I did an interior BPO a week or two ago on a rural property out in a kind of exclusive part of Santa Cruz county. None of the homes are alike, the parcel sizes and qualities are all different, the houses range from brand new estate-type properties to...well, older estate-type properties. There are probably a few normal houses thrown in here and there, tucked away behind different hills and knolls.One thing I sure hate to do is tell a client the asset is worth more than it is. Hate it. So I spent a long time on that BPO, weighing various factors, and came up with a price that I was sure it would sell by in 30 days. This is in a very desirable area, where there have not been any REOs in recent memory.The listing hit the streets today (not mine): $100,000 lower than what I said in my BPO. Yowza. That ought to sell in a matter of days. I expect I'll see it 'pending' here by this time next week, unless they get multiple offers (very possible) and the process drags on a bit.But it's a point well taken. I have another REO listing - big, beautiful, 5-year old house, the kind that everyone in town wants to buy (if they can afford it). I listed it based on the active comps and recent solds - lower than all the active comps, lower than all the recent solds (most of them also REOs - or short sales). Actually, lower than all solds for all time in that subdivision.And then, one after another, new REOs came on up and under-cut my asking price by 10%. And they went into escrow, blip blip blip. And then the short sales in the neighborhood dropped their price. And now, suddenly, in a matter of 3 weeks, the listing goes from the best priced in the neighborhood to practically the highest priced.The lesson here? Get super aggressive with the pricing. The asset manager sets the price, anyway - better to price it a little low then to risk getting stuck with a listing that can turn out to be priced too high and have everyone beat you on a race to the bottom.
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I don't know if you've been hearing the rumors, but there's a gathering consensus that the sub-prime mortgage market was just the beginning of the REO wave, that next up we're going to see more "prime" mortgage defaults and foreclosures. Check out this article from the New York Times, for example.That's my sense of it, surely. Most of the REO listings I've been getting have been in Watsonville, and most of them, I'd guess, were sub-prime borrowers stuffed into loans they couldn't really afford.Now, I think we're going to be seeing lots more prime-borrowers, stuffed into loans that they could barely afford, but with with Americans being profligate spenders and abusers of debt, they have now borrowed themselves into a hole from which the only escape is foreclosure and/or bankruptcy.I kind of went through a blessed dry spell where I was not really getting many BPOs, maybe just 2-3 a week. I have kind of cut back, anyway, ignoring all broadcast requests and accepting just the BPOs from my bread-and-butter companies who also give me listings.This week, though, I have had as many orders as I've ever had - and, interestingly, many of these are higher-end properties. Some of them are very high-end: estate type properties on acreage, or beach properties with ocean views, etc.Time to wax my surf board and get ready for that next wave, I guess.
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Hey, did you get the invite to sign up for IndyMac's new mandatory training at DefaultSchool? I did, and I'm not even an IndyMac-approved broker! My application is pending, and has been for some time now. Fortunately, I am already and REO Default Certified Professional with DefaultSchool, so all I had to do is fork out $399 to take the IndyMac Policies and Procedures course.Of course, right after getting my cert, I e-mailed it off to IndyMac along with my existing RDCPro Certificate from DefaultSchool. Apparently all brokers who want to work wtih IndyMac have only until August 25 to complete the training to remain eligible to list and sell IndyMac properties.I heard a lot of whinging and moaning on various mailing lists and forums and such from people who think it's a waste, a rip-off, a scam, whatever. That, or IndyMac is looking to separate the wheat from the chaff.Me, I'm wheat. OK, I'm either wheat, or I'm just $399 poorer. How about you?
