonged
short-sale.  Buyers will actually
be able to buy the home as it comes back on the market as bank-owned instead of
waiting for something that may never be approved.  And finally, the option for people to “game the system” will
be removed because there are no ambiguities or intermediate steps.

I want to sell property and help people reach their
goals.  I’m just frustrated by the
system.  Thanks for listening.

-Mark

Short Sales Don’t Work — Part 3 of 4

Have you ever seen those late-night TV infomercial where
some fast-talking “average” guy is telling you how to build a real estate
fortune with no money down?  Here’s
an example of such a scheme that I ran into recently in San Mateo.

I called on a listing for a buyer client looking to stay
under $600k.  We found a new
listing that seemed like a great deal — nice condition and priced well.  Undoubtedly we would see multiple
offers again, but it was certainly worth a deeper dive.

Come to find out, the listing agent was actually a partner
in an investment syndicate who was listing this house for sale before they
actually owned it.  They had a
purchase contract in place with the seller but the sale price was lower than
what the seller owed so the listing agent was negotiating the short-sale with
the bank.  As it got to the point
where their offer was accepted, he re-listed it on the open market at a much
higher price!  Pure profit and they
will only own the house for ½ a day. 
Just like on TV!

Why doesn’t the bank do their homework to find out this
home was never listed on the open market before the investor jumped in with
their low-ball offer?  Why doesn’t
the seller care they are going to be hit with a bigger loss than necessary
since the home could be sold for a higher amount?  Why doesn’t the real estate board care that their members
are gaming the system?

Is there anything illegal here?  Probably not — but it makes me wonder who is policing the
system.

-Mark

Withdrawn: 150 Reef Point Rd, Moss Beach 94038

150 Reef Point Rd – $2,550,000. Listed 4/9/10 (Laura Bradfield of Alain Pinel Realtors represents the Seller)

– 2 bed, 2 bath

– 2270sf living space on a 22651sf lot

– Built in 1951

– Breathtaking views from every room, Remodeled and updated, Great room with gourmet kitchen

Request a Showing to See This Home

Mark’s Preview Notes:

MLS Photos:

Reef1 Reef2
Reef3 Reef4

Short Sales Don’t Work — Part 2 of 4

What is it called when a person demands “compensation” for
something in a threat to avoid performance on some other item or service?  Is that called extortion or just a
shakedown?

I recently had clients showing interest in a home in
Campbell, a short sale that appeared to be priced under the market value so
surely we expected multiple offers. 
As I was writing up the offer and getting ready to go over it with my
client, the listing agent calls me to tell me his seller is demanding an
addition condition for the sale — the seller wants to walk away from the
short-sale with $50,000 in his pocket. 

I wasn’t sure I heard him right, so I asked for
clarification.  The listing agent
says “to keep it legal it will be written as a purchase addendum for $50,000
for his furniture and art, which admittedly is only worth about $3,000 on
craigslist.”  I was shocked.

Basically, the seller can decide which offer to send to
the bank as the “accepted” offer for the short sale.  He will pick the one that agrees to give him the $50,000
side money for his crap.  Essentially,
he is saying “You want my house, you’ll give me $50,000 on the side and I’ll
accept your offer and work with the bank to short sale my home to you.”  The bank has no way to know there may
have been higher offers for the property without the side money.  Disgusting.

It gets better. 
As I dig into the Title report where we find how much is owed against
the property, I see that the first name of the listing agent has a 3rd
lien on this house for $19,000!

It’s pure speculation on my part since I have no “court
proof”, but here is what I think happened.  The listing agent will get nothing for his personal loan of
$19,000 if a normal short-sale goes through since his loan is in 3rd
position.  So he cooks up a scheme
with his seller-friend to get the short sale approved with this additional cash
on the side so he can be re-paid his $19,000.  Where is the IRS when you need them?!

In the end, we moved on to another home and our clients
are now happily moved into a normal sale just one block away from the
“shakedown” house.

-Mark