Short sales and foreclosures seem to be the new norm when it comes to the real estate market in Orlando. Unlike a foreclosure, which is a bank owned property, a short sale is a home for sale in which the original mortgage owner is still current on his payments, but owes more than the house is worth. In an interest to prevent an eventual foreclosure and further loss on the property the bank agrees to sell the home at the market rate. A short sale can save the mortgage holder’s credit by selling the home before he defaults on payments preventing the foreclosure. With short sales, the bank acts as the third party. Therefore, in a short sale, the bank must approve the sale by agreeing with the sellers and buyers negotiated price.
Well, I am currently purchasing my first home, a short sale, and I began negotiating on the home in early March. After making my first offer I got a speedy response from the bank informing me that my offer was too low. My offer price was $6,000 dollars above the listed MLS price for the home. They “low balled” me, a common sales technique where you show a price so low that many offers could be expected. This starts a bidding war for the highest offer. Once the offer beats the other bidders, the bank opens price negotiations. I lost my first battle on this front and received a counter-offer. The bank had an offer higher than my expected budget could allow and only left me a small fixed amount of money for the needed repairs: mold, drywall, flooring and what have you. I wanted to get the home quickly and after a couple short responses within 24-48 hours we finally arrived at a final price that worked well with the bank and sellers, ending the bidding war 10 days in.
The bank then asked me to show proof of my funds, so after transferring the money to my checking account, I provided them with my account information. The title company of the home started their process of clearing the title for sale while I planned my move. It only took a few days for them to respond. Everything was ready with the title and I just needed a final letter of approval from the bank. I had a verbal commitment from the loss mitigation department of the bank, but the final sale must be signed by the President of the Board. The loss mitigation department did all of the negotiating on the banks behalf; but, without the Board’s signature the sale would not go through. I was sitting on an account with my money ready to go and my closing date was coming up. The day finally comes, but no bank letter. So, I made some calls to find out information on my home. “The sale is in review,” the bank tells me. I was taken aback because I thought the review was when I provided proof of my funds.
I know that a lot of people in Orlando are going through way worse than I am right now. They are losing their homes to foreclosure while I am moving into a new home and should be thankful, but I also find myself with the broken end of the stick. In the process of moving preparations I have put my life on hold by not taking any more clients in Miami, my current home. This is costing me a lot of needed savings to keep my month-to-month lease while losing the interest money I was generating before I liquidated the assets. After two months, and with no recent response from the bank, I do not see an end in sight, no pun intended. This is just another side to the real estate fiasco in Orlando. I had heard of people purchasing foreclosures in a matter of weeks, but the short sale process doesn’t seem so short. I would think that the bank wants to get the house off their books quickly, but it seems they are inundated with this rampant real estate market. I took my number, waited in line and no letter, no new projects, just the imaginary “nails to a chalk board” sound in my head. Welcome to the real estate bottleneck; it’s eight and a half by eleven inches and called an “approval to short sale letter.” If you want a home you could get a great price on a foreclosure or short sale, but if you need the home quickly, be ready to stand in line.
Article By Cameron Holbrook