Tuesday, November 1, 2011

'The Naked Foot House' - A Timeline of Our Short Sale Purchase

In case any of you are interested (and for the record), the following is a timeline of our 2011 experience buying a house via short sale. Overall, we are very happy with our purchase and feel it was worth the wait and various headaches we encountered along the way. But we also want to paint a realistic picture of our experience for anyone who might consider venturing down this path.

February 26 -- We first see the property (a four bedroom, three bath, newly remodeled house in a good neighborhood) shortly after noon. We dub it the “Naked Foot House” after I see the seller's naked foot protruding from beneath the blankets on his bed. He had told our real estate agent he would be in the Bay Area but apparently he overslept. We make a full-price offer today. (For point of reference, we had also made offers on two other short sale houses in the last two weeks; one we withdrew, and the other we ended up as the backup offer).

February 27 -- The seller counters with contract details, and we accept.

March 4 -- The property's status is changed to contingent based on our offer.

March 8 -- The seller signs the contract.

March 9 -- More paperwork is requested by the seller’s agent and is submitted.

March 12 -- The offer package is submitted to the short-selling bank for review.

March 25 -- Seller’s agent update: “"The BPO / appraisal has been returned and we are in the valuations stage of the file. We are a little further behind than I would like to be but not too far off. I will continue keep the file moving forward. Please confirm your buyers are still in."

April 8 -- Seller’s agent update: "Our file is now in the analysis stage which usually takes about a week to 10 days. We should be getting a response in the next week or so."

April 13 -- The bank counters, and we accept. Close of Escrow (COE) is set for May 27.

April 14 -- The hang-ups begin. We’re informed that the bank will take two weeks to get us the bank approval letter to move us into pending. More importantly, we’re informed that there is a federal tax lien on the house. It is estimated that it will take 45-60 days to get this removed.

April 22 -- Seller’s agent expects the bank approval letter within the next week or two. Hmm... didn’t we hear this last week?

May 4 -- Seller’s agent update: He’s still working on the approval letter, expects lien issues to delay things by 45-60 days (wait.. didn’t this timeline start more than two weeks ago? Does the estimated number ever decrease?), and is trying to delay the foreclosure sale date of 5/23.

May 7 -- The short-selling bank asks for more paperwork, and it is submitted.

May 18 -- Seller’s agent expects bank’s approval “this week.”

May 26, morning -- The agent receives the short sale approval letter, which moves the process into “pending”; new COE is 6/20; we’re told that the federal tax lien might take 45-60 days to be removed. We begin to wonder if all time estimations belong to a continuum of which we are entirely unaware.

May 26, afternoon --We find out that the bank sold off the second during the process of negotiating with us. We’re now no longer officially pending, but still seem to be unofficially pending. The seller’s agent is confident the second bank will approve this within the next couple weeks and that this will not delay the sale, as he believes that the second bank will approve the sale before the tax lien is released in 45-60 days. We also find out that there is a state tax lien and some other lien on the house that the seller intends to clear.

May 31 -- The house we had made the back-up offer on in February sells/closes.

June 1 -- The house we had made and withdrawn the offer on in February sells/closes.

June 9 -- Seller’s agent update: he’s still working on getting the second approval and getting the liens removed.

June 15 -- Seller’s agent update: he’s still working on the second approval; IRS has confirmed receipt of lien removal package, which is under review.

June 23 -- Seller’s agent update: he’s “still working on it.”

June 29 -- We are informed that the second bank has asked the seller to bring money to the table, which caused a delay, but he has agreed to do so.

July 13 -- Seller’s agent update: he’s following up about federal lien and should be hearing about the second approval “today or tomorrow.”

July 14 -- Federal tax lien released; should be hearing about the second approval “Friday or early next week.”

July 20 -- Seller’s agent update: he expects second approval “Friday or early next week;” appraiser didn’t get bubble burst memo and valued house $200K more than worth, causing more delays; ordering demands to clear other liens off title; anticipates COE to be end of August.

July 27 -- Seller’s agent expects second bank approval today.

July 28 -- We receive second bank approval with estimated 8/26 COE.

August 8 -- Inspection/Appraisal/Pest reports done; expected COE “by end of month.”

August 23 -- Banks extend “drop dead” (date bank will take the house as a foreclosure if short sale has not closed; no extensions will be made after this point) date to 9/22; expected COE 9/15.

August 25 -- “Drop dead” date changes to 9/9; expected COE 9/6; the seller/seller’s agent “still working on” clearing title (having final liens removed).

August 31 -- We find out that with passage of AB 458, seller is not allowed to bring cash to close the deal as he had agreed to with second bank. Additionally, seller’s ex-wife is now refusing to pay off liens that she had previously agreed to pay. Seller’s agent is still trying to get second bank to agree to less to close the deal, but quite possibly all the problems will kill the deal. According to the seller’s agent, “This is a freaking nightmare deal. Every time I get one issue resolved 2 more pop up.” Our realtor says that in all his years of real estate, he’s never met a person who has gotten himself into as much trouble financially as this seller.

September 2 -- “Drop dead” date is now 9/16

September 6 -- “Drop dead” date is now 9/15; expecting answer from second bank regarding change of expectations for closing by 5 PM following the next day.

September 12 -- The second bank agrees to reduce expectations in order to allow deal to close; the seller’s agent is basically giving his full commission to see this deal close. When asked why, he says he’s doing this so he can say that he was able to close this deal. He’s a pretty big time realtor who specializes in short sales, and this one takes the cake as far as short sales go. Final liens have been cleared by seller’s mom and they are expecting the confirmation paperwork of that tomorrow. We sign all the paperwork today. Seller’s agent informs us that we may have an “occupancy” problem, meaning that the seller still hasn’t moved out of the house. We’ll hold our down payment until we know that the seller has actually vacated, so there’s still a chance that this might all fall together. Or apart. Hoping the seller will move and we can close on Wednesday (Sept 14).

September 13 -- The seller says he has a place lined up to live, but is working in the Bay Area for the week and can’t move out until this weekend. Foreclosure date still set at 9/15. Updated information a few minutes later: the seller’s agent got the bank to postpone foreclosure until Monday, 9/19. The seller says he will be out of the house by Sunday, 9/18 at 5 PM. We should be able to wire money and close on Monday!

September 18 -- Did final walk-through this evening and were happily surprised to find the owner 99% out of house. Seller said he was just grabbing the last bit of his clothing and would be out of there this evening. On course to close tomorrow at noon!

September 19 -- House closes/records at or around noon, and the title agency receives confirmation of this right before 2 PM. At 2:50 PM, I show up at the house to meet the painter and find the previous owner in the driveway on a motorcycle with a couple of his buddies. He seems surprised to see me and I ask him why he is still here. He says the reason why he is still here is because he had just gotten the phone call 30 minute before that the house has closed. I inform him that the house had closed three hours before and that he shouldn’t be here anymore. He tells me his dog is still in the house and he’ll be back in 30 minutes to get him. I tell him that is nice and that I am going to show the house to the painter. He shows up 15 minutes later to get the dog and tells me that he is NOW out of here.

Over the next week and a half, we have the house fumigated and painted; the "growing operation" in the garage is removed as we would prefer being able to park our vehicles in there over using the garage in the manner that the previous owner had. In the process of cleaning out the house, I find two smoked joints and a used cocaine straw. And a riding lawn mower. (Well, that one wasn't actually *in* the house).

October 1 - We move in (with much help from friends and family). Time to unpack!

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