The Short Sale From Hell

Short sales are not fun. Some folks (me included) sort of think of them as hellish. I have one right now that was (supposedly) approved when we ratified our offer in early January that’s still out there waiting for completion. You get excited, you buy a place…and then you wait, and wait….and wait for somebody at the bank or their service company affiliate to finalize your deal. When most folks hear about a short sale they get queasy. When you hear there’s a short sale, which happens alot, where there’s 2 loans queasy turns into weak at the knees. The reason being is that you’ll have to negotiate with both lenders to make this fly. You see, often the seller of a short sale owes on his original mortgage plus a second loan as well. Quite often that’s an equity line. Every once in awhile you’ll see a short sale where there’s 3 loans. Often that happens when it’s a condo and the seller hasn’t been paying both his loans as well as the HOA dues. # lien holders makes you go from queasy to weak in the knees all the way to nauseous.

Well, a couple of days ago I saw a short sale in Menlo Park that topped them all. It’s a really cute 3 bedroom, 1 bath house at 1082 Lucky (ironic street name, huh?) that’s listed for $899,000. Turns out the sellers owe almost $1,400,000. They owe that to not 1, not 2, not 3 liens…but 20 of them. That’s right…20 lien holders! They owe money to lots of different people who, over time, have recorded these debts against the title of this house. What that means is that in the case of a short sale, the first lien holder is going to have to get all of these other folks to agree to a significantly reduced payoff. 19 groups need to be negotiated with! So much for nauseous and all the rest…we’ve moved directly to comotose! I can’t imagine this actually ever happening without foreclosure. What a mess…but it’ll probably get multiple offers anyway in this insane market!

 

Comments

  1. Thank you for admitting that this market is insane 🙂

Speak Your Mind

*