What is a short pay off?
I have a client that contacted me this week regarding a new listing; it is priced at $849,000 and is subject to the lender’s approval of a “short pay” (pay off, or short sale). This particular home was purchased in 2006 for $1,040,000, the loan amount is approximately $985,000.
The agent which listed the home for $849,000 is hoping that once he/she finds a buyer that the bank will agree to sell the home for $849,000 and take a loss of $142,000 PLUS closing costs. If the bank agrees to take less than the amount owed, more than likely they will insist on squeezing every last penny from the buyer.
So, an agent lists a home for whatever price they “pick out of a hat”
A buyer and a seller agree to this price IF the lender agrees to take the hit (loss)
The buyer and seller agree, and while waiting for the lender’s decision which usually takes about 30 days, the buyer pays for an inspector to inspect the property and guess what? The seller doesn’t want to make repairs and the lender is all ready going to loose money so AS IS is really AS IS. The buyer proceeds with the loan and pays upfront fees for the appraisal and credit report. Buyer and seller continue to wait for the lender’s decision.
I have discussed short pays with two different escrow officers and their consensus is that AFTER a home is sold and escrow is opened less than 50% close escrow (one escrow officer said less than 20% of her (short pay) escrows are closing! But the really insane aspect is that these listings, with their predominantly "made up" prices are flooding the market. They are in the MLS, being advertised and all with "made up" prices!
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7/1/2008 9:52 AM
Los Angeles Real Estate Blog wrote:
There were 11 Notices of Default (NOD) last week; three in La Canada. One of the La Canada NOD’s is presently listed, one was purchased in 2005 (likely owe more than their home is worth) and the other purchased in 1992 (maybe spent their equity???). One NOD for La Crescenta, another in Montrose, the remainder in Glendale. The foreclosure analysis: Montrose – house with guest houseThis property was purchased in December 2005 for $605,000. At time of foreclosure $715,500 was (plus arrears) owed. Glendale’s Chevy Chase CanyonThis home was purchased August 2005 for $700,000 with 0 ... -
5/30/2008 8:30 AM
Los Angeles Real Estate Blog wrote:
Purchased as a flip in April of 2006 for $766,000 – this Northwest Glendale home just closed escrow as an approved short sale for $770,000.____________________________________________________________MLS Stats:April 2006 –2 -
2/26/2008 9:52 AM
Los Angeles Real Estate Blog wrote:
In Glendale, La Crescenta and LaCanada there are currently 20 homes listed for sale, subject to lender’s approval of short pay off. In the past 6 months only one has closed escrow. By examining them, you will notice that some of the owners aren't having difficulty due to market stabilization but because they have been taking their equity out of the house.Glendale 91206, List Price $749,000Purchased 12/06 $1,080,010Glendale 92102, List Price $449,000Purchased 8/03 $405,000 Glendale 91201, List Price $539,000Purchased 6/05 $635,006 Glendale 91201, List Price $599,900Purchased 8/05 $580,000 Glendale 91202, List Price $649,000Purchased 10/05 $699,006 ... -
2/26/2008 9:50 AM
Los Angeles Real Estate Blog wrote:
In Glendale, La Crescenta and LaCanada there are currently 20 homes listed for sale, subject to lender’s approval of short pay off. In the past 6 months only one has closed escrow. By examining them, you will notice that some of the owners aren't having difficulty due to market stabilization but because they have been taking their equity out of the house.Glendale 91206, List Price $749,000Purchased 12/06 $1,080,010Glendale 92102, List Price $449,000Purchased 8/03 $405,000 Glendale 91201, List Price $539,000Purchased 6/05 $635,006 Glendale 91201, List Price $599,900Purchased 8/05 $580,000 Glendale 91202, List Price $649,000Purchased 10/05 $699,006 ... -
7/1/2008 9:40 AM
Los Angeles Real Estate Blog wrote:
