It was a cute home. A nice cape-style home on a private lot. It was affordable. It needed some work, but not too much. It was priced accordingly. It was a short sale - the owners owed more money on the home than it was worth.
We quickly received two offers. The first buyer changed his mind...
The second buyer experienced family issues, and buying a home was no longer in their plans.
So we continued onward. We continued to market and show the home.
The home was vacant and supposed to be winterized. I checked every few days to see if this had been done, and notified the owners every few days to remind them - the home needs to be winterized.
Well, the home was never winterized. I showed up one day for my regular check of the home, and there was water everywhere. It was an indoor waterfall. Not my idea of fun.
Obviously, the home was now damaged. Everything was wet. Drywall was falling off of the walls and ceilings. The carpeting had to go. The carpeting really had to go. There are things growing in the carpets. Not pretty.
But, we kept moving forward. We kept marketing this home. And, we generated three more offers.
One of these offers was pretty darn good. That was in January. Five months later, that buyer is still with us. He still wants the home and he's still willing to wait. How many buyers do you meet like that? In a short sale situation, this buyer was a dream come true.
The lender had been sitting on this offer since January. They didn't want to accept that the home had lost value because of the damage. We sent pictures and detailed information. Finally, the lender agreed to send out an appraiser. The house, in its current condition, appraised for right around the offer price.
We thought we were in luck. We thought this journey might soon end. We thought the buyer would soon have this house and begin working on it.
We thought wrong.
The owner's loan on the home was an FHA loan. With FHA loans, they will not consider a short sale on a home where the damages are greater than 10% of the value of the home prior to the damages occurring.
What? I never knew that. Does it make sense? No. We're still trying to work on this, but the lender has informed us that they have now closed the file and will proceed with foreclosure.
What they refuse to take into consideration is that after the foreclosure is completed, the bank will then own this damaged home. The value most certainly will not increase as the home sits there during the foreclosure process. In fact, while they proceed with the foreclosure, this home will most likely continue to deteriorate. This home will lose more value.
I've closed a number of short sales. They are a part of our marketplace. They are not easy, but no one ever said selling real estate would be easy.
We could have had another successful short sale transaction this week.
The lender has let us down. These owners will now face foreclosure.
What a shame.
Don Fabrizio-Garcia, REALTOR
Connecticut Real Estate & Appraisals
Keller Williams CT Realty
Connecticut Real Estate and Homes for Sale