Is that home really for sale?
It sure looks like it is. There’s a sign in the yard, property information on the internet, an asking price and everything. The comings and goings of Real Estatey type people with wide eyed gawkers in tow confirms that the quaint Spanish hacienda is looking for a new owner.
Or is it?
There is a disturbing new trend in the Scottsdale Real Estate scene: the fictitious short sale listing.
By now, anyone who is not somewhat up to speed on the short sale market should be stoned to death with the rock under which he has been sleeping. Get used to them, people, as they are not going anywhere anytime soon. Though we all know the uncertainties and complexities involved in such a transaction mean that the listed price is not necessarily the real price, we generally take for granted that a seller is actually interested in selling.
Given the rise in anecdotal reports of would be sellers who haven’t made payments in two years while attempting to consummate short sales, you can imagine what the more entrepreneurial freeloaders in our midst have concluded: going through the motions of a short sale for the sake of appearances can keep the bank off one’s back while he lives rent free for as long as the ruse will allow.
Financial institutions are not so naive to believe such subterfuge never happens, so it typically takes a viable offer on a property to postpone a trustee’s sale (Arizona’s version of a foreclosure). That’s where you, the buyer, come in. For the “seller” interested in staying in the payment-free property for as long as possible, the facade entails the procurement of an offer for submission to the bank. Whether the seller intends to actually complete the sale or not.
In essence, the prospective buyer could get strung along for months by a seller who is just buying time. Or stealing time, I should say.
Perhaps his credit is already damaged beyond repair. Perhaps he doesn’t want to bring any of the money to the table that the bank demands. Perhaps he does not qualify for the short sale at all (yes, a seller does have to meet certain qualifications to gain bank approval). Perhaps the seller is simply bitter beyond reason and unwilling to let some buyer have his home for pennies on the dollar. Whatever the reason, there are properties on the market that aren’t really available.
How do you identify those shiftless wasters of time before embroiling yourself in a slow, emotional death? There are a few tactics that a competent buyer’s agent will employ when separating fact from fiction on a short sale offering, but none is foolproof. Short of peering into homeowner’s soul, all one can do is take basic precautions to assess the viability of a sale. Unfortunately, the determination of what the owner can do is not necessarily indicative of what he will do.
The guy could be dealing with you in good faith, or he could simply be using your offer to delay his inevitable foreclosure.
My advice? If you are going to go the short sale route, start with properties that have been through the process to the point that they have a bank approved price attached. One way of the other, the process will resolve itself with considerably more haste once the bank has assigned an acceptable price to the property. If the seller is still playing games at this point, he is running out of room to maneuver. Moreover, to reach this point, most are actually committed to the process.
If you fall in love with a home that has not yet been approved for a short sale by the bank, make sure the appropriate questions are asked and answered and that the listing agent has a competent record of successful short sale transactions. The good ones are adept at separating the viable candidates from the disingenuous types as they have a vested interest in getting the transaction to the closing table as well.
At the end of the day, though, you just never know what is in store from one short sale to the next. With all of the variables to contend with in the best of circumstances, adding the integrity and intention of the seller to the list of concerns is almost comical in a tragically masochistic sense. All the more reason I recommend avoiding the short sale quagmire unless all other avenues have been exhausted.
It’s a beautiful home alright, but is it really for sale?
It has been quite some time since I revisited the Scottsdale Foreclosure Value of the Day series that I launched in 2009. More aptly titled the Scottsdale Foreclosure Value of the Fortnight, or Leap Year, I aim to chase away the dust bunnies and rededicate myself to the format. It may not be daily, and it may not be strictly Scottsdale (value propositions do not adhere to our strict time tables and locational demands), but it will be a viable resource for those Scottsdale area home buyers who are only interested in the deepest discounts that the bargain basement bin of the Arizona Regional Multiple Listing Service has to offer.