There were 11 Notices of Default last week, three of these were in La Canada. One of the La Canada NOD’s is presently listed, one was just purchased in 2005 (likely owe more than their home is worth) and the other was purchased in 1992 (maybe spent their equity???). One NOD for La Crescenta, another in Montrose, the remainder in Glendale. The foreclosure analysis: Montrose – house with guest houseThis property was purchased in December 2005 for $605,000. At time of foreclosure $715,500 was (plus arrears) owed. Glendale’s Chevy Chase CanyonThis home was purchased August 2005 ... -
3/20/2008 6:55 AM
Los Angeles Real Estate Blog wrote:
1300 block of Irving, in Glendale MLS Stats:Sold 12/04 $605,0002 -
3/7/2008 4:45 AM
Los Angeles Real Estate Blog wrote:
1300 Block of Allen in Glendale MLS STATS2 -
3/7/2008 4:40 AM
Los Angeles Real Estate Blog wrote:
In Glendale, La Crescenta and LaCanada there are currently 20 homes listed for sale, subject to lender’s approval of short pay off. In the past 6 months only one has closed escrow. By examining them, you will notice that some of the owners aren't having difficulty due to market stabilization but because they have been taking their equity out of the house.Glendale 91206, List Price $749,000Purchased 12/06 $1,080,010Glendale 92102, List Price $449,000Purchased 8/03 $405,000Glendale 91201, List Price $539,000Purchased 6/05 $635,006Glendale 91201, List Price $599,900Purchased 8/05 $580,000Glendale 91202, List Price $649,000Purchased 10/05 $699,006Glendale 91201, List Price $699,000Purchased 6/06 $865,008Glendale 91202, ... -
3/6/2008 8:29 AM
Los Angeles Real Estate Blog wrote:
Received an email from my handyman who is curious as to what is going on with a home listed for sale in La Canada near Descanso Gardens. He thinks it is outrageous that a home listed for nearly $1.2 has weeds and a brown lawn. So here's the scoop: The home sold in April of 2007, for $1,400,000 – at the time it was advertised as suitable for building your dream home.It is now on the market for $1,197,000, according to the MLS it is tenant occupied and still being advertised to build, not to rehab, ... -
3/5/2008 5:47 PM
Los Angeles Real Estate Blog wrote:
Received an email from my handyman who is curious as to what is going on with a home listed for sale in La Canada near Descanso Gardens. He thinks it is outrageous that a home listed for nearly $1.2 has weeds and a brown lawn. So here's the scoop: The home sold in April of 2007, for $1,400,000 – at the time it was advertised as suitable for building your dream home.It is now on the market for $1,197,000, according to the MLS it is tenant occupied and still being advertised to build, not to rehab, ... -
2/26/2008 9:56 AM
Los Angeles Real Estate Blog wrote:
In Glendale, La Crescenta and LaCanada there are currently 20 homes listed for sale, subject to lender’s approval of short pay off. In the past 6 months only one has closed escrow. By examining them, you will notice that some of the owners aren't having difficulty due to market stabilization but because they have been taking their equity out of the house.Glendale 91206, List Price $749,000Purchased 12/06 $1,080,010Glendale 92102, List Price $449,000Purchased 8/03 $405,000Glendale 91201, List Price $539,000Purchased 6/05 $635,006Glendale 91201, List Price $599,900Purchased 8/05 $580,000Glendale 91202, List Price $649,000Purchased 10/05 $699,006Glendale 91201, List Price $699,000Purchased 6/06 $865,008Glendale 91202, ... -
4/1/2008 5:18 AM
Los Angeles Real Estate Blog wrote:
No homes lost in La Canada, Montrose or La Crescenta; all three are in Glendale The first home is in the 1000 block of RaymondMLS STATSSold 8/6/04 $$625,000 (3 -
3/19/2008 5:33 PM
Los Angeles Real Estate Blog wrote:
1300 block of Irving, in Glendale MLS Stats:Sold 12/04 $605,0002
I am an agent up north and I have been RANTING about these phony prices for some time now, it bungles up the buyers into thinking all the other homes should be listed at these prices and our area they say only 10% of the short sales are closing.
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Yes, it's MLS Pollution and I don't know why our MLS does not requrie that these listings be tagged differently
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