Pitfalls of Investment Property Short Sales
3 February, 2009
(5) Comment
Just when I thought I was out, they pull me back in.
-Michael Corleone
I have said it before: I am done with Short Sales. Unfortunately, I feel like Al Pacino in the Godfather III when he says: “Just when I thought I was out, they pull me back in”. I consistently say that I am not going to sell my customers short sales. Unfortunately, the allure of the attractive pricing gets me every time.
Here are some pitfalls that I have seen amongst deals that have closed and many that have not:
- Listing agent calls 2 days before closing, says there is a $3400 Minneapolis water bill on the property and the seller is NOT going to pay it. Listing agent asks if my buyer would take care of it!
- Buyer puts in full price, non-contingent offer on nice tri-plex in NE Minneapolis. Listing agent does great job of communicating with us weekly. Countrywide goes through 8 BPOs, 4 negotiators, and countless phone calls. 6 months later, my buyer finally decides to cancel when they ask for another BPO.
- A deal had previously fallen through (because of buyer’s financing) on a townhouse in Apple Valley. Great agent does a good job of repricing the property at the previously accepted offer price. My buyer pays full price, no contingencies. Bank delays several times, sends someone out to do a BPO who promptly claims the property is worth 25% more than the list price (and 15% more than any recent sale in the neighborhood), bank cancels sale after 90 days in the process.
- Buyer is purchasing multi-family property. Seller has stopped caring about property and not collecting rent. Between the first showing and the offer being accepted, one unit becomes vacant. As part of our due diligence, we get copies of the rent rolls and the leases. None of the remaining tenants have paid any damage deposit and two are now more than two months behind in rent!
- Real Estate Agent markets property in Neighborhood with many foreclosures. She never tells me this is in fact a short sale until well after we have an accepted offer. At the closing, we find out the house was actually sold that morning to a land trust who in turn was actually the group selling it to us. They make a $25,000 profit on a $115k sale!
Investment Property Short Sales can be great opportunities to buy investment properties at greatly discounted prices. You just need to be prepared for anything as it seems like they are making it up as they go.
Categories :
Buying Property
I love the quote from the movie. Sooo true! I can relate to all of them except #1. In my county in Ga. they are not allowed to attach the utility bills onto the home, or the new homeowner. Whew!
But, I am in the negotiating part of short sales. Every bank has their own rules. Some are so unprofessional that they start screaming if you ask a question.
Short sales can be very frustrating to say the least. I have an owner occupant buyer that has had an offer in since 9/5/08 and we have yet to receive a response. The home owner has attempted a loan mod with no success all the while the short sale negotiations have been put on hold. My buyer is in no rush and still hopeful to get the home.
OK, maybe I’m just slow, here…but if there were a large open pit on the property into which people might fall, wouldn’t that AUTOMATICALLY be some kind of code violation?
(Tee hee)
Just having fun with you.
I’m finding that my listings that are short sales are attracting buyers who are willing to meet the mortgage due plus the seller closing costs and commissions. Price it low and they will come. (I hate short sales, nonetheless.)
Scott,
You’re the “Godfather” of North Minneapolis Investment Properties…!!
But seriously, short sales should lose the “o” and”r” , and replace them with an “i”
Just my personal take…