In 2010 the market was different than today. You could bargain for a lower purchase price and can play some games. That was called a “Buyer’s Market”.
Back then I knew a couple that reminded me of characters in a high school musical. I’ll call them Gabriella and Troy. Gabriella told me they were thinking of buying a house, “this is perfect time” I told her but she wasn’t sure if the market is low enough. “Do you think prices will go lower?” “No one knows when the market will recover but it’s definitely low” I answered. Troy and Gabriella decided to start looking. Their budget was up to $450,000, 4+ bedrooms, good schools and safe neighborhood. We started our search and visited some houses.
As with all first home buyers, everything is new. They learned what they are willing to compromise on and what part of their life was firm. I tell my clients that location and floor plans are hard to change but other features are easy to update, such as a dated kitchen or older roof. It was October, and there was only one picture posted of the house. I remember they had pumpkins on the front porch, the size was good and the location was perfect.
In addition it was Short Sale! Short Sale occurs when the owners owe more on the home than it will sell for. When that happens, the seller needs the lender’s approval to accept a lower price than owed. If you’re a buyer, a short sale can enable you to buy at a discount because the seller is distressed and has fewer options. I prepared them in advance, the home could be messy! I was right but, the main features were GREAT! Hardwood floors, high ceiling, 4 bedrooms on the top floor 2 more on the bottom, huge living room with skylight, large yard and open concept kitchen. All the appliances were old, the deck needed replacement and so did the roof.
It wasn’t love at first sight but they could see the potential. They decided to put an offer of $400,000. Now came the less charming part…. To wait! With a Short Sale the process is long; and the lien holder has final word on the price. Sometimes there is one more lien holder which can complicate the short sale. We were lucky, we had one lien holder, the bank which moved slowly. After 3 months, the bank repossessed the home, negating the short sale. The home was now to be sold as “bank owned”. Our offer died! The bank offered to sell the home at auction for $416,000. It didn’t sell. The listing agent got hold of a bank representative and said, “I have excellent offer, will you look at it?” the bank agreed. We wrote the offer again, this time for a bit below $400,000 since the previous home owner took all the appliances (although they weren’t great). Guess what? The bank signed our offer and Tory and Gabriella bought their first home after 5 month of waiting. They replaced the roof and deck and updated the messy look. Today the home looks fresh and young, and is worth over $700,000!