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Live Diary Of A Short Sale

A colleague of mine is doing a short sale today; she's the buyer. A short sale is when the bank allows a troubled borrower to sell the home for less than the value of the loan. The lender gets all the money, but at least the owner doesn't go through foreclosure and can walk away clean.

Short sale home
CNBC.com
Short sale home

This experience has been a nightmare for my colleague so far, dealing with the bank and the owners.

The owners have been living in the house for almost a year without paying a dime: No mortgage payment, and yesterday my colleague found out they haven't paid utility bills for a year either.

Today is closing day, and I knew this would be interesting, so I'm going to do my blog version of pseudo-Twittering it throughout the day, with emails coming in from my colleague.

Below is a live blog for "Diary of a Short Sale." The most current information is here up on top. To read the whole post, start at the bottom:

7:01pm It is radio silence. All the players - aside from buyer and seller (bank) - want it to go thru so they can all see a payday. I fear there is not one to be had. They say silence is golden, but not in this instance.

5:04 No matter how good a deal it is, no matter how much I need a home, I will NOT continue to deal with untrustworthy individuals who game the system and take advantage and rip off others. So the short answer if they don't sign today as the said they would, the bank gets the house.

4:56 I just got this a second ago. I had just told my realtor to tell the other realtor that I am done. It is history. Let the bank foreclose.

See below:

I spoke with Michelle at XXX Title and the seller is now scheduled to sign at 5pm today, they even offered to go to where the seller is to get the documents signed. She will email me to confirm once the seller has signed. I also confirmed with them that the buyer has signed and we have all the funds.

- Title Representative

3:46 Still no show. I'm waiting here until close of business. If the owners really go to the closing table say on Monday, it would be up to the banks to accept, but I think it is in the bank's best interest to get it wrapped up and avoid foreclosure. On the owner side I see no benefit to them of going forward on the deal, they are experts at gaming the system. It seems they don't have to play by any rules, unlike the rest of us. ... But I still have a naive faith in humanity though, and this isn't over till it's over.

3:25: Still no show. If they don't go to the table today, the bank(s) agreement is null and void.

3pm: (Closing time) Sellers no show. Don't think it is going to happen but the day is not over yet.

2:56 The owner says the illegal tenants, and I really mean illegal, need to stay thru the weekend.

2:43 Heading to the sheriff's office. My locksmith showed up at the home, and was greeted by screaming tenants. The owner is now screaming at her realtor saying she won't go to the closing table. This is NOT looking good.

1:56 On the tenants, yes once I own I can force them out, but it gets sticky as to what the sheriff will do, damage to the home. Still figuring out how best to proceed. On arrival this morning the tenants were polite and respectful, but had not packed a thing. English is not their first language.

1:37p: I have signed my paperwork, and handed over my check to purchase the property. The owners, if they show up, will sign at 3pm. My attorney advises me about the tenant situation, and legally it is a wee bit precarious.

1:09p: Oy.

12:29p: Talking to attorney now...

10:45am: Realtor for owners just showed up to talk to tenants (owners occupy but also rent out rooms).

10:27 No arguing, fake comraderie. Owner's realtor says all will be well. Realtor adds that closing now needs to be delayed until 3pm [originally scheduled for noon], and asks me to allow the tenants to stay thru the weekend. Though i don't say so to the realtor, that is NOT going to happen. I will call the sheriff's office.

Oh, and had to empty mailbox.

9:52: Time for Starbucks...

9:48am: Tenants still there. Gotta get the owners to closing, and then change locks and haul trash.

9:22am: We got in. A mess. Two of the 4 bedrooms stil piled high with belongings. Trash piled high in the front yard. So far, as expected...

Questions? Comments? RealtyCheck@cnbc.com

  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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