And we wonder why we’re in this mess…
My neighbors lost their home to foreclosure last week. They purchased said home for $1.1 million about two years ago. Noone bid on it at the minimum of $535K. Ouch.
I’m profoundly sad about this. They are a nice young family with similar interests to mine, young children with whom my daughter has play dates, and all in all good, educated, conscientious people. And, I could be in their shoes very soon.
I tried to pull a deal together for them. I dragged my buyer into town, literally off of his death bed, to look at the house, knowing it was perfect for them and that they’d write an offer. The week before, my buyer had been in ICU with a liver abcess that almost killed him.
Per the lender’s direction, we wrote an offer for $560K. Upon submittal of said offer, the lender turned us down flat, instead asking that we “settle” for $530 and have my buyer buy a home without free and clear title, pay all commissions and pay off the second lienholder to the tune of $30K. The sum total coming to upwards of $600K.
Needless to say, my buyer said forget it and we let the house go to auction. When noone stepped up, it reverted to the lender.
The home was now in of the hands of “Investment Group X” who purchased the note on the home from Wells Fargo for, what I can figure, is about 50 cents on the dollar.
In true Real Estate Lady form, I was on the horn to the lender stating our desire to purchase the home immediately. I was told flatly, that, although they wished me to perform all duties of a listing agent (ie: ensure the “smooth removal of the last owner, maintain the home, write up and submit the offer and get it closed, etc), they were only willing to pay a 3 % commission, as “it wasn’t technically listed with me”.
Though taken aback, negotiating commission was not going to kill the deal. I had worked endlessly for a year and a half to find a home for my buyer, my all-cash-immediate-close-buyer, and I was going to see this through.
Along with that, I was told that they would “honor” our previous $560K offer, though it was considered “discounted”. They apprised me that they intended on listing the home over $600K.
Then, they asked my opinion of value.
At 5 am in the morning (8 am their time, New York time that is), I wrote an email to my contact stating that since no home had sold in that neighborhood in the last year for over $499K (a home which had a cumulative days on market of 602), they would have trouble selling for anything over $600K to anyone other than a cash buyer as the home wouldn’t appraise. AND I WAS BEING GENEROUS.
“Investment Group X” did not respond to my opinion of value.
Then my buyer then decided enough was enough and told me they were losing interest. They said the most they’d pay for the house was now $530K.
I passed this onto the “contact” at “Investment Group X” and his reply was “That’s fine. Let the buyer walk”.
Walk we did. Right across the street…to purchase a home from another bank. It’s 1000 square feet bigger , beautifully finished, backs to a lovely park and my clients are over the moon.
The original purchase price was $1.4 million. We closed on that home for $580K . That works out to $138/sq. ft., effectively erasing $150K in “perceived value” from the home we tried to purchase from “Investment Group X” in less than one month. It now comps out at $456K.
