The Trouble with Shorties

Posted by Dave Fratello on Friday, December 19th, 2008 at 3:50am.

If you're looking for bargains in MB, foreclosures are all but off the table.

Compare MB to the rest of the Southland. According to DataQuick:
"[F]oreclosure resales" ranged from 44.1 percent of November existing home sales in Los Angeles County to 70.4 percent in Riverside County. In Orange County foreclosure resales were 44.2 percent of sales; in San Diego 52.1 percent; San Bernardino 67.8 percent and in Ventura County 47.8 percent.
That's a torrent, and we have barely a trickle at this point in MB.

The deals – such as they are – among troubled properties are short sales. Of those, we have a few.

(Short sales require a lender to accept less than the full balance on a loan from the homeowner to transfer the property, but they expect to take less of a hit than if the property were to move to foreclosure. Indeed, it's common to see shorties that aren't in default; the whole process is cleaner.)

But the problem with shorties is often the wait. Getting the lender's attention and approval can take months.

And these days, the longer you wait in limbo, the less of a "deal" you might feel you got in the first place.

Take, for example, 465 30th up on the plateau in the Sand Section.

Here's a 5br/5ba and 3350 sq. ft. home we've called "voluptuous." It boasts a quiet location and a spacious outdoor room/deck on the 3rd floor.

This one first hit the market in March at $2.799m. That seemed high to plenty of folks, but it had some basis in prior sales.

Maybe more importantly, that price looked like a "rescue price" that might have helped a bad situation end well for the sellers.

No takers, though. The home lingered, switched agents, dropped to $2.399m this Summer and posted as a shortie. (We don't yet have the total amount owed; purchase in '03 was at $1.5m, but loans were taken against the home later.)

In mid-July, 30th got a buyer.

This week, the lender approved that sale, short, at $2.150m.

Did you notice the problem?

That deal was made almost 5 months ago. The buyer has long since walked.

Five months is longer than what's typical, but then again, what's typical in the financial world these days?

We've heard tales of Herculean efforts to reach the top brass at some lender to close a deal. (Successful.) We've heard plenty more tales of annoyance and frustration. (Unsuccessful.)

465 30th is now a unique opportunity – you can grab it at the approved price ($2.150m) within the next week, maybe longer, while the "approval" of that July sale is still good. (Incredibly, the lender offers a very small window for a final acceptance after 5 months of navel-gazing.)

A shortie with short wait – there's something different.
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