Shane Fisher thought he got a real bargain: a $202,000 three-story house in Lansdowne - $29,000 less than list price - that he could live in and that had two upper floors he could rent.
Yet today, Fisher finds himself still scrambling to finance tens of thousands of dollars in unanticipated expenses, including $60,000 in renovation-cost overruns he says could have been avoided if settlement had not taken almost a year to complete.
The house he put his deposit on 20 months ago was a short sale, in which the lender accepted less than the balance owed on the mortgage. And Fisher's experience is what other first-time buyers of short sales and foreclosed properties are discovering:
Short sales promise a lower-cost entry into home ownership, but instead deliver endless delays, constant disappointments, and lenders who go inexplicably silent, unwilling to communicate with buyers and agents, sometimes for months on end.
Fisher, 26, never bargained on an 11-months-plus wait to close on a house that sat vacant for a year before he saw it in October 2007.
As the sale dragged on and his $23,000 deposit was tied up, the house was repeatedly vandalized, a tree fell and took out the garage roof, and the arrangements Fisher made for renovations got more expensive - especially after Lansdowne declared it part of a historic district.
"If I'd been able to buy the property and get started right away, this would have never happened," Fisher said. "I'd never do this again."
Real estate industry observers say lenders are moving faster to get rid of their troubled assets. Yet that push doesn't seem to include short sales, which account for one in every 7.5 transactions involving distressed properties, according to data from Freddie Mac and Fannie Mae.
Foreclosed properties are being pushed by lenders instead, through both mass auctions and individual sales, said economist Thomas Lawler of Lawler Economic & Housing Consulting in Vienna, Va., especially as foreclosure moratoriums have given asset managers a chance to clean up inventories of houses the banks already own.
That observation, however, seems to contradict the experience of Ryan Wolvin and Jackie Boyer. They are trying to buy a foreclosed property in Narberth and, Wolvin said, the lender "can't seem to commit to a closing date."
Now, he said, "they're saying May 28." Wolvin thinks the house the couple offered $188,000 for could be worth $425,000 in good shape.
Instead, Wolvin said, the basement is getting moldier by the minute, and as warm weather rolls in and the situation worsens, remediation costs likely will skyrocket.
Because short sales are designed to avert foreclosure, and don't typically involve legal and other costs, they appeal to buyers. Still, lenders seem uncomfortable.
"Think about it from the perspective of you lending money to someone to buy a home, and then two years later they call up saying they can only sell the home for 80 percent of what they paid, and they want you to agree to write off 20 percent of the money you lent them," Lawler said.
Lenders are worried that some short-sale requests are at very low levels and may not be indicative of true market value, he said.
That sums up Elizabeth Lenz's experience.
Lenz, of Newark, Del., vowed to buy her first house by age 25. She did, but it wasn't the short sale she wanted. She made three separate offers over six months, then had to call the bank repeatedly each time to learn her offer had been rejected.
"They were asking $215,000, but it was much higher than the comparable sales for the neighborhood, so I offered $170,000," then $175,000.
The lender agreed to reappraise the house, which had no power, cabinets falling off the kitchen walls, and holes in every door. The appraiser's verdict: $205,000.
Lenz's offer of $180,000 was rejected. She gave up.
"It's hard to figure why the lender would hold me hostage for so long. You'd think the banks would want to get rid of those houses quickly," said Lenz, who eventually found a house nearby that wasn't tied up in mortgage knots, but was in fine shape and priced at $195,000. She settled on her 25th birthday.
Unlike Fisher and Lenz, Wolvin and Boyer have been house-shopping for only about two months. Wolvin, 24, is a special-education teacher in Voorhees; Boyer, 24, works for Vanguard in Malvern.
The couple found a four-bedroom, one-bath, lender-owned foreclosure under their $250,000 price limit. The lender wanted $225,000.
Wolvin admits the couple's first bid was too low. The lender accepted another offer, but it fell through.
So they made a second offer. Again, the lender rejected it; again, the other buyer's offer fell through.
Finally, the lender accepted the couple's third offer - $188,000.
"We came in with financing in hand with the FHA, good credit, a big down payment, and full-time jobs," Wolvin said. "And it didn't seem to make a difference."