Why this house is a short sale? http://www.redfin.com/CA/Los-Altos/10549-Creston-Dr-94024/home/1764446

Asked by Tony, Los Altos, CA Tue Apr 16, 2013

How can this house be a short sale? This house is currently not under water. It was purchased in 2006 for $1.2 M. With the current market, it can be easily sold for at least $1.4 to $1.5 M. How can any bank would approve this for $1 M short sale after it pulls up the comp? The agent indicated that he already has his buyer(s). Can anyone please explain to see if this makes any sense? This house would still be more than $1.3 M even the house was completely trashed inside.

http://www.redfin.com/CA/Los-Altos/10549-Creston-Dr-94024/ho…

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David Blockh…, Agent, Los Altos, CA
Wed Apr 17, 2013
BEST ANSWER
Tony,

The purchase price is not indicative as to the value of the liens on the home. A notice of default was file in April 2012 with an estimate value of the liens on the property at over 1.55 million. The homeowner took out at first and a second and appears he/she has not been paying on either. With fees and accrued interest the value of debt has gone above 1.55M.
The list price is absurdly low in order to get an offer so they can begin negotiations with the bank. If they have no offer, the bank will not negotiate. My guess (without speaking to the agent) is that the buyer got tired of waiting for a response and walked.
It shouldn't be that tough of a deal to negotiate. The first is with B of A and the second with Wells. There also could be a tax lien that we aren't aware of. Either which way, a short sale should be able to be completed if you have an agent who knows what to do and a buyer who is willing to wait a couple of months to complete the negotiations and close the deal. Since I don't know the agent or his/her expertise in short sales, I can't tell you.
Note: the market will bear what the market will bear (1.2, 1.3 or what ever a qualified buyer offer is). If the home has been presented to the market and obtained enough interest and offer(s), the bank will negotiate.

David Blockhus
Coldwell Banker - Downtown Los Altos Office
DRE# 01169028
650 917-4250
http://www.LosAltosHomes.com
1 vote
Juliana Lee, Agent, Palo Alto, CA
Thu Apr 18, 2013
Almost anything is for sale at the right price. The advertised price is probably not the right price. The sequence of events in a foreclosure or short sale can be very strange.

Yes 12,100 sf of dirt in Los Altos probably is worth more than $1M. However real estate statistics show there have been homes sold in Los Altos with a price less that $1M in 2012.
http://julianalee.com/los-altos/los-altos-statistics.htm

Juliana Lee
Top 2 agent nationwide at Keller Williams Realty
650-857-1000

Over 30 years experience
Over 1,000 homes sold in Santa Clara and San Mateo Counties
.
Web Reference:  http://julianalee.com
1 vote
Elena Talis, Broker, Palo Alto, CA
Tue Apr 16, 2013
This house was in pending state for a while and it TFTed earlier today. My guess is that the short sale was not approved and the buyer canceled.

In terms of how can it be a short sale - it depends on the amount of loans the owners took against this property. It is quite possible that the proceeds from the sale are not enough to pay off the loans.
Web Reference:  http://talisrealestate.com
1 vote
Vinicius Bra…, Agent, Cupertino, CA
Tue Apr 16, 2013
This whole situation is very dubious. The agent works out of San Diego and not in the area. Doesn't return calls or emails, no showings, but yet there are offers.

There are three scenarios that I can think of. 1) The home is no longer a short sale, the agent is going to put it on the market and try to get the highest price possible and sell it as a normal sale. 2) The agent is only interested in selling it to his own buyer. 3) This is a dubious deal where the buyer may be affiliated with the sellers, therefore violating the arms length transaction requirement.
1 vote
Tony, Home Buyer, Los Altos, CA
Tue Oct 15, 2013
This house (10549 Creston Dr.) finally was sold for $1,245,000 (http://www.redfin.com/CA/Los-Altos/10549-Creston-Dr-94024/ho…)

Now compare the above house with its almost similar next door neighboring house (10481 Creston Dr.), which was sold for $1,620,000 (http://www.redfin.com/CA/Los-Altos/10481-Creston-Dr-94024/ho…)

Even though the house at 10549 Creston Dr. was a short sale, the price was being manipulated badly, yet banks approved? There is some thing strange going on! Which price is the correct price? House prices can be manipulated by people involved in the transactions, can't they?
0 votes
Tony, Home Buyer, Los Altos, CA
Mon Jul 15, 2013
Now what is going on with the new price? It is up to $1,285,300, but still way way below the current market price for this house. Why can the owner just put up the house as a regular sale, and receive offers from potential buyers, instead of a closed door short sale? The house will be sold for a lot more than $1,285,300. The bank again will NOT approve at the new proposed list price. There has to be some strange, hidden thing going on internally with this closed-door short sale between the potential buyer and the owner that they hope the bank would approve at the below the market price in the red hot Los Altos real estate market. An interesting case to follow and learn!