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The other day, I got a new property assignment. "Hmm," I thought, "that address looks familiar." Turns out, I had done an interior BPO on the property back in December of 2007, for a short sale. That was kind of a puzzler - I know I turned in a value higher than the contract price (the seller's agent met me out at the property and said, hey, this is our contract price) - but considering the location and lot size, the value I gave it was fair to all concerned.But OK, say that my valuation was hire than the contract price, and the buyer was not willing to come up. Strangely enough, this property was never listed for sale on the MLS. Incredible. Here you are, facing foreclosure - and you're not going to list the property for sale on the MLS to at least even try to get out from under a foreclosure?The whole strategy of "pocket listings" of short sales kind of confuses me, to be honest. I really think a Realtor is doing a disservice to their client by keeping a short sale a secret. Perhaps in some cases the client insists that nobody know - but c'mon, what shame is there in doing a short sale these days? About 1/3rd of all the listings on the MLS in my area are short sales or straight-out REO properties.Hmmm. Well, I've ended up with what should be a nice listing in a popular area. So thanks for that, but I'm sorry things had to work out this way. Now instead of being the nice Realtor who came to take pictures of your house to help you get out from under this burden, I'm the nice Realtor who's going to negotitate a Cash for Keys to get you out of the house. Sigh. All in a day's work, I guess.
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When you think of a REO Agent, what image pops in your mind? Do you see some well dressed, luxury car driving, wildly sexy, speak with a foreign accent Realtor or is it more of a blue jean and polo wearing, pick up truck driving, only sexy after a few drinks, sounds like they just walked off the farm Realtor?
The reason I ask is because, I recently walked into a group of older, mature no less successful than myself Realtors only to discover, my “image” didn’t fit their crowd. It was obvious to me when I pulled up to the meeting I was attending and saw nothing but, Mercedes, Jaguar and Lexus in the drive that I was going to truly be out of my element but, I was going to face this demon head on.
You see, even though I can afford those things, I have had plenty of success in real estate and, still am. I choose to be much more restrained with my image due to the fact, I purposely want to break the stereotype that surrounds my profession. You know the stereo type, the one about how Realtors don’t work but make lots of money and take ego centric pictures of themselves to put on their business cards………yeah that one. I hate this stereotype with a passion, especially as a REO Agent because, REO’s take much more work than your standard listing.
So, after my meeting, I realized this group just wasn’t my crowd or my cup of tea and, it was time for me to make a gracious but, quick get away, so out the door I headed and, to my surprise, I heard my name bellowed out in the back ground. Ready for a confrontation I turn around and see one of those pretentious rick-a-tarts headed my way. He pulls me to the side and says, can you believe this place? I was ready for my practiced answer and said, “No, it’s beautiful but, not right for me” and he said, “me to!” What, was this possible, did I happen to run into someone who felt like me about all this over done hoopla?
Come to find out, he was in town from Georgia and preparing to move his family up here to Tennessee. He mentioned that after attending this “meeting” we were at he was concerned that he wouldn’t be able to do business up here in Tennessee like he did in Georgia, which to him was more laid back and welcoming. After a tour of my office I changed his perception and now a couple of months later, I am realizing that my perception has changed as well.
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According to a recent report by Managing REO Online Magazine dated July 9, 2008 Volume 3 Issue 8
Link: (http://www.managingreo.com)
“Housing starts in 2008 are expected to be 36% lower than 2007 levels, creating three straight years of decline.”
Contrary to what you may hear from bullish or optimistic real estate industry guru’s the state of our national economy, credit crisis, high housing inventories, fall of the sub-prime market, closing bank lending operations and finally a lack of an effective energy solution to soaring gas prices will continue to plague the minds of credit worthy buyer’s and keep them from purchasing a home.
In most markets we are seeing increased inventories due to continued foreclosure. In Tennessee alone at the start of 2nd quarter 2008 we saw foreclosure housing inventories totaling approximately .66% and at the end of 2nd quarter it was up to 1.53%, which is a dramatic jump. To put this in perspective, this jump equates to almost a third of the entire housing inventory across the state.
As you can imagine, with this much inventory on the market, housing prices are falling. Comparably, Tennessee hasn’t suffered nearly as bad as other states like, California, Florida, Nevada and Arizona however, try telling that to the homeowner here in Tennessee who is out of a job and has found work in another state. Not to mention, if he bought his home in the past 3-5 years, he may not have enough equity in the home to sell it for the amount owed due to falling home values. Short sales or even foreclosure becomes the only solution for many.
