Feeding Frenzy Aftermath: Broken Deals
Broken lines, broken strings,
Broken threads, broken springs,
Broken idols, broken heads,
People sleeping in broken beds.
Ain’t no use jiving
Ain’t no use joking
Everything is broken.
–lyrics, “Everything is Broken” (Bob Dylan)
Lo and behold, four to six weeks after some of the wildest bidding wars for foreclosure properties this Spring and early Summer, what do you see?
Broken deals, with the properties put back on the market.
(No, no broken hearts in any of these transactions.)
In many, many cases, the banks knowingly fomented Buyer feeding frenzies by listing the homes anywhere from 20% to 50% below market (I’ve personally documented many such cases on this blog).
The predictable result was 5, 10, and sometimes even 20-plus offers for the same, derelict foreclosed home.
Seller Games Beget Buyer Games
At some point, many of these runners-up decided to fight fire with fire.
So, at least anecdotally, I’ve heard stories of Buyer submitting simultaneous offers on multiple homes, committing to unrealistic closing timetables, and representing themselves as all-cash Buyers or financially qualified even though they weren’t.
It’s not exactly a shock, then, when the banks find that they’ve been stood up.
Maybe they’ll conduct all these “rebound” listings more responsibly.
Next post: ‘Broken Deals — Traditional Sales’ (non-lender mediated)