Perhaps in this market the buyers need to be aware of sellers who accept too low a price on their home. I know many buyers are saying we’re trying to get the lowest price possible but even when the seller accepts an extremely low price they may not be able to sell it to you at that price. How is this possible?
Obviously I’m writing this because I encountered this situation recently. I was the listing and selling agent in this particular transaction. The seller accepted a price where he would have to bring $65,000 to closing. Why did the seller accept a price that is far lower than what he owes the mortgage company? The seller could have accepted because he wanted to payments to stop on a property he was not using, maybe he just couldn’t make any more payments, or maybe he need to in order to get a loan for something else. Sometimes sellers have the ability to sell at a lower price than what he owes because he has enough liquid cash or the the mortgage company has agreed to a short sale which is when the mortgage company agrees to accept a lower amount than the seller owes. Banks do this to avoid the costs of foreclosing which is about $90,000 per home. The seller in this case could not get the bank to agree. In fact, getting a bank to agree to a short sale is a lengthy process and will take more than a month.
The seller tried contacting the bank but after numerous attempts at trying to figure out pressing 1 for this service, 2 for another service, etc., and dialing 0 just resulted in getting transferred to someone who accidentally hangs up on you, the seller was ready to either go crazy or just say uncle. I contacted Gloria at Wells Fargo, a mortgage lender that I trust, to see if she knew of anything we could do. She said she got a call from another agent with the same situation that I was in but she couldn’t help either.
In the end the transaction was canceled, the seller is still trying to reach the right to person to talk to about a short sale, the buyer is pissed he didn’t get the house at an incredible price and that he spent a lot of time and money on inspections, mortgage applications, etc., and I missed out on a double commission.
I’m sure situations like this one will occur more and more while the real estate market continues its decline and the bottom feeder buyers may want to do a little research into finding out whether the seller can actually sell the property at a price they agree to. If you can find them, short sales can be a better buying opportunity than a foreclosure because the banks have not spent too much money yet and are willing to accept a lower price because they know foreclosing on a property is dang expensive and takes a long time.