Realty Guild Blog

In its Deeds and Don’ts section, Connecticut Cottages and Gardens gives “the inside story behind area real estate deals.” This month, along with the latest details on the Greenwich estates of Tommy Hilfiger and Mel Gibson, they featured the Realty Guild’s listing at 120 Clearview Lane. After checking out the property, the magazine wrote that it is “an immaculately renovated Colonial that was thoughtfully equipped with every sybaritic detail you can dream up (and a few extras, as well).” They also pointed out that there is “a private dock on the pond that the family uses to launch kayaks in summer and host skating parties in winter. There’s also a swimming pool that’s beautifully sited amid tiered terraces and gardens.” They were pretty taken with the inside as well, writing, “we’re especially partial to the wood-paneled den with a fireplace and wet bar, but rest assured that the new kitchen, butler’s pantry and family room, with its stone hearth, are also lovely.” The property is listed by Leslie Razook. Click here for the full article, titled Colonial New Canaan.

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By Bob Anderson

With the recent financial meltdown, both home buyers and sellers are feeling the impact of declining home prices, created in large part from defaults on mortgages.  As a result, we are seeing homes being sold as “short sales” and “foreclosures”.

A short sale is defined by the Nolo Press as “a sale of a house in which the proceeds (of the sale) fall short of what the owner still owes on the mortgage.”  Many lenders will agree to accept a short sale and forgive the rest of what is owed on the mortgage when the owner cannot make the mortgage payments.  By accepting a short sale, the bank can avoid a lengthy and costly foreclosure, and the owners are able to pay off the loan for less than what they owe, without negatively affecting their credit the way a foreclosure would.

As I have learned from personal experience as a buyer, short sales do not mean that the transaction will be short or that there will be a sale.  The traditional real estate transaction roles are very different.

In this Blog, I will describe my attempt to purchase a home in Florida that was listed as a “Short Sale,” my first experience in dealing with short sale transactions and a valuable one in understanding the process.  In a subsequent Blog, I will explain my experience in successfully purchasing a foreclosed property.

The Short Sale Property
A few years back, my wife and I purchased a five-acre parcel of land in Naples Florida, with the intention of one day building a second home there. When recently we researched building a 3900 sq ft house on the property, the estimates were $550,000 (for the construction and permits). To our astonishment, just a mile away, on 2.5 acres, the identical model that was 1 year old was listed in a short sale for $375,000. It begged the question, “Why would you have the house built, for $550,000, when you can go out and buy an identical home for $375,000, or less?”

We decided to pursue the short sale. In the case of the property we were attempting to purchase, the appraisal was $375,000.  However, given the rapidly declining values and actual foreclosures on the market in the neighborhood, the comparable prices were in the area of $275,000.  So we offered $275,000.

This offer led to what is the first, and perhaps biggest frustration of attempting to purchase a short sale: A total lack  of communication by the banks.

We actually never received a response to our offer from the seller. Now that we were dealing with a bank as the seller, and not a homeowner or realtor, the person our offer went to was a clerk in the Loss Mitigation Department of the bank, located literally thousands of miles from the property we were interested in, with no knowledge of the home or its neighborhood. The back-office staff are dealing with huge caseloads of short sales and foreclosed properties and are overwhelmed.

Despite numerous attempts to find somebody, any person, to consider our offer, we never heard back from anyone at the bank. When we finally did receive some communication,  it was that the bank, much to our surprise, decided to sell the loan on the property. If we wanted to continue to pursue the house, we would have had to start from scratch and deal with an entirely new financial institution. We decided not to continue to pursue this property, as there were others available through auction and foreclosure.

What ended up happening to the house we put the offer on? The lender who purchased the “bad debt” from the bank eventually sold the home for $260,000, $15,000 less that what we had offered.

Here is a quick list of  items to be aware of when considering purchasing a home listed as a short sale.

• Establish a relationship with a Buyer Agent who is experienced in short sales.
An experienced professional is critical to assist you in navigating the nuances of a short sale transaction.  Why?  Because a short sale does not follow the rules of the traditional real estate transaction.  Typically the homeowner is still living in the property and is going through emotional and financial stress, and your agent and you will need to make sure that there are no existing liens on the property.  If these exist, they all will need to be satisfied for a successful transaction.  As part of the due diligence, a preliminary title search will determine if, indeed, there will be complications in purchasing the home.

• The Buyer Agent will need to assess who is on the Seller Agent’s team to advise you if indeed the expertise and willingness is there to complete a short sale.
One thing to know going in is that, if the homeowner agrees to renegotiate the loan with the bank, there will be no sale and you will have consumed time and energy in trying to purchase a home that will be taken off the market.

• It is key that the Seller’s team has a direct and rapid channel of communication with the lender’s loss mitigation clerk. He has a specific service level to turn around documents.

In my next blog entry, I’ll discuss how we successfully purchased a bank-owned property on the same street, at auction.

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The 17th annual New Canaan CARES Kitchen Tour will take place this Thursday, May 14th, from 10 a.m. to 3 p.m. featuring the newest and most innovative ideas in kitchen design and renovation. The tour committee released a statement saying: “The kitchens not only exhibit beautiful and sophisticated varieties of style, size, and location, but the homes share a singular and uncompromising commitment to quality.”

One of the eight kitchens on this year’s tour is the Realty Guild’s listing at 76 Mather

76 Mather Farm Road, located in an exclusive enclave at the crossroads of New Canaan and Darien.

Farm Road, a masterfully built new home which combines both a charming farmhouse character with an unparalleled level of modern luxury. The property is also one of the most historically significant in the area.

The kitchen was designed by Kitchens by Deane

A sample of the homes’ commitment to design includes: Random width wide plank oak floors, radiant heat in all full baths, mud room and lower level, a bluestone terrace with fireplace and snow-melt radiant heat, and state-of-the-art heating and cooling systems. The exquisite, gourmet kitchen was designed by Kitchens by Deane and features custom cabinets, a large center island, dual Miele dishwashers, Subzero 700 series refrigerators/drawers, Wolfe range and double wall ovens.

The great room features a floor-to-ceiling native fieldstone fireplace.

This year’s event will kick off with a 9 a.m. coffee gathering at Waveny, where attendees may leave their cars parked free of charge. A boxed lunch, to take place along the route, can also be purchased for $15.00 but has to be reserved by May 12th.  The tour will also feature surprise giveaways at various homes. To purchase tickets to this year’s event, or to find out more information, please call 203-966-7862 or visit the CARES office at 112 Main Street.

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