Is your mortgage with Stupid?… a brief short sale rant
Over the past few years I’ve worked on a number of short sales. These experiences have led me to a one general principle: Banks are stupid.
For some of you this may be revelatory while others of you have unfortunately shared in the unpleasant experience of a short sale or foreclosure.
If you’re not familiar with short sales, a short sale is when a property owner sells a property for less than what is owed on it. In order for the sale to close and ownership to be transferred, the bank must approve the sale since they hold the note on the property.
Working with banks through this process can be pretty maddening. They are generally unresponsive, indecisive, and uneducated about the home and market.
Just making contact and getting the bank to get back to you is usually the most frustrating part.
Here’s what initiating a conversation with a bank on a short sale pretty much looks like:
Agent: Hey Bank, remember those people you’ve been talking to that can’t make their payment and have to sell their house for less than what they owe? Well, they found some people here that would like to give you a reasonable sum of money for the home.
Bank: …. (silence)…
Agent: Baaank… we have some monnneyyy…
Agent: HEYYYYY BANNNNNNKKK!!!
Bank: … 2 months later … What? Is someone talking to me???
Agent: Yes. We have an offer on that property for $XXX. Here are the statistics and comparable sales to show that this is a good price for the property.
Bank: That makes too much sense… we want another agent who lives anywhere from 10-100 miles away to look at the property to tell us what it’s worth…
Agent: Fine. .
2 more months pass…
Agent: Have you decided anything Bank?
Bank: Yes. The other agent that doesn’t live or work in your market says that the house is worth $50,000 more than this offer. We are rejecting this offer unless the buyers come up $50,000.
Agent: I’m going to the liquor store….
Narrator: 12-18 months later, after the foreclosure, the bank sells the home for %15-%30 less than what was offered them
… and scene!
The reality is that banks don’t operate in the real world. When I explain this to people they adopt a confused looked and ask why banks do this.
I wish I had an answer for them.