The seller was going through a divorce, starting a new job and was afraid she couldn't make the payments. Also, despite months of effort, she couldn't sell the RV -- an asset, in the bank's opinion. The deal fell through and the bank foreclosed on the property. The experience left a bitter taste in Kennedy's mouth.
"I avoid short sales and advise buyers to avoid them," Kennedy said. "They are miserable."
Sticking it out
True, most participants say, but some eventually have happy endings.
Mari and Joe Abrams found the house of their dreams in Porter Ranch in December. They got quick loan approval to buy the four-bedroom, three-bathroom home, and feeling optimistic about the new purchase, they put their Encino home on the market.
The couple offered $650,000 for the new house, which had been listed earlier in the $699,000 to $749,000 range. They paid a $10,000 good-faith deposit, agreed to pay all of the escrow fees (which usually are split between seller and buyer) and agreed to buy the property as is.
They expected the bank to quickly counter-offer. For one thing, the seller's second-mortgage holder already had agreed to the sale, a major hurdle in short-sale transactions. But without the first bank's approval, the deal stalled. (Both the first and second mortgage holders must settle to complete a short sale.)
The couple's own house sold three months into the process, so they moved, with their toddler, Daniel, and 50-pound dog into Mari's mother's condo.
By April, Mari, 32, started peppering the first lender with daily phone calls, seeking a response to their offer. As the deal dragged, the Abramses extended the escrow. It closed, finally, on May 2. The family plans to move in later this month.
"Our hearts sank a hundred times," Mari said. "It was a roller coaster."
"If we didn't like the house so much, we wouldn't have hung on that long," Joe, 37, added. In the end, however, they're glad they stuck it out. It is, Mari says, just what they wanted. Even if they didn't get the "deal of the century," Joe said.
Bargain bins
Lenders will not accept short-sale offers that are far below market value. To the contrary, many banks "net about 90% of the current market value" on many of these sales, agent Shandrow said. Also, the homes usually are sold as is, which sometimes can mean a missing kitchen sink, ripped-out bathroom fixtures and stained carpets.
Marty Rodriguez, a Century 21 agent in Glendora, says she won't take a short-sale offer to the bank unless it's reasonable. "The negotiator doesn't want to look at 12 offers," Rodriguez said. "He wants the best, highest and the most qualified ones."
Buyers looking for bargains should wait until short-sale and foreclosure prices are down about 35% from the peak market in their search area, said James Joseph, owner of Century 21 Ambassador in Brea and Whittier.
"Short sales and foreclosures are the nails in the floor of the market," Joseph said. "That's where the bargains are."
--
diane.wedner@latimes.com
