Craziest. Transaction. Ever.

For the last couple of months, I have been sitting on a great blog post topic and haven't quite had it figured out in my head, what I wanted to say about it. I was still pondering it. There was a transaction I did, not long ago, that probably will go down in memory as the craziest one I have ever worked on. Well, craziest one so far. Maybe someday there will be one crazier--after all, I expect to be in this business for a long time and part of what attracts me to it is the craziness! Gives me good stories to tell over beers...and over the internet.

Anyway, I had a client that contacted me wanting to do a rehab/flip of a property. After going to great lengths to explain the various ways these deals can go south, and making sure that they understood the risks involved and so forth, we in the end decided to go forward.

Several months went by, looking for the perfect property. Finally, we found a property that my clients felt like would be worth the work to fix up as they envisioned. The neighborhood was great--right on a golf course, in an area with a lot of older homes that are being fixed up. Prices range from $600K up to over a million. The commuting distance to two of the Northwest's major employers is about 20 minutes in either direction depending on traffic. The home also has a view of the lake. And, it was a very large home.

It was listed with a Limited Service agency. That meant, all contact had to be made with the seller directly. Dutifully, I called the seller to set up a showing. Up to this point, there was nothing to indicate that things were about to get strange.

I call the phone-to-show and a teenager answers the phone. I say that I am interested in seeing the house and can I please speak to Mr. or Mrs. Seller? I was informed that the parents were out of town, but I left a message for a parent to call me back. I did, and we set up the showing.

The next day promptly at 10, my buyers and I arrive. The first problem is, there is no lockbox. The second problem is, there are two large dogs barking their heads off on the other side of the door. There also appear to be kids home...several of them. How many kids are living here, my buyers and I wondered? Looked like a reunion of the Lost Boys.

Well, the only thing to do was to knock on the door, so I did. The oldest of the Lost Boys answers the door. I mention that I called about showing the house? Naturally, he did not get the message, but says it is okay to take a look around, so my buyers and I go inside and start looking around. The first thing to hit us is the odor of dog feces, cigarette smoke, stale beer and rotting garbage.

And they say real estate is a glamorous job? Anyone who has worked foreclosures or short sales more than once (which I have) would recognize this house as a "distress case." Normally if it looks like this, or smells like this, for a showing, the sellers have issues--financial ones usually go hand in hand with "other" issues.

First stop was the kitchen. There we found two large dogs eating dog food directly from the 50 lb. bag. We noticed that both of the double ovens were open, with the heating units on. I asked the young man about it and he announced that, "oh yeah, the furnace is not working."

Okay.

Next stop was the living room, where in the middle of April, the Christmas tree was still up. It was a real tree, not a plastic one, so it was completely dried out and had dropped pine needles all over the floor. It reminded me of nothing so much as the Charlie Brown Christmas tree. Shoot, evidently Pig Pen was living here so we even had some of the characters.

Continuing our tour of this lovely home, we went into the family room, which was built around a beautiful large fireplace. Every inch of floor in the room was covered in linens, dirty clothes and so forth, such that you could not see or feel whether the floor was carpet or hardwood. When I kicked aside a pile of clothes to see what kind of flooring was in evidence, I unearthed a large, petrified pile of dog poop.

Soon enough we had seen what we needed to see. The home was in terrible shape cosmetically, but beneath it all you could see that it was a lovely, well-built home.

And the signs of distress were so clear that I went home and did a little research on my own. I discovered that in addition to being behind on his negative amortization home loan, the owner was also subject to two tax liens totalling almost $80,000 and a judgement from the person who sold the house to him for an additional $5,000.

So, knowing all this, we decided to go to the seller with an offer that reflected the condition of the house, and explained to him that this would be a short sale situation. In fact, it would have been short whether he got full price or not. So I carefully explained our offer to him, and explained to him what would have to be done to actually sell his home. I explained to him that although I represented the buyers, I would be available to help him as he tried to clear title to his home so my buyers could purchase it.

After a few days of deliberation, during which time the contract expired, he finally accepted the offer. Now, we had 30 days to see if we could clear the tax liens, judgements, and get the lender to accept a short sale. Naturally, it was my job to make sure that all this happened. So, I was on the phone with the seller nearly every day, making sure that he had done his part, offering to run and fax documents around for him, and whatever needed to be done to make sure we got to closing.

Considering the situation, the actual short sale negotiation was relatively uneventful. The IRS worked out a payment plan and removed the lien, the judgement released their interest, and the bank accepted the short sale. The big trick was getting to talk to the right person at the lender, but a clever conversation with someone in the customer service department got me talking to someone at the right level to make a decision and we were able to get agreement.

The big hitch turned out to be with the buyer's lender. The appraiser had been pretty appalled at the general condition of the property and took some pictures, which made their way back to the buyer's lender who at the last minute (1 day before our scheduled closing) decided that they wanted to put some conditions on the closing. One of which was, that the property had to be cleaned up and the appraiser had to come back to take pictures showing that this had been done.
I explained the situation to the sellers who basically ignored it. So, the buyers and I were down there at 8am on the morning of closing cleaning up the property--it took 8 large contractor bags just to clean up the beer cans on the property. 8 LARGE CONTRACTOR BAGS of beer cans people. That is hundreds, maybe thousands, of beer cans.

Anyway, we got it cleaned up, the appraiser came back, the buyer's lender cleared the condition and we were good to go with releasing documents.

So, I go to the signing appointment with the buyers, all went well with no issues. That night, I went to the signing appointment with the sellers and a mobile notary, and we get down to signing all the paperwork when suddenly the seller stands up and asks, "hey, we aren't going to be able to move the washer dryer out before the buyers take possession, so can we come back for it?"

Well, you could, except that the washer dryer goes with the house. You signed a contract that said so. Which I explained to you line by line and point by point. Which you then looked at for over a week. During which time the contract expired...remember that?

I pulled out the contract and showed him where the box for "washer dryer stays with house" was checked. I showed him his initials next to the box.

"Well, I don't read contracts, I just assumed that it would be okay if we kept the washer dryer."

Finally he decided that it wasn't worth not closing on the house, just to keep the washer dryer.

Meanwhile, now that we actually could close, the seller realized he was going to actually have to move. The seller had found a place to move, but was working at a job site about 50 miles away on the day of closing, so his son, in his late teens or early twenties, was entrusted with the task of making sure that all everything was ready to go when the movers got there. The seller asked, since I was going to be there cleaning up, if I could maybe check in just to make sure things went according to "plan."

Now, the son was largely responsible for the aforementioned beer can issue, so I wasn't too sure that entrusting him with this job was the best of ideas. Sure enough, it wasn't. When I arrived that morning, the son was passed out (hungover I assume) in the master bedroom, none of the other kids were anywhere to be found and not one thing had been packed. The seller had left a list of what was to be moved and what was supposed to stay, which I made sure the movers had. They executed it to the best of their ability. About an hour before they finished, the son finally wakes up and starts pitching in. This only happened because the movers started moving the bed he was sleeping in, with him still in it.

We closed, my buyers took possession and everything seemed well until I get a call about a week later.

The seller, since he couldn't take the washer dryer with him, simply decided that he would go to the house to use it. My buyers asked if I could please discuss the matter with him.

I did, and that was the last we heard from him.