I spent some time this weekend with a Buyer who really wants a deal. For him, it isn’t about finding the perfect house, it’s solely about the right numbers at the right time.
Good deals, we can find. A quick CMA for each of the ten biggest subdivisions on the side of town with the highest months of inventory, and voila. There are homes listed for $10-20 less per square foot than the recent solds. What’s wrong with them that they haven’t already sold?
They’re short sales and foreclosures.
Time out for definitions:
A short sale is where the owner can’t sell the house at a high enough price to cover all the loans on the house. The lenders will come up “short.” The Seller walks away from the sale without a penny and usually with a big hit to his credit rating, and the lender gets shorted on repayment of his loans. Some people are forced into short sales because they can no longer afford the payments, are moving, or must otherwise get rid of the house. Short sales are often a precursor to…
Foreclosure. This is when the bank takes back the house and auctions it off at a Trustee sale. The owner looses his home, his credit scores go kaput, and the lender stands a good chance of not getting all of their money back at the Trustee sale.
Short sale and Foreclosed houses are side effects, the product of someone’s misfortune, terribly sad places to visit. Because the owner won’t make a penny, they tend to neglect the house, or otherwise leave it in poor condition. The owner has no incentive to clean or fix the house in any way.
Often, other than being left unclean, there is stuff in the house: remnants of the owner’s old life, kid’s toys, clothing, items strewn about. Did the bank take the house and change the locks before the owner could move everything out?
And then there are the houses where things are missing. Things like, oh, the kitchen sink. The range and the oven hood. Ceiling fans and light fixtures. The dishwasher, the garage door opener. Carpet. Blinds. Sometimes an owner in foreclosure will take whatever isn’t nailed down (and some stuff that is) in order to salvage what they can from the old house.
Showing these homes is incredibly sad. The owner’s story is laid bare in the condition of the house that they leave behind. Yeah, I can find you deal, but you better have the stomach to visit these houses one after the other. My last buyer didn’t. We’re on to new construction.
November 16th, 2007 at 5:32 pm
Metaphysical question.
Do you feel that the sadness transfers with the house?
November 16th, 2007 at 6:26 pm
Metaphysically, I think houses have a long memory, but are more capable of elective forgetting than humans are. You can take the sadness out of the house, but the human can’t take the memory of the sadness away as quickly. Perhaps. In a metaphysical sense.
December 10th, 2007 at 11:13 am
You are correct, complete sadness. I grew up working in the family mortgage bank. At the age of sixteen I was knocking on doors of deliquent payers and requesting payments. I started doing evictions at 21. On December 23rd of 1992 I received a call from our HUD foreclosure contact, he wanted me to secure a house on Princeton Ave that day, two days before Christmas, accross the street from my Grandmas old house!
There was no talking him out of it, he wanted done to close out his year and he was heading on vacation. The occupants had a long history of being difficult, they were drug addicts with irrational behavior. We knocked on the door, informed them they had 2 hours to get a truck and we would help load, I even offered to pay for the truck. I was sick to my stomach evicting someone right before Christmas.
We left and came back in two hours, they had done nothing, the sheriff let my team in and they started moving the people out of the house, very carefully not to damage anything and stacking everything on pallets outside. I was in my truck watching.
My knowledge of the ex-homeowner was they were mid-twenties, irrational & had no children when they purchased the home six years prior.
The last thing they brought out of the house was a Charlie Brown looking Christmas tree. As soon as they hit the porch with the tree, two little kids probably 4 &5 ran out screaming “don’t take our Christmas”.
I snapped, 6′4″ 210lbs of shaking, balling man. I was sad for the kids, angry with the parents. Inferiated with HUD. Needless to say it completely ruined Christmas. 15 years later I still wonder about those kids, and can’t make it through Christmas without thinking about them and what I had to do. I look at my kids and think how fortunate they are.
In my market, Flint MI, 40% of the homes on the market are foreclosures. Why can’t the listing agent or clean out team take down childrens artwork? It is heartbreaking to see.
Where are the kids now? Why did the parents not care enough to take it? If you have nothing, isn’t a picture of a rainbow your kid drew priceless?
December 10th, 2007 at 11:25 am
Buddy - that’s a terrible story. Thanks for reminding us that there are real people behind every sad house.
March 3rd, 2008 at 5:30 pm
[...] talked briefly about short sales before. A short sale is where the Seller isn’t going to make enough money at the sale [...]