Another Short Sale Question????
In my daily travels to the County Assessor’s and Recorder’s offices, I sometimes stop at the Trustee sale held at the County Courthouse. These Trustee sales are now held daily because of the growing number of properties going to sale. Of course you have to qualify to bid on these properties by showing the auctioneer the cashier checks proving you have the money. One day I saw a bidder, pick up a 1.3 million dollar property however most properties are in the 100 to 200 thousand range. I also notice that most of the properties go back the “bank”, with no one bidding on them.
My question is, actually about “short sales”.
If the lenders are “selling short”, all these properties, then why the Trustee sale? From what I’m seeing, the lenders are willing to wait and see what happens at auction before deciding to accept 50% cash. Then when the property becomes a REO, resell for FMV.
Now, for the most part, these bidders are sophisticated veteran investors that attend the auction daily. Which brings up another point being: Why are these veterans even bidding on these properties, with the bid starting at the loan balance plus fees, if all they have to do is simply make a proposal to the lender and save half of their money?
John (LV)
John,
Take this lightly as my experience in this area is limited. I would imagine that your market is not that different from mine in that a large percentage of the foreclosures are newer loans, many of them with FHA loans.
So, it could be that the lender's checklist wasn't followed to qualify for the short sale and/or it may be that 82% of the FMV isn't enough to make it worthwhile. I'm still waiting to find the lender who will drop their payoff below that percentage on an FHA.
Once the lender owns the property they (I assume) have much more discretion as to what to do with it.
Anyway, just some thoughts...