Having heavily been involved in short sales in Lake Worth, Wellington, and Boynton as well as the remainder of Palm Beach County for the past 2 years, I have seen a lot, but cannot yet say I have see it all. The incompetency of the banks is overwhelming, and says a lot as to why most of them are going broke and need government bail outs.
The normal protocol for buyers and sellers involved in a real estate transaction are as follows. The seller sets a price, the buyer makes an offer, the seller either accepts the offer or counters with a more acceptable price after determining what their acceptable bottom line is after all expenses. The buyer either accepts or rejects the counter, or may even counter again.
The process is based on the price, minus expenses and is usually determined based on the sellers net proceeds. The geniuses that work in the banks have devised their own system. In reality they are not the sellers, but do have complete control over the transaction in terms of price, offers, and bottom line what is acceptable.
Now, here is a typical scenario. Asking price on the short sale is $ 200,000.00, the buyer realizing this is a good buy offers $ 200,000.00. The bank, I assume crunches the numbers and determines the price is acceptable, but is only acceptable if they don’t have to pay the $ 2,000.00 obligation the seller has to the home owners association, and doesn’t want to pay the $ 3,000.00 the seller owes for the previous years taxes, and decides that the Realtor that did 3 times as much work as a normal file should discount their commission by let’s say 1%, or $ 2,000.00 in this case. The total is $ 7,000.00.
Now, the bankers, in their infinite wisdom say OK, we will accept the offer, however, we will not pay the above sellers obligations, so now you have to go back to the buyer. 9 out of 10 times the buyers says I didn’t live their and am not paying last years taxes, and I am not paying last years HOA, and I am the buyer, I am certainly not paying any Real Estate commission. Reality is if the bank came back and said $ 207,000.00, they buyer would probably accept it, instead of the deal falling apart and now the process for the sale of that home will have to begin all over again.
This also makes it difficult for FHA buyers that are working with little cash because even if they agree to pay, usually these amounts cannot be rolled into the mortgage and they don’t have the extra cash to pay. I have seen cases where the deal fell apart for these exact reasons time and time again,
But it gets better, the deal falls apart and another buyer steps up, and pays $ 210,000.00 for the house. Even with the bank paying all they refused to pay before, they would net an additional $ 3,000.00. What do they say? The $ 210,000.00 is great but, we are still not paying the HOA, the sellers taxes, and are still not paying the Realtor, that got them the additional $ 10,000.00, all of their commission.
The people negotiating these deals are out of control, incompetent, and act without logic. They are hindering the process, causing damage to both sellers and buyers, and are actually violating the law. What they are doing is torcherous interference of a contract. That however is for a whole new blog. Write your Legislatures, let’s simplify this process. If you are doing a short sale in Lake Worth, Wellington, and Boynton as well as the remainder of Palm Beach County, contact us, we do have the expertise and experience to head off and extinguish potential problems.