The Games That You Have To Play When Offering On Bank Owned Property
Hurry Up and Wait So That You Can Get Out Bid
When it comes to bank owned properties, there’s a lot that they don’t tell you. For starters, there’s USUALLY only one picture. The directions are often wrong.
What they usually don’t disclose is how the bank will look at offers. We’re seeing ridiculous prices that just can’t be for real. The buyer’s don’t want to believe that if they offer even at the list price that they might not get the home. They don’t believe that the bank won’t get around to looking at the offer for a week or 2.
What’s really happening is that the banks are putting ridiculously low list prices on the property, in hopes of getting lots of buyers to write offers. Then they put out a request among the buyers to send in a NEW offer stating their “highest and best” offer. At that point, you’re trying to out guess all the other people who put in offers.
If you don’t believe me, here’s the proof.
I finally found an agent who handles property for the banks that’s willing to “tell it like it is”.
REO – Lender owned property. New, New, New, New, New, New, New stuff. New paint, New carpet, New appliances, etc. WOW!!! This property will be better than new. And at this price and in Desert Shores too! How can you go wrong. Will go fast!
Seller reserves the right to receive offers for the 1st 8 days. Only highest & best MAY be countered. All information herein should NOT be relied on. S/A to satisfy themselves/buyer. Buyer will have to sign banks addendums. Proof of funds/lender letter, copy EMD w/offer. No disclosures at this time.
There was a comment posted on VVV last week that spoke to the point:
I have been trying to buy foreclosure properties for personal use, not investment, since April of 2008. We find a great bargain, put in our offer, hear nothing for weeks and then are rejected with no explanation. On one occasion we offered over the listing price, had a locked in mortgage, and a credit rating of 728, but that property mysteriously went to someone else. A month or two later, that property is listed as “contingent contract pending” on MLS and I hear from the real estate agent that actually, there were four deals, supposedly all better than ours, all of them fell out for the financing, and so the bank recently accepted a new offer which is pending. I smell a rat here and am looking for a general referral or source of information to ascertain exactly which banking regulations apply to these deals and whether fair housing laws apply, because there is obviously a preferential, arbitrary non-accountable method of allowing certain individuals to purchase these bargain properties which is having a discriminatory impact on US–a hispanic family with the money, mortgage, and credit to rightfully obtain these properties.
I’d like to think that there’s no actual racial discrimination going on here, but the rest of the story is common enough.
Blindly OVER pricing the property
On the other hand, I’m negotiating at the moment with a bank over a totally cool mid-mod (sorry, I can’t tell you which one until this buyer gets it, or stops negotiating) that’s in need of a TON of work (as in about 200,000) to put it back to it’s fabulous glory. The bank and it’s agent has been very good about answering us quickly. The problem is… The listing agent has NEVER SEEN THE PROPERTY. She sent an assistant to put on the lockbox, and to take the picture. I almost missed it, because the only picture in the MLS for the last 9 months is of the wrong house. I believe the buyer has made a fair and sensible offer. The agent tells me that the bank has turned down 1/2 a dozen offers similar to ours. Oh well! Will the bank out bid us? They seem to be stuck at 5000 less than list price.
I’ve had an offer in on a bank owned property since February 23. It’s never been rejected, or countered. I’ve called the listing agent twice a week since then. All I ever get is “the asset manager hasn’t responded yet”. My client doesn’t really care if he gets it, as it’s the house next door to his. He’s been mowing the lawn and watching out for the place for 6 months now, anyway.
Here’s Another Story Which Has Me Scratching My Head
There was this privately owned home owned home in Vintage Vegas that I was very aware of. I intentionally never showed it to anyone. It’s REALLY (trust me on this) BROKEN. There’s serious foundation problems. The flat roof is absolutely long past the end of it’s life. The pools been empty for 12 years. There’s no pump and no filter equipment. I’d have shown it to a cash buyer, investor type, but not to a family trying to get a new loan.
But somehow, it sold with an FHA LOAN. The condition field in the MLS only gets filled in when a property is changed to Sold status. What’s it say on this house? POOR CONDITION! That’s the lowest of the four choices. There’s Excellent, Good, Fair and Poor. Fha guidelines state that the house has to be “livable” for a year without the need to spend any money on it. I think Excellent and Good are what FHA has in mind. How they got away with it, I’ll never know, and it’s one of those “tricks” I don’t care to learn.
I’ve been telling FHA buyers the truth forever, and that a given house might not be able to be bought FHA because of it’s condition. Gee, I might as well have been telling the buyers in 2006 that there house would go up 20% a year forever. This is loan fraud, and I hope I’m not seeing a new trend emerging.