REO Disaster - Listing 4 - The utilities boondoggle
Got an asset disposition assignment from one of our asset management companies. They asked for an immediate occupancy check. I did it the same day.
Next was the Broker Price Opinion. It was 150 feet from the freeway. After careful search of comparables, I suggested the price be $174900 to $179900.
After that a week went by.
"Are we waiting for an appraisal?" I emailed.
"Yes we are", was the response I got back.
On Friday I got an email that said, "Wow! Appraisal came in at $390000!" That was $210,000 higher than my Broker Price Opinion. So I had to spring into action. Fortunately, this property had been listed twice - and for long periods of time. In 2007 - at the peak of the market in our area, it had been listed for sale starting at $369950. It slowly came down. In 2008 it was listed again, for a long period of time. It slowly came down and down and down. In the end, it was at $294000.
It did not sell at that price, which is why the bank now owns it. In the year since, it has become derelict. Enveloped in blackberries and weeds. The beautiful roses in the listing pictures now choked and hidden. All my market research convinced the folks I am dealing with. They listed it at $179,900 - my price.
Now there were 4 to 5 showings every day. Two offers came in, both all cash offers from investors. My instructions were to go back to both investors, asking for their best offer. One of the two stepped up. The other one thought the bank would accept any price they chose, no matter how low. So the higher offer was accepted.
Now my challenge was to get the utilities turned on. The electric bill was almost $2000! How did they let the people get that far behind? The bank asked ME to pay for the utilities until closing! So I pay the bill, expecting the lights to go on immediately. No! They cut the electricity off in August of 2008. They had to send a city inspector out to the house, go INSIDE and check to see if it was safe to turn the power back on. OK? I met the inspector, he took the cover off the electric panel, and deemed the house safe for electric power once again.
Then the other bill. Water, garbage and sewer. Should be a couple of hundred dollars, right? No! The bill was $4345!!! How was that possible? I guess it was so bad, the city actually went out and removed the water meter at the street. I had to pay $152 to reinstall the water meter. Never in my life had I heard of such a thing! I guess you learn something new every day... So I paid that staggering bill as well. I sure hope the bank honors their agreement to repay me all these charges! We move forward with the sale. Now it is time for the inspection.
The inspection was really severe. The investor was clearly shaken by the end of the time with them. All the siding needs to be replaced. The porch in front is improperly installed. It needs to be replaced. The deck in back is rotted. It needs to be completely removed and rebuilt!Keep moving forward, or bail? Well, it turns out, both. The investor would like to go forward, but is asking for some seller financial concessions for the repairs that need to be done. I pass the request, along with the inspection report, to the bank.
We move toward closing. I tell the buyer to start moving their money into cash so they will be able to wire it for closing. The assigned escrow person draws up the closing papers. They are pretty simple, since there is no loan. I put calls in and emails to the asset manager. The day before closing, the approval for a discount comes in. The closing papers are redrawn. The buyer wires their money to escrow. It closes on time! Buyers are happy.
I meet them. They have one more paper to sign. It says that they know and understand that they need to change the locks. Many people have had access to the one that is on the door now. I had suggested that they bring a new door knob and dead bolt. While they are getting reaquainted with the house, children scampering in and out, I take the old locks off and install the ones they brought.
They are happy I am happy The bank is happy
Happy! Happy! Happy!
The bank WILL repay me the $6400 I spent for utilities, right?
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