Banks are Dumb

Posted on May 7, 2010 | by Denny Oh

After a few years of trying to negotiate a short sale, 1199 Pacific Hwy #2805 has finally gotten foreclosed on. The Grande South’s 28th floor, south facing, A1 floor plan was a listing that my former team and had listed…but was unsuccessful in selling. Why? Well…because banks are !#@*#.

After having several good offers, many of which were well into the $900K range, the banks(there was a first and a second loan) couldn’t reach a compromise and approve the short sale.  For years, the two banks argued over a few thousand dollars, wanting more than what the buyer was offering and more than the First was willing to give the Second.  Now, condo #2805 at the Grande South is an REO and is listed at $830,000.  What could have sold for about $950K…will now sell for $120K less…not to mention two years later!

At a list price of $830K, the Grande South unit isn’t a bad buy.  I wouldn’t call it a great deal, but it’s not bad.  Considering the most recent comp was on the 33rd floor on the north side of the Grande North, at $860K, it’s not a bad buy.  However, keep in mind that the south side of the Grande South will be heavily impacted in terms of it’s views.  Another thing to note, is that the comps I just sited was an REO and the same unit directly above it sold for $1,130,000 in July of 2009.

If you’re looking for a good deal, let me know.  Things to know:

  • The entry level for any market in San Diego, is VERY competitive – this means that FHA buyers are kind of out of luck.
  • Cash is king.  All you FHA and 10% down buyers can thank those who have cash for ruining their chances of buying anything in this market.
  • Inventory is low.  With only 500 condos on the MLS and ZERO residential construction scheduled(probably for another 12-18 months), good inventory is in high demand and you have to act quickly.
  • Having an agent who knows their stuff(and knows the other agents) is very important.
  • Now that the California First Time Home Buyer Tax Credit has expired, there will probably be less buyers out there, creating more leverage for qualified buyers.

If you have any questions about San Diego real estate, please call Denny Oh at 858-243-2092 or [email protected].

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7 Comments

  1. Tom says:

    Good title. In a similar circumstance, I spent a year trying to get a short sale of my condo approved. THe initial offer that the bank rejected was $780k. Over the following year we kept submitting offers that were lower and lower as the market fell. Finally, the bank accepted an offer of $610k a week before the scheduled foreclosure. They missed out on a year, $170k and had to pay an additional year of back taxes and HOA fees. And, in my case, the first and second were held by the same bank!

    The system is broken.

  2. Denny Oh says:

    Hi Tom – yes, the banks are certainly broken. I understand that they don’t want to encourage short sales, but some of the stuff they do make no sense. Once time, they denied my client’s offer because we offered more than what they approved the sale for…insane.

  3. Keahi Pelayo says:

    The parallels between the San Diego and Honolulu real estate markets is very strong.
    Aloha,
    Keahi

  4. Denny Oh says:

    Stupidity is universal

  5. Bruce says:

    Good title. In a similar circumstance, I spent a year trying to get a short sale of my condo approved. THe initial offer that the bank rejected was $780k. Over the following year we kept submitting offers that were lower and lower as the market fell. Finally, the bank accepted an offer of $610k a week before the scheduled foreclosure. They missed out on a year, $170k and had to pay an additional year of back taxes and HOA fees. And, in my case, the first and second were held by the same bank!

    The system is broken.

  6. Denny Oh says:

    Hi Bruce – the system is definitely broken. I’m not sure what the best thing to do is, but it needs to be fixed. Some banks are now allowing sellers to submit a file prior to listing it – the HAFA program. The bank will then review the file/property and give the seller a price that they’ll agree to sell the home for. The listing agent would then advertise that price and hope someone buys it.

    In the past, the process has been the reverse, where the seller and listing agent determine the asking price and then ask the lien holder to accept the price, once a buyer has submitted an offer. Hopefully this speeds things up.

  7. Steve says:

    The parallels between the San Diego and Honolulu real estate markets is very strong.
    Aloha,
    Keahi