Sunday, November 06, 2011

In Search of Burgundy

Hey, sorry for my absence.  I’ve been busy.  I had an unusually busy summer and fall at work.  More importantly for this post, I’ve been playing in the freefalling real estate market.

In August I had dinner with a friend who is a real estate agent and we got talking about the market.  Looking into it, I realized that prices were very, very low.  Though I can’t cite evidence, I’d say home prices are historically low.

I ran some numbers and realized that, without going into detail, I could save about half on my housing expenses by buying a home.

So I started looking at properties that were “short sales” and foreclosures. 

For the uninitiated, a short sale is a home in which the owner owes more than the property is worth.  The lender has agreed to forgive the loan balance above the current sale price on the theory that it is better off cutting its loss rather than going to the expense of foreclosing and then sitting with an empty house in a glutted market.

A foreclosure is that empty house, that the lender wants to get rid of in the same market glutted with short sales and other foreclosures.  Usually the price is even cheaper because there’s no seller wanting to come out of it financially even and the banks have learned that they aren’t very good at managing real estate.

Beware potential buyers of either.  Though there is motivation on the part of the short seller and his or her lender, the process is chaotic.

I made a full asking price offer on a short sale, which was “conditionally accepted,” subject to mortgage insurance and lender final approval.  Let’s leave it at such approval (though they had agreed to the asking price) was not forthcoming.  As the tentative closing date approached, there was no word; and, there is no one to talk to about these deals.

Picture a low level employee with stacks of files on the desk who knows they are in a dead end job likely to be eliminated in a few years when the market recovers.  They methodically go from one file to the next, checking boxes or deciding that form “A” is not properly filled out and the file has to be returned to the selling agent for more information, with the process and the timeline returning to day one.

My transaction had several problematic form A’s.  I learned that the tentative closing date, September 30, would need to be extended to, are you ready for this…..December 1.

While cooling my heals, impatiently, I’d done some more research and realized that there are literally thousands of distressed properties in Atlanta and that is in all senses of the word, a buyer’s market (other than speed).  So, when faced with a two month delay, I ….

I think this is a-three part post, a skill I learned from Curmudgeon at Second Effort, who stretched out the story of a one-day trial for a month of posts.  Searching for Burgundy doesn’t come into play, now that I think about it, until part 3.

Stay tuned as your grandparents used to say.