http://www.trulia.com/property/3116640649-10549-Creston-Dr-L…
0 votes
David Blockh…, Agent, Los Altos, CA
Wed Apr 17, 2013
Tony,

In today's overheated pro seller market, short sales can be a good way for the average (20% down buyer who needs a loan) to compete against high cash and/or no contingency buyers because many agents and their clients aren't familiar with the process and the ability to close on short sale properties. If you are interested in this type of option, have your agent contact me in a week. I will have a (likely) Los Altos short sale on the market for the last weekend in April - priced just under 1.5.

David Blockhus
DRE# 01169028
Coldwell Banker - Downtown Los Altos Office
http://www.LosAltosHomes.com
650 917-4250
0 votes
Tony, Home Buyer, Los Altos, CA
Wed Apr 17, 2013
Thank you all very much for your potential explanations, which make sense. I think that David's explanation with the owner has a total current debt well above $1.55M on the house made a very good sense. If this house is placed on the market even it is located near 280 in this area, it will sell slightly above $1.5 M IMO as in a regular sell. It has a large lot of 12,100 s.f. flat desirable land in a nice Creston's neighborhood. I can't estimate the amount of the discount for waiting a couple of months on banks' responses. I just wish that the seller agent would have an open house, allowing competing offers to come in, and present those highest offer to the banks. That's right, he (out-of-town seller agent) didn't respond to phone calls, and no open house, for both short sale listing occasions before and now.
0 votes
Tony, Home Buyer, Los Altos, CA
Wed Apr 17, 2013
Thank you all very much for your potential explanations, which make sense. I think that David's explanation with the owner has a total current debt well above $1.55M on the house made a very good sense. If this house is placed on the market even it is located near 280 in this area, it will sell slightly above $1.5 M IMO as in a regular sell. It has a large lot of 12,100 s.f. flat desirable land in a nice Creston's neighborhood. I can't estimate the amount of the discount for waiting a couple of months on banks' responses. I just wish that the seller agent would have an open house, allowing competing offers to come in, and present those highest offer to the banks. That's right, he (out-of-town seller agent) didn't respond to phone calls, and no open house, for both short sale listing occasions before and now.
0 votes
Gretchen Swa…, Agent, Los Altos, CA
Tue Apr 16, 2013
Tony, the close location of this home near a major freeway (280) is always going to be an issue in resale. In my opinion this is why it is priced "low" relative to your analysis or perhaps why the agent and bank have taken this strategy. The list price even on short sales, is a starting price. The bank knows ( as well as the listing agent )that it could/might sell higher. List prices on regular sales are often 5-10% below "value" to draw more offers. SO given this is tough location, a short sale(distressed), and -would require the banks approval- in my humble opinion why would they list high? better to list below, get maximum interest, and strive for multiple offers in our current conditions of low inventory.

I hope this was helpful and always love to hear questions from others involved in our markets.

Gretchen Swall
650-810-5678(m)
0 votes
Thank you for responding to my question. I found it is interesting with regarding to the list prices on regular sales to be 5-10% below the actual value of the house to draw more buyers' attention. I have another question for you. If there is someone who offers to buy at the list price of 10% below the home value, and NO other higher offers, would the seller be obligated to sell the house at the list price? If the seller declines to sell at the list price (which is 10% below the estimated market value), can the buyer sue the seller for false advertisement? Tough to win, but on principle, the buyer can, right? I use an analogy of a department store. If the store places a sale item (i.e. a shirt) at $90 (after 10% discount on the regular price of $100), the buyer agrees to buy at $90, however, the department store refuses to sale at $90, that is a false advertisement, right? Thanks in advance.
Flag Wed Apr 17, 2013
Lynn Wilson…, Agent, Palo Alto, CA
Tue Apr 16, 2013
The listing agent says there have been numerous offers. No phone calls returned. I am guessing the bank was too slow and the buyer said let me out! Banks are not always sensible or predictable.
0 votes
Terri Vellios, Agent, Campbell, CA
Tue Apr 16, 2013
The Seller may have taken out a second equity line of credit. It may have been a negative arm loan and the principle increased.

The bank will only approve market value.

Your best resource is to consult the listing agent or your own agent.
Web Reference:  http://www.terrivellios.com
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