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.
