Catherine Bacchus has had a frustrating nine months trying to unload her Strasburg home in a short sale.
Three times she’s had buyers accepted by the lender. And three times the sale has fallen through.
A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property.
“We are on our fourth actual buyer that the lender accepted,” said Laura Lomba-Berg, a broker with Your Castle Real Estate who is listing the four-bedroom, two-bath house. “The biggest problem is how long (the lenders) take to evaluate things.”
In the first three cases, the bank took so long that the buyers were no longer qualified for a loan for which they had already been approved. In two of the cases, market conditions changed and in the third, a health problem prevented the buyer from getting the mortgage.
“The banks are not living in a very logical realm,” Lomba-Berg said. “Part of it is the unrealistic information they are basing their decisions on. They’re sitting in another part of the world and pulling up desktop comparables.”
Comparing real estate sales in a given neighborhood is a standard way of establishing home values. Comparables are often found through computer databases, such as and www .
In new developments like the Wolf Creek Run neighborhood where Bacchus’ home is, the builders are still trying to sell homes and are able to slash prices.
Bacchus, who hasn’t made a mortgage payment since July 2007, bought the 1,500-square-foot house for $207,000 in December 2005. She put it on the market Jan. 1 for $138,000.
“Her house was competing with a brand new house, fully furnished for $155,000,” Lomba-Berg said. “People are going to gravitate toward that new house with all that furniture.”
But often, it’s just that the banks are so busy they’ve had to create special divisions to deal with the properties they own, said mortgage banker Jim Smith of American Guaranty Mortgage.
“If your offer and the way it’s structured isn’t complete and it isn’t packaged correctly, you’re going to have some hiccups and it’s going to be a rough road,” Smith said.
The key, he said, is to be fully preapproved and underwritten before the real estate agent even puts an offer in.
“It’s a waste of time otherwise,” he said. “You need to show the bank that you’re qualified and ready to buy.”
Mortgage broker Mike Oswald of American Home Funding said banks have become less flexible in providing loans to homebuyers, so it’s a good idea to get the loan first.
“It’s always been get a Realtor, find a house, go get a loan,” Oswald said. “Now it’s the opposite. Now, it’s get a loan, get a house.”
Will Berry of Foreclosure Brokers LLC said often real estate agents are more harmful than helpful.
“They believe they’re going to protect their buyer at all costs because they believe it’s a buyers’ market,” said Berry, whose team helps homeowners and real estate agents in closing pre-foreclosure and short sale transactions. “But when it comes to short sales, it’s not a buyers’ market.”
One reason is that the seller often has not paid — and is unable to pay — the property taxes or homeowners association fees, and the lender isn’t willing to pay.
“We’ve seen buyers walk away from transactions after we have worked for months to get the offer approved because they’re refusing to come up with an extra $600 at closing,” Berry said.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
