Ignorance is an occupational hazard.

Today was an interesting day. I feel torn between sadness, anger and relief! The short sale that I've been working on for.ever died an untimely death today. It is probably something I could have changed if I had known then, what I know now, hence the name of this blog. My ignorance cost me a lot of time and effort. Oh...and a little bit of money.

Here is my story for newbies (like me!) to learn from and the experienced to marvel at.

This process began a long time ago. Back in June. I saw an ad on Craigslist for a house in a nice neighborhood being sold for way under its assessed value. So I spoke with the owner and went to look at it. $99K in a $145K neighborhood. Decided it would be a good house to wholesale if the seller would let me have it for what he owed. First he had to evict his tenants for non-payment. That process moved us into the end of July. We signed an option agreement, I marketed it and got lots of interest in the first few weeks of August but everyone said it needed to be sold for much less due to the work it needed. Estimates for work were all over the board...from $11K-$50K. Everyone has different eyes! That brought us to the short sale as an option.

Aug 17th: I asked them to send us a Short Sale packet. We pulled all of the necessary info together. not for the feint hearted!

• Letter in lieu of listing agreement,
• HUD1,
• fully executed purchase contract initialled by all parties,
• proof of funds,
• Financial information worksheet,
• hardship letter,
• last mortgage statement,
• last 2 year's tax returns,
• last 4 paystubs,
• last 2 bankstatements and
• the contractor's bid for repairs needed.

Faxed 42 pages off to the loss mitigation department at Wells Fargo. They set up the BPO, I went with comps and other info....It's a very nice neighborhood so it was hard to justify comps as low as this house needed!

October 13: I sent another packet off with additional substantiating photos and contractor's estimates. To no avail. They couldn't care less. Wells Fargo won't let you speak directly with your negotiator. Everything is via e.mail.

Oct.17: the bank countered my (agreeably low) offer of $48.1 with $75K. Huh? Have they smelled this house? So I countered at $62K which is really about where it should be. I was thinking $70 would be the most it should cost with closing costs to make it work. She shot it down and repeated $75K. I asked: If I came in at $64.9 would that be acceptable? A: NO, We're considering your file closed. End of discussion. hmmm.

Meanwhile, I'm still showing the house to investors. I have actively interested parties...(or so I thought!) I am having a hard time getting them to commit. (another lesson learned: why do I care? move on!) Arrangements are made to show the house again, to take measurements,etc.

Nov. 16th: I show up and GUESS WHAT! The bank has drilled out the locks, winterized and locked up the house. My key is worthless! (and they didn't call me...what were they thinking?)

There's a lot of indecision going on and we're in limbo. I can't show the house to anyone and I'm thinking it's over. Then I figure after much research...Hey..they can't lock out the owner of the house...they haven't even filed Lis Pendens yet! So I call the Bank. I NEED a key. A:You can't have a key. Me:The house isnt' yours yet, the owner should have a key. They have the team that secured the house call me. After much back and forth and round and round...I meet with him and get a new key. Back in Business!.

Mid Dec.: New key in hand, I talk with more investors and feel I should try again. The seller mentions that he might need to file bankruptcy. NOTE TO SELF: this is a critical juncture.

Jan. 5th: Get all new signatures and new paychecks,bank statements, etc. and send off another offer to the bank. I'm originally going to offer $68 and then I think to myself...Are you crazy?? I should be able to sell it for $72-$75 to a rehabber if I don't want to take on the rehab myself. (I'm actually still considering this at this time.) So I offer $64.4K.

Jan. 26th: I hear from the bank. (finally!) Offer rejected. Counters at $70K, acceptance or counter in 48 hours. Hmm I haven't even shown all of the interested parties the inside of the house yet. Can't get the paperwork signed in 48 hours plus I'm trying to work it out so I can have co-buyer on the contract. Ask for extension till Monday. It's granted.

Jan 28th: Quick open house. Ask the bank if they'd consider $65.9K. Yes..if he slashes a lot of the expenses they were going to pay to close. Okay, I can live with that.

Feb.1st: Can't sleep at night anymore. It's either my age or my current profession! I am anxious to get ahold of my lawyer to clear some things up and get the revised HUD1 to send over. I ask if seller should include bankruptcy in his hardship letter. Bankruptcy you say? You can't do a short sale once you've filed for bankruptcy.... and that's where the wind came out of my sails.

All of that time, effort, work for naught. Dang. That's why I say ignorance is an occupational hazard...when he mentioned possible bankruptcy...after ALL of the reading I've done I should have known that would kill the deal.

Live and learn. I have learned from this. I have met a lot of nice people who pay cash for houses. (that's good!) And you can bet I won't make that mistake again.

Why Real Estate Investing-Part#2

Well. I certainly have procrastinated on this post, eh? I have an excuse. (yea,yea) I have been busy! (aren't we all?) (see previous post!) Post #1 was kind of a "where have I been?" So post #2 should be a "where I am". I am probably unemployable at this point in my life. Not that I'm not capable. Certainly I would be worth hiring in some capacity but staying home has spoiled me...I like my own schedule. I like the freedom that that allows. (we have lots of doctor app'ts to keep..fit that into some body's 40 hour workweek) But I don't like not having the income. So...How can I take my skill set and my interests and do something that can earn some money? I love Rochester (maybe not so much in January) and it's houses. We have some beautiful neighborhoods/homes that have gone into serious disrepair...I love the end result of people's creative energy..seeing something created from not much. I like working independently. I like meeting lots of different people. For that matter, I like people. mostly. I love the idea of providing decent, clean housing for people that are trying to make it all work but are having difficulty making ends meet. I know where I want to go....it's in the getting there that I'm fuzzy and still working on the specifics. I'll save the "where am I going?" as my part #3. Back to the "where I am"... I'm working on rehabbing a house in "the Wedge". Cute little cape that Cori will live in for a few years and (hopefully) we'll make a profit when we sell it...I say "hopefully" because reining in expenses when remodeling an old house...not easy! I'll go into all of the details in another post! Too much for now! I'm also working on a short sale. A short sale is when a homeowner can not make his/her mortgage payments but the house is worth less than they owe on it. They are "upside down" on their mortgage so they try to work with the bank to accept less for the property that is owed. A homeowner gets into this situation in a few ways: i.e. in other parts of the country where there has been a rapid depreciation in home values, that can do it. Locally it's usually one of two things: The house has fallen into disrepair which makes it worth less than the original amount borrowed or the homeowner has taken out loans against the property or over leveraged it and they just can't get the $ needed out of a sale. If you know about short sales...you know this: they have a reputation to be a real PITA because they are time consuming, frustrating and you have to be very detail oriented. Which reminds me...I have to call the bank! :) Thanks for reading! Gail

Spark

People are a funny lot.
We are beaten down by the mundane
and submit willingly to the
nothingness of our busy days.
(It is so much easier that way)
Scurrying like squirrels to
tuck away their treasures.
We overlook what we really need to see...
(It is so much easier that way)
Who we really need to be...

Find the Spark.