So, if you are ready to buy and are credit worthy, deals are out there to be made! Buyer’s can afford more home now than they have been able to in the past 5-7 years. If you plan on staying in the home for at least 5 years, most likely you will be able to weather out of this real estate storm and end up big winner when ready to sell. If you’re looking at purchasing a home now and may end up moving in the next 24-36 months, you might be off better to rent. In my opinion, it is going to take 2-3 more years before we see the light at the end of this tunnel.
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So the other day, I was supposed to do an Interior BPO for a listing that got assigned to another one of them infamous out of town agents. It was over the 4th of July weekend, actually - I had called on Thursday, no answer from the Interior contact (the out-of-area REO agent). So I drove by, because I know that this agent uses pretty much the same combo lockbox code all the time, figured I would see if that worked.But lo and behold, the house was not vacant. Totally occupied. I called again, left another message. Needless to say, I didn't get a call back that weekend, not until Monday. Turns out, they had made a mistake and reported it as vacant when in fact it was inhabited."Any idea when they'll be vacating?" The client wanted to know if the listing agent would somehow be arranging interior access. "Well, no, you see, they don't speak any English, and we don't speak Spanish. We'll need to find a translator to help negotiate a Cash for Keys."Grrrr. I speak Spanish. Me. Me. Give. That. Listing. To. Me. I'll. Handle. It.Thanks. I feel better. :)
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Yesterday, I was assigned a new property out in the country. I drove out there after completing a Cash for Keys with a property closer in to town. I approached the subject property and parked outside the driveway. There was a big truck parked by the side of the house - but it was a commercial vehicle, not a personal vehicle. I went down and knocked on the door - nobody home, but by all appearances, someone was still living there.I went back to my car, grabbed my camara, and took a bunch of pictures. I got back in my car, and saw that a neighbor lady had come out of her house and was kind of standing by the side of the road, looking like she wanted to talk to me. I pulled up to her, opened my window, and said, "Hi!"She asked why I was taking the pictures? "I'm casing the joint," I deadpanned. Ha ha, no, just kidding - I'm a professional, not a comedian, and certainly not a professional comedian. No no, what I really said was, "Well, it looks like your neighbor here lost the house to foreclosure."Thereupon we embarked upon a little friendly conversation about the wave of foreclosures that is going on, how bad the economy is, how this particular neighbor had been having problems for a long time (divorce, apparently), etc. We spoke for a few minutes, and I gave her my card, and said not to worry, the house wouldn't be boarded up, it will probably be sold pretty quickly, and hopefully the property will be sold to some sold owners. I asked her to please call me if she sees anything funny going on over at the house.And with that, I drove away. As sometimes happens, though, I started to wonder - did I get the right house? What if I made a mistake, and that wasn't the right address? I would have just posted an occupancy check notice on the door of some house that wasn't foreclosed on, and told the nieghbor lady that the house had just been lost to foreclosure! D'oh!And then this morning, as I'm sipping my coffee, browsing my RSS New Reader, I see a story in the local newspaper:From [The Santa Cruz Sentinel - Oops! Foreclosure notice in error]Bob Richter was puzzled when a man rushed up to his home in Santa Cruz Gardens one Saturday and posted a foreclosure notice offering him cash to turn in his house keys. The man took a photo of the posted notice, then left.Richter and his wife bought the house in 1977, and the mortgage is paid.It turned out the posting was in error.I hate it when that happens! Actually, it's never happened to me - the occupant of the house did call me a few hours later, and we've already worked out a cash-for-keys deal, so as soon as the lender sends over the task to work it out, I'll reply immediately with the details and get the ball rolling on it. All in a day's work.Happy 4th of July everyone!
