The house is in pre-foreclosure. Buyers make offers ostensibly to the owner but, in reality, to the lending institution holding a mortgage in arears and agreeing to accept a short sale -- something less than the actual amount owed. A "home preservation specialist" (read debt collector) is assigned to the case. The Realtor chosen by the owner handles the listing.
Once the offers are in, the bank keeps buyers waiting for months as appraisals are done and numbers adjusted. Queries from the listing agent to the preservationist go unanswered. By 8 in the morning, their phonemail is totally full; most don't respond to email. Weeks elapse. Buyers squirm. Is the whole thing a waste of time, they ask? What's wrong with the Realtors? Why can't they find out anything? After interminable silence, the bank responds in a so-called "demand letter," a scary little document indemnifying the lender from judgements,liens and inherent problems with the property and accompanied by a question and a threat: Mr. and Ms. Buyer, are you closing tomorrow?...next week?...if not, let us bill you -- you who have dutifully come in at asking price and obediently waited for your bid to be acknowledged -- upwards of $300 a day for every day you don't close.
What, Mr. and Mrs. Buyer? You want to test that 100-year old underground tank? Consult with wood-destroying insect specialist? Look at a survey? Run title? Sorry, no time. You should have done that before, spent your own money while waiting for us to process your offer.
Welcome to the wacky world of pre-forclosures, when the "listing agent" serves an essentially powerless and depressed seller and a bank 1000 miles away comfortably bullies potential buyers actually capable of making a deal. Negotiation? Doubtful. Value-added service? None. Respect for Realtors? Zero.
One fine morning the other week at the RE/MAX International Convention, I missed a session that I'm sure would have made me a more powerful agent in order to stay in my hotel room to beg and plead with a bank debt-collecting functionary to help make the deal work -- something that, through the art of compromise, happens every day in the real world of real estate.
Let me back up a bit. The house had been in pre-forclosure for a year; this was the 4th round of offers. The first offer, for asking price, was never processed by the bank, so after 3 months, the incredulous buyer walked out. The next offer, accepted after interminable deliberation, curdled when the bank's "demand letter" insisted on a closing within 1 day. The buyer almost had a heart attack, then withdrew. And so on.
Which brings us to the latest offer from a nice young couple on a mission to restore a falling down estate. Full price offer. Willingness to close in 5 weeks. Not good enough for this bank, which slaps a $9000 surcharge on them for failure to close faster, though they had never promised to do so.
Doug, the other real estate professional in this ridiculous odyssey, was heartsick over the stalemate. After all, his clients had nowhere to move after April 15 if the bank didn't follow through with the closing and waive the $9000 surcharge. Yet the couple went ahead and paid for a home and termite inspection and underground oil tank test.
This is only one pre-foreclosure in hundreds of thousands now engorging the marketplace and showing no sign of abating. Agents are scurrying to take courses in how to handle these transactions but, in fact, there are no rules. One experienced veteran of the preforclosure marketplace has only one word for colleagues and other individuals who want to get into this form of real estate: Don't.
Regarding my deal, with ever more rigid intonation and affect, 3 home preservationist/debt collectors took a year to process the incoming offers and botch them. My protestations, pleadings, and outright groveling in behalf of various perfectly worthy cash buyers resulted in a zero-sum game. The only really proactive decision the bank made was to unilaterally lower the REALTORS' commissions.
Driving to work the other day, I released myself from short-sale angst, from further attempts to reason with the preservationists and their wacky clarion cries to "close tomorrow." What will be, will be, I told myself.
And then, a glimmer of hope. Yesterday, an perky email from Realtor Doug: "Roberta, Well, my clients are NOT backing out. They are very excited! And they trying to get the people buying their house to see if they could push their closing sooner. We are totally moving forward. It is going to happen!"
Good kids, these buyers. More thank the bank deserves.
