Horror Story: A Price Reduction Disaster Story

“Some REALTORS® think being ‘given’ a County Probate or Public Guardian house to sell is a ‘freebie.’  The County calls up agents and asks them to sell a house.  Pretty simple, right?

Last year I was given a home to sell by the County Public Guardian property division, just as the market in the East San Francisco Bay Area was beginning to tumble.  I submitted comparable sales to the administrators, estimated downward, knowing that the market was tanking.  I ‘won’ the listing and put the county’s run-down house up for sale.

For next 3 months, investors circled around like sharks and I presented low ball offers to the County.  Each time they rejected them, based on what an administrator ‘thought’ the market was doing and what she ‘thought’ the house was ‘worth.’  Meanwhile, foreclosures and N.O.D.s (notices of default) continued to blossom like mushrooms in the rain in this neighborhood, lowering property values by less than half.

For each of the next 6 months, every time the comparable sales dropped, I re-submitted an estimate of what I thought it would sell for, and the County administrators passed the papers around at the speed of paint drying, rejecting each new price, as the market continued to fall 6% in one quarter last summer!  It wasn’t until I produced data from the California Association of REALTORS® that the County bureaucrats validated my requests for a price reduction.

When a perfect young man showed up to buy it at the now realistic price, and was willing to do the considerable fixing of a dilapidated property, he chose a friend of the family to do the loan.  This novice lender, very puffed up and sure of himself, delayed the close through two court appearances because he couldn’t close the loan.  Only because my intrepid buyer was heartbroken that he wouldn’t be able to ‘buy my first house before I turn 30’ and the County had stalled the sale for almost a year and now mandated it sold, did they allow me to find him a loan (which I had in underwriting within 2 days, at 1.5% lower than his so-called ‘friend of the family’).

It was looking more and more like a Keystone Kops movie, ridiculously scrambling down to the wire:  the underwriters insisted we have the Section One termite work done before funding, and the County broke their protocol and found a contractor who could whip it out, in the winter rains, in a couple of days to keep the loan locked, and finally the house sold just on my buyer’s birthday.  Lesson learned:  I’ve got to be much pushier about my knowledge of the market and loans, much more communicative (especially with local bureaucrats), and more persuasive with buyers to give up their silly loyalty to mediocre or inexperienced lenders.”

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