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Sorry I haven't posted in a little while, I have been busy. I got another REO or two, but I have been consumed with doing BPOs lately. I view BPOs as kind of a loss leader, but I think they are an excellent way to stay on top of the market and to keep your name in front of the eyeballs of some unknown person or persons who may well one day stoke you out by sending you that fattie REO...I've also been busy workin' a few buyers. Oy vey, that's a hard way to make a living. Still, though, I'm excited to work with buyers because, as we all know, nobody ever got rich selling real estate. You get rich by buying it, and is sure a good time to buy it.So here's something funny. I wrote up a couple of offers yesterday. One of them was for a short sale, being sold by an agent - not his primary residence. Looks like we might put that one together. And today, I'm doing a BPO, and I'm researching away...nice house, estate-type property, acreage, ocean views...owned by the same Realtor who is selling the property I just put an offer in on.I make a little trip over to Realquest.com, and I see a notice of default was filed on this lovely property back in May 2008. D'oh.You see a lot of that - many Realtors are losing their homes to foreclosure. I expect the same is true of mortgage lenders. I expect appraisers, though, for the most part, are still happily ensconced in their abodes, they probably have plenty of work these days.So keep muchin' them BPOs, the taste of irony is bittersweet.
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Common Short Sale and REO Myths.
I am shocked and this misinformation out there that is being passed as reliable. To combat some of these silly and often gullible myths, let me outline some for you today.
1. You can ridiculously low ball banks because they have built in projected losses on their REO’s and Short Sales. In other words, they all have a “sweet spot” selling price and if you know what it is, your offer will be accepted.
a. The first problem I have with this myth is to believe this silly idea is like saying that when they made the loan in the first place, they were betting on default. Let me assure you, that isn’t the case hence, the fall of the sub-prime market and resulting credit crunch. I don’t know any banker or for that matter any consumer, who took a risky loan with the idea they were intentionally going to default.
b. My second problem with this myth is that to believe it, you are assuming banks don’t have a clue as to market value. My goodness people, these are banks we are talking about. My point is, they are this nations monetary backbone, I would think they would know something about market value and fair pricing, wouldn’t you? Banks hire agents to go out and provide opinions on a properties value before they ever put it on the market. Typically they get more than one opinion from several different agents and therefore, they sometimes have more knowledge than the buyer’s putting in the offer!
c. The third problem I have with this myth is that is creates weird expectations and speculations on behalf of any prospective buyer. People who believe this can’t understand why their offer was refused. In fact, it puts a lot of Realtors in weird situations where they are writing up silly offers on homes that they know the bank isn’t going to consider. Then when the all to obvious counter comes bank, the buyer wants to be offended or looses faith in their Realtors abilities.
In short, this myth is bad for all involved. It creates hostilities, resentment and hardship. We as Realtors who work with REO’s and Short Sales must do a good job in educating our buyers or even other agents that yes, we will present the offer, it’s our duty however, DID YOU DO COMPS BEFORE SUBMITTING THE OFFER? If not, you might want to!
We have a lot more myths out there about Short Sales and REO’s I would love for you to share your ideas and thoughts…..thanks.
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I don't know how it is in your area, but in my area, a lot of the REOs have illegal improvements. I am currently dealing with one that has two red tags, and it is a total friggin' nightmare. But don't get me started.I was down there a couple of times this week (and it's only Tuesday) with some contractors, trying to figure out what it will take to satisfy the county (they are deliciously vague about this). Anyway, I found a handy diagram showing what the former owners had done to the house:
It should be noted that this is a single-family residence - supposedly a 3 bedroom, 1 bathroom, 1 kitchen house. Ahh well. Ya gotta takes the lemons with the peaches, I suppose.
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OKAY - I just used that name to draw attention. REO Speedwagon are a 70s band that I grew up with.I love trendspotting and thought we might enjoy a creative challenge. So here's the drill: Come up with trend names for items and activities surrounding REOs. Below are a few I've used recently...REOnly... This is used to describe Buyers who are only interested in viewing REO/Bank Owned properties.REOhMy... An adjective used to describe the dismal state of many of these REO properties. Yup, I'm sure you've seen some of the photos. Also referred to as OHREO!REOPRO...OK, that's us!REOwner...The Lenders/SellersREOhab... An REO property that qualifies for a 203K rehab loan.Cmon, use the creative side of your brain for awhile. I'd love to see what other trendnames you all come up with!
