Back in the day when I represented banks in foreclosure sales from approximately 2009-2013, I worked on all kinds of distressed properties. There were some people who made out very well in these sales. In hindsight, almost everyone who bought houses in the darkest days of the housing market collapse did very well because the prices bottomed out and they’ve been rising ever since. I’ve certainly got a few stories I can tell, including the time I sold house in Monte Rio that had been converted into a marijuana grow house. Those were some wild times.
This blog is about the time I was selling a home for a management company out of Texas I shall call FP. FP was an REO (bank owned property) management company. I’ll make no secret of how I started to work with FP. I sold a lot of short sales in the first two years as the market caved from 2007-2009, and every time I sold a house short I would ask my bank contacts how I could get an REO listing. I was selling a condo in Novato when I asked the asset manager the same question I’d asked a few other dozen people without success. “Call Brenda.” He told me and gave me her number.
I called Brenda, and got her voicemail, “If you are a Realtor, leave your name, number, and counties where you are selling. When we get a listing in your area I will be in touch.” It seemed too easy, but I left the information and two months later Brenda called me with my first REO listing! I ended up selling a couple dozen REOs for FP and the different banks they represented, including the largest banks in the nation.
When FP contacted me to sell a lot in Cotati, I didn’t hesitate to take the listing. I didn't want to turn down the listing and have another agent move into my territory. I had never sold parcels before and to this day I still won't represent a buyer on such a transaction because of the speculative nature of land sales. I’d hate to represent a client in a land sale and have them lose money. In this case, the buyer made out like a bandit.
It was a two-acre parcel on a country road. The next-door neighbor had subdivided his lot in 2005 and sold it for $500,000. The buyer had intentions of building, but apparently they found themselves in over their head quickly. Trying to recoup their money, in 2007 they listed the lot for sale at $550,000 but couldn’t find a buyer. They were unable to sell, even after reducing the price to $500,000. A few months later, they tried again with another agent at $459,000 with no success. By the middle of 2008 they had lowered the price to $399,000 and still couldn’t find a buyer after a cumulative 330 days on the market. They walked away from the land, losing their down payment and everything they had put into the property along the way.
In January of 2009, (I can’t believe it’s been 13 years!) FP had me put the property on the market for $350,000. I don’t believe that was my valuation at the time, although those details escape me. Even at $350,000, the project didn’t make sense to any builder buyers. Construction costs were too high and the potential resale value too low. The neighbor who’d originally owned the property told me he would be interested in purchasing the property back, but not at that price.
Months went by without an offer so we reduced the price from $350,000 to $336,000, then $322,000, and finally $249,000. The listing expired, and FP put the property back on the market with me at $249,000. After 139 days, we finally accepted an offer of $237,000 from the next door neighbor who had previously sold it for $500,000. It was truly remarkable he was able to pull that off.
What did the neighbor do with all that money he made? Today there is a house on that parcel, and I'm sure all of the money and then some went into the new home. The neighbor had effectively taken someone else's dream, and their money, and made it his own.
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