My Sellers Disappeared

About 4 months ago I received a referral from one of my clients to two very nice guys who needed to sell 15 single family homes in Columbus, OH.  Overall the properties were nice.  They had tenants and the tenants were paying the rent.

The problem was that their loans were maturing.  Their payments were about to go up.  The rent would not cover the new payments.  On top of it, the market for their type of property is down about 30%.

Market Drop + Increased Payments = Screwed Seller

Why did the market drop so drastically?  I think it is because about 50% of the buyers dried up when the 0 Down loans took a dive and lending restrictions became tighter.  It used to be that anyone could get a loan.  It was the "anyones" that were buying this stuff.

Right now, the buyer is the professional investor.  The guys are paying cash.  These are about 50% of the deals that I am closing compared to about 10% 4-6 months ago.

Unfortunately, my sellers did not want to renew their listings with me.  At the expiration, they were already planning to come to the table with $100,000 in cash on their side to get out.  They cancelled their appointment to re-list and it has been about 3 weeks since expiration.  I have called them a couple of times and emailed.  Mostly I wanted to see about getting the lockboxes and keys.

Yesterday I found out that they are filing bankruptcy.  It is all due to their real estate portfolio.  These are good guys who really tried hard to do the right thing.

Who's to blame?  I don't know, but it's not them.