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Hi All!
I am now in a postion to seriously expand my REO business. If you have any suggestions on websites, AM Companies or people I should, meet greet or become a member of, please let me know. By the way, I am in Tennessee so I would only be interested in companies that do business here in my state.
Thanks!
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Today was supposed to be the most exciting day for my buyers~the closing of their first home. Well, it did not quite work out that way. Boy, were they disappointed.A little background....We submitted an offer on an REO property on March17. The offer was accepted by the lender. However, it took the bank almost 30 days to sign and execute the contract. Once escrow opened, we were told by the escrow company that we were not "priority" and we would get escrow instructions within 2 weeks. In about 7 days, we finally got escrow instructions and proceeded with all inspections, etc.Getting the needed disclosures/documents was almost impossible. The listing agent was not accessible by by email, text and/or voice mail. I could only talk to an assistant, who, was not very well knowledgeable about real estate at all. Most faxes ended up in "la-la" land, so, my only recourse was to personally go the the listing agent's office (at least 3 different times) and sit and sit, until I got my signed disclosures and other documents. Okay, we got through that process.Oh, here we go again~ with escrow that is. Loan docs were received by escrow. But again, we are told that we were not priority and they woud not know when they would have time to prepare the docs for the buyer's signature. At that point, I requested to speak with a supervisor or manager. That problem resolved~loan docs were signed.Now, before we can fund, the buyer's funder needed certain conditions/corrections to be made. Again, escrow would NOT respond. And of course, they would always deny receiving any requests via email and/or fax. So, in order to help expedite the waiting period for my clients, I personally made a trip to the escrow office until things got resolved.Finally, we funded and closed, almost two weeks after the original COE date. I called my clients to congratulate them~ I am very excited and cheerful. However, they were not. This home buying process had sucked the excitement and joy right out of them.Nonetheless, I scheduled an appointment to meet with them to hand over the keys to their new home. I arrived at the house about 20 minutes before my clients to find that the home had been broken into. Nothing major, but the stove had been stolen. However, this was something that was not going to go over well with my clients. Especially after all of the turmoil that they had gone through up to this point. Yes they were very disappointed.So, my question is, how do we really prepare our clients about the REO process~all of the unknowns that may occur; unknowns that are out of the buyer's agent's hands? Despite the fact that I continually educated my clients about the REO process, I was not able to prepare them for the lack of the other professionals NOT doing their job. Professionals that were paid for a specific service.What should have been one of my clients most exciting life event was sucked out of them from beginning to end. Instead, it was draining and frustrating.Any thoughts or ideas?
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I got a request to do an interior BPO for a house in my service area. D'oh, another listing that wasn't assigned to me. No worries, I really can't complain, I'm busy enough. So I call up the agent and say hey, I want to get in there, what's the combo box code?He says, "I don't know. You know, I don't really work in that area, it's a bit far for me, so I'm having a local agent I work with there put the lockbox on and he's working on getting it trashed out."Ahem. I know the local agent, I'm in an escrow with him now at the moment actually. He's not even with the listing agent's brokerage (the local guy has got his own brokerage).I don't know, that just doesn't seem right. What do you think? I think if you cannot service your own listing personally, which the client has entrusted you with, then you probably shouldn't accept the listing and allow another agent who (like me!) who does personally service his listings to get the job.
