The Courant had an interesting article this morning about a family in Farmington that recently tried to sell their home as a short sale. They had an offer on their home and waited for 3 months for their bank to respond to the offer and authorize the short sale. The bank did not respond. The buyer eventually got tired of waiting and walked away. The house is currently in the process of being foreclosed upon.
Unfortunately this is very common and I was actually involved in more than one of these situations (representing a buyer) last year. Here’s what transpired with just one of the properties from then until now…
My buyer saw a short sale property last spring in Hartford that they liked and put in a bid about 10% off the asking price. We waited for 2 months to hear back from the bank. Repeated calls were made by me and the listing agent to try to get some response out of the bank. Nothing. Frustrated and needing to buy a place, my buyer walked away and pursued something else in Hartford.
Fast forward ahead several months from the spring of 2008. Still no offers accepted by the bank. The property goes under foreclosure and the bank becomes the owner.
This property is now currently listed for sale with the bank as the owner. The listing price is 10% below what my buyer offered last year. I recently showed this property to a current client. The home has been vacant for over a year. There is now water damage on one of the internal walls from a pipe that leaked/burst because no one was properly maintaining the property.
The bank’s inability to respond to legitimate short sale offers is driving down property values through decreased sale prices, as well as a slew of vacant homes. Buyers become frustrated with the short sale process and refuse to look or bid on these homes because they don’t want to waste their time waiting for the bank. Agents also grow frustrated as they try to help buyers successfully purchase short sale properties, but wait for months with no response. Neighbors are upset as they watch homes sit vacant and fall into disrepair, negatively affecting their own property values.
In my experience short sale response time has not decreased recently in our area. It’s unfortunate because if there are buyers willing to buy earlier in the process, it just drags things out unnecessarily for all those involved. The mortgage lender may not be in the immediate area, but they are affecting our property values. In addition, they are hurting their own balance sheets with these delays by incurring foreclosure and carrying costs before being willing to accept an offer for less than the mortgage amount.
Needless to say, it frustrating for all those involved and unfortunately there doesn’t seem to be an easy solution in the near term.