Los Angeles Short Sales - Are they MLS Pollution?
In some Los Angeles neighborhoods short sales may be a possibility for a home buyer. But in my market, few close. Let’s do a quick brush up:
A buyer owes $1,000,000 – $800,000 first and a $200,000 second
The home is worth $750,000
Why would the second trust deed holder agree to wipe out the debt? Receive nothing? Why not wait for foreclosure? You never know the market could make a miraculous recovery. There is no incentive for the second trust deed holder to erase their debt. The first trust deed holder is “sitting prettier” they won’t allow the 2nd trust deed holder to collect any proceeds of a $750,000 sale.
If contemplating an offer on a short sale – ask how many loans there are. The more loans the less likely the short sale will be approved. Earlier this week, I had a call from a client regarding a home in Pasadena’s Hasting Ranch neighborhood. She received the email alert of a new listing and the price seemed great. Aha! Of course it seemed great it was a short sale – some listing agents make these prices up out of thin air. I contacted the short sale Realtor and he very smugly told me that he had seven offers. I asked him how many loans were on the property he told me he didn’t know, I asked how much was owed on the property, he didn’t know that either. Good luck to all seven buyers.
This is what I found in the MLS this morning: Glendale’s Oakmont Woods, which most recently sold in 2006 for $740,000 – I remember showing this home, not enough yard for my clients. MLS Stats: 4 & 2, 1550 sq ft, lot size: 11,000+ but not all level. Was recently listed as a short sale @ $989,000 for 155 days. 
It is amazing to me that any bank would lend $989,000 - money going in the homeowner’s pocket on this recently purchased home. What value did the bank appraise this 1550 sq ft home at?
Now it is relisted – still a short sale and listed at $680,000. Be interesting to see what happens with this one.
Trackbacks
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8/15/2008 8:07 AM
Los Angeles Real Estate Blog wrote:
LaLaLand or is it Fantasy Land? You found your dream home, the price is right and you want to make an offer. What does your Realtor mean when she informs you that your offer should be over asking price? Short Sales: I have a client who is mesmerized by a Pasadena home that is a short sale – the asking price is so enticing that they had 12 offers. I spoke to the seller’s agent; most of the offers were well over the “enticing” asking price. They are waiting for the bank to decide if they ... -
9/19/2008 8:32 AM
Los Angeles Real Estate Blog wrote:
One of my favorite Los Angeles blogs is Peter Viles LA Land:“Nearly half of SoCal sales are foreclosed homesThe region's housing market is increasingly dominated by sales of bank-owned, foreclosed houses, which made up almost half of the homes sold in August, according to MDA DataQuick's report on existing home sales.” I was curious about the above post... I don’t dispute these figures… But l took a look at what has closed escrow in Glendale, La Canada, and La Crescenta month to date (September) as reported in the multiple listing service. 28 homes (reported) sold as of ... -
9/14/2008 6:37 AM
Los Angeles Real Estate Blog wrote:
One of our clients’s recently referred a first time home buyer to us. After the initial consultation, our new client indicated that being in proximity to Downtown Glendale was important and upon learning that they have a toddler we zeroed in on great and affordable school districts and decided on the community of La Crescenta. What price range? Although I was in the mortgage banking field for well over ten years, I don’t prequalify my clients; there are several reasons: *It is not my business how much they make or the number of their ... -
9/14/2008 6:33 AM
Los Angeles Real Estate Blog wrote:
One of our clients’s recently referred a first time home buyer to us. After the initial consultation, our new client indicated that being in proximity to Downtown Glendale was important and upon learning that they have a toddler we zeroed in on great and affordable school districts and decided on the community of La Crescenta. What price range? Although I was in the mortgage banking field for well over ten years, I don’t prequalify my clients; there are several reasons: *It is not my business how much they make or the number of their ... -
8/15/2008 7:43 AM
Los Angeles Real Estate Blog wrote:
LaLaLand or is it Fantasy Land? You found your dream home, the price is right and you want to make an offer. What does your Realtor mean when she informs you that your offer should be over asking price? Short Sales: I have a client who is mesmerized by a Pasadena home that is a short sale – the asking price is so enticing that they had 12 offers. I spoke to the seller’s agent; most of the offers were well over the “enticing” asking price. They are waiting for the bank to decide if they ... -
8/14/2008 5:56 PM
Los Angeles Real Estate Blog wrote:
LaLaLand or is it Fantasy Land? You found your dream home, the price is right and you want to make an offer. What does your Realtor mean when she informs you that your offer should be over asking price? Short Sales: I have a client who is mesmerized by a Pasadena home that is a short sale – the asking price is so enticing that they had 12 offers. I spoke to the seller’s agent; most of the offers were well over the “enticing” asking price. They are waiting for the bank to decide if they ...
I read an interesting statistic that illustrates the problems with short sales. One realtor (sorry I don't remember his location) claims that short sales comprise 25% of the listings but only 5% of the closings in his area. No math degree required to see that there is a problem.
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You hit it right on the nail! Not all short sales will close even when an offer is made. Short Sales take a lot of work and unfortunately there are no guarantees that it will close and that the real estate agents will be compensated well for their efforts. The first I do is educate my buyers and sellers on short sales and make sure they are completely informed on the process. Most of all I preach PATIENCE!
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Great Article. I'm In LA Doing these short sales, and man it is a hard task to get these things done. Patience is a virtue. Thanks for the Good read.
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