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The days on the calendar swirled by, and before you know it, two months and a week had passed, and it was time to do the actual Cash for Keys - get the keys from the former owners, and give him the keys, and everyone goes on their merry way.I don't know how it is with everyone else, but here's how my CFK goes. A day or two before, I call up the former owner and arrange a time to do the exchange. I go over the requirements again (that the place be clean, the appliances in place, etc.), and say OK, see you then. I then call the locksmith to reconfirm the time and address, and then at the appointed date and time, I meet the locksmith out at the property.Almost invariably, the former occupants are not ready to go. They are usually still packing up. I can't fork over the cash (a check, actually) until I see that everything is loaded up. So, I usually stand around, chat with the locksmith, the former owner, etc., while I take interior photos for the listing BPO.Yesterday,this is just what happened - I show up, the former owners aren't quite ready to go, so I stand around for an hour or so while they finish up and the locksmith goes about his business. I got to chatting with the former owner - a nice guy, too bad he lost the house and all. He's from Mexico, and he doesn't speak English, so, as with about 1/2 of these deals, we converse in Spanish.Kind of an interesting conversation. He said he hadn't made a mortgage payment in a year. "A year?!" I said. "Well, at least six months, maybe year." Wow, at $4K a month in mortgage payments, that's a lot of dough. And of course, he gets the CFK money, too - although he only asked for $500.I asked him what his plan was. They were going to rent, and then buy another house. It seems they had saved up quite a nest egg, not paying anything for rent or mortgage the past 6-12 months - enough for a down payment for sure, especially with this groovy new FHA financing they have out here, which he already knew a good deal about. There were a number of adults living there, and only one of them had been on title - plenty of un-affected credit reports out there. And now, home prices are 1/2 of what they were two years ago when this guy had bought - the perfect time to buy!I gave him my card (again) and said if he knows someone who wants to buy a house, please call me. And I do believe he will. Who'da thunk.
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Hi, I just got in from the week spent in Las Vegas. I was there for the CRS Training, which was so-so, and also the "secret" Vegas conference put on by AVM (Asset Valuation and Marketing), CalREO, and Atlantic Pacific REO. I have done some BPOs for AVM (probably a couple of dozen?), and long ago I signed up with CalREO but never heard a peep back out of them.At the conference, we got to meet the boss of CalREO. I asked him if they did any work in Santa Cruz county, where I am based. He said yes, absolutely, and that he had just fired his agent there. I asked him who that was, he hesitated, and said the agent's first name.I know all the big REO agents in the county, and of course, there are not very many of them, perhaps a dozen that do any volume, and this guy he fired was indeed a big one. Of course, this agent has lots of clients, so his business won't just dry up and blow away, and I'm sure he'll be fine. Sounds like he had a bit too much work to properly service CalREO's listings.Anyway, I hope I can pick up the business. The conference itself was OK, I didn't really learn a lot, but that's not why I signed up to go - it was all about the chance to meet the decision makers. Will it pay off? Time will tell!
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I recently listed an REO: a spacious 3 Bedroom/2 Bath condo. This condo was "aesthestically-challenged", with drab colors on the walls, ceilings that were painted shoddily, crown molding installed upside down, some faux-pax rooms, and even some crown molding used as chair rail in the dining room. The Asset Manager agreed to have it freshly painted and professionally cleaned - and then to lure buyers with photos, I decided to stage the property (absorbed into my costs).
Obviously I can't absorb the costs and stage every property, but this was a test for me as I wanted to see if it would bring in additional Buyers. We all know Buyers love photos - and the photos of empty, vacant rooms were not helping tell the whole story of how nice this place could be. Plus the number of competing properties in this area is very high. I have all my residential listings staged, and I market REO listings with the same type brochures and same websites as I market a residential listing (plus a few additional REO sites)
The outcome: The property is still listed, after 121 days on the market, 2 small price reductions and a dismal 7 showings. It actually had a chance of selling at the higher price when it was first listed, but the declining market (in this particular area) has not helped. Add that to the fact that Buyers can find attached townhomes (a few REOs) in the area for the same price.So my question: has anyone else tested this and staged any of their REO listings? And would you do it again?Dee--
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As I often do, I was reading over some of my favorite blogs today and a very interesting question came up. I was a bit shocked by some of the responses and I would like to know how our members would see the situation. I am not going to provide this agents name, state or contact information. Just think of this as a hypothetical situation so, here it goes……..
“I just got a contract on a REO I have listed, I learned through the city utility department that the house was fined $400.00 for lack of lawn cutting should I tell the Asset Manager or should I negotiate with the buyer and have them pay it?” Anonymous
So, what are your thoughts, would you tell the Asset Manager?
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