And by “we,” I mean “the industry.” WE should all be ashamed of ourselves.
Today, I sat through a foreclosure auction and watched a property my clients were trying to buy – actually had under contract – get lost to foreclosure. Because it wasn’t a great deal for any investors, it received no bids at the auction, and went to the bank that had started the foreclosure proceedings many months ago. Left in the wake of that were the former owners who had been attempting to fix the situation through various means for a long time, and buyers who really wanted to purchase the house so their kids would have a place to live while they are attending college.
Instead, the sellers now have a foreclosure on their records, which will severely hinder their ability to purchase another home for a long time to come. The potential buyers must continue to pay rent and enrich someone else, rather than creating benefit for themselves. Meanwhile, a house sits empty, with no one to care for it, and no one to call it home.
How did all this happen? Let’s review the grisly details.
For us – meaning me and my clients – it started this past summer. At the beginning of July, we began a search, and this particular property popped up. When we first looked at it, the fact that it was a short sale wasn’t that much of a concern. The property filled the buyers’ requirements, and we quickly made an offer on it. Unfortunately, we were not able to come to terms with the sellers. Maybe they thought our offer was too far below their payoff, and the bank would never accept it. Whatever the reason, the negotiations failed, and we moved on.
We found a few more properties we were interested in, and made an offer or two, but nothing really worked. By the beginning of October, we were not under contract anywhere, and looked back to this property. The listing had expired. The foreclosure sale was looming, but was still a few weeks away.
I had no contact information for the seller, and was unable to quickly locate any, so I decided to go straight to the bank. I called the bank’s attorney, and was condescendingly reminded that the attorney worked for the bank. She needed to protect the interests of the bank, and would therefore not talk to me. (Hey, attorney lady — if you’re reading this — if you’d have talked to me, we could have gotten this all handled without going through the whole foreclosure process. THAT would have protected your client’s interests, but I digress.)
I then turned to the former listing agent. At that point, the sellers were negotiating a deed-in-lieu with the bank. I’m not sure what communications took place, but the call came back that both the sellers and the bank would agree to the buyer’s price. The deed-in-lieu process was stopped because the bank told the sellers that a short sale would be a much better situation. A new offer was drawn up, quickly signed and forwarded to the bank for short sale acceptance.
Then the waiting began.
We were successful in getting the original foreclosure date extended for a month so the short sale could proceed, but the bank was not willing to withdraw the foreclosure completely. All in all, I can understand that. When we’re waiting on the bank, though, it’s really irritating that the bank is the chief source of aggravation.
Throughout it all, the buyers wanted to pick up the phone, call someone, and just get the deal done. We’d been promised it would happen, and surely a phone call could allay whatever fears the bank was still harboring. At the very least, WE could find out what the bank’s real issue was. In a reasonable situation, the phone call method would probably work.
Unfortunately, the foreclosure and short sale world is not always a reasonable place.
In the foreclosure and short sale world, whole departments of people are overwhelmed, and don’t talk to each other, let alone those of us on the outside who are just trying to make a deal happen.
So we waited.
As the new foreclosure date started looming large, we began pushing harder. Surely, with us being this close to the finish line, the bank would extend the foreclosure date. Just two days before the foreclosure sale, we were told we were within days of closing.
So we waited again.
The bank entered an opening bid for the foreclosure sale, but ultimately refused to extend the date. By the time we received word that — in spite of what we had been told — the bank would NOT extend the foreclosure sale, it was too late for the buyer to be able to place a bid on the property at the sale.
I went to the sale, hoping that if someone bid on the property, I could make another attempt to secure it for my buyers. Throughout the sale, two thoughts kept going through my mind: if the bank had extended the sale, the sellers could have avoided a foreclosure, and if the bank hold told us earlier that they would not be extending the sale, the buyers could have bought the property then and cleaned up the mess as well as possible right there.
In the end, though, we all failed, and no one benefited. The bank, that doesn’t want the property, ended up with it. The buyers, who did want the property, ended up with nothing but a lot of wasted time and money. Still, though, they fared better than the sellers, who lost their home, walked away from a deed-in-lieu and now have a foreclosure on their records.
All in all, we failed. We all failed.
This was truly a sad situation for all concerned, and the hardest part to face is that it is not at all unique. Scenarios just like this are playing out daily all across the country.
I understand fully that the system is overwhelmed, and I’ll give the benefit of the doubt to everyone involved — even those I never met, and whose names I never learned — that no one wanted this to end the way it has. Still, though, I keep coming to the conclusion that we need to work harder to fix our system because too many people are still getting hurt.
I do know that the market is getting better, and hopefully these situations will start fading into history. Until then, I will do what I can to make things work out for my clients — sellers and buyers — and just hope I never have to go through a transaction like this again.
Because this sucks.
Randall Brennan, REALTOR
So what’s next? Take your pick.
Yeah. You should probably do at least one of those things right now.