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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Do you live in Orange County, CA? Are you an active agent but biz is kinda slow? Are you looking to get into the REO biz but can't due to the overwhelming amount of agents also trying to follow suit? Are you looking to subsidize your income so you can weather the storm? Now most important are you a team player?I am looking to form a team. I work with several asset managers and I am extremely busy. I am having to turn biz away and I decided that I do not want to do that. I am looking to create a team to help me with my biz in return for a commission split. You will also get paid 95% on your own personal business. I am looking for seasoned agents who want to learn the REO biz but also want to continue to market themselves and add to their own personal biz.Does this peak you interest? If so please call me because I could use the help. Thanks~Stacie
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I would like to hear from some of the members on their opinions of software for their workflow. What kind of management tools are you using for your business and how do you like them? Franklin Covey organizers? Outlook? REOMaestro? AgentOffice?
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Ok, so, I got to thinking, what if we (REOPro) created our own designation? Sounds great and all however, I want it to be the kind of designation that makes a difference. When people say they are a REOPro, I really want it to stand for something. With as much experience as we have on this site, maybe we can do it. Of course, right now, it’s just a pipe dream however, I am no Amy Winehouse, my pipe dreams come true…...occasionally.
So, what ya think, could we do something like that? Would you be willing to help and add content or material? Better yet, do you have a contact that would be willing to sponsor a training program and in return, use our members, who have passed training as their dedicated REOPro Agents?
Before any of you start biting at the bit…..bear with me here. Take a deep breathe, wait 10 seconds, then exhale…….this is just a thought at the moment. I am taking the temperature of our membership to see if this would even be a possibility. Obviously, it gives you a big clue as to where I want this whole “Social Network” to go but, baby steps first.
In other words, share your thoughts with me, let me know what you think, I would greatly appreciate it.
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Second item on the REO To-Do list: Secure the property. Many Asset Managers have a preferred type of combination lockbox and/or a preferred code for their Bank-owned properties. Some even have preferred Master Locks they want us to use. Almost all I've worked with want some kind of combination lockbox.But are these lockboxes really secure?There have been a number of recent occurances in our area where appliances are missing. Who would take appliances? Are they getting access through an open window or door? Or simply through a combo code that was verbally passed along?...After all, once that code leaves our lips how do we know who else knows about it?Our area MLS uses Supra lockboxes for a reason, and I'm not taking any chances these days. Once the original BPOs are completed and Contractor estimates received, I will usually re-code the combo box, move it to another area of the property, and place a Supra lockbox on the property. This satisfies both the client's requirements and my own. (I also started putting lights on timers, which I periodically change) Sure, someone will usually find a way to break into any property if they really want to -- it just won't be from a passed-down combo code.
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So last night (Friday, mind you), I'm working on my ad for the DSNews REO RedBook (hey, I noticed a couple of big producer REO agents have hads in the current RedBook, I figured what the heck, give it a shot), and I get a phone call. It's the cops. Yay.It turns out that one of my REOs - the one that's got two red tags on it for illegal improvements, located right across the street from the neighborhood mini mart/beer outlet - the property was the scene of (apparently) a post-Graduation party.Some local youths had broken into the house (again, it's happened a couple of times before) and had gotten kind of wild in there, drinking beer and breaking windows. Yay. So, the cops wanted me to come down and secure the property (as best I could, with broken windows) and take down the case number.Good times, good times. I gotta head out over that way this morning to get a signature on a CFK agreement, I'll go back and check it out again this morning to see if any of the msicreants returned to further tarnish this gem. All in a day's work.
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A few weeks ago, we had some guy come to our regular office meeting to do a presentation about something. He trotted out a list of the top 10 surnames of new home buyers in California. One of my colleagues made a wry comment that that list of names probably looks a lot like the list of surnames of the folks who are presently losing their houses to foreclosure.I am getting ready to go to that "invitation only" REO seminar in Las Vegas next week (I didn't get invited, but I asked if I could go, and they said sure, no problem). I thought I'd prepare a little packet of info for any asset managers I might stumble upon while there, and for this packet, I thought it would be interesting to include the Top 10 Surnames on the NOD list of the primary counties where I work. I'll share them here with you:Top 10 Surnames - May 2008, Notices of DefaultSanta Cruz County----------------------------------------LopezRamirezJimenezGonzalezSantosSanchezRiveraMartinezHernandezGerbodeSan Benito County----------------------------------------GarciaRochaMartinezLopezTorresRamirezHernandezGonzalezGomezEspinozaMonterey County----------------------------------------RamirezGarciaSanchezMendozaHernandezRodriguezMartinezGonzalezRiosPerezNow why did I go through the trouble to compile this list? Because I'm fluent in Spanish. I think that in this market, in this particular market segment, the ability to speak the primary (and in many cases, sole) language of the people you're dealing with is an important skill to have. I hope the asset managers I come across will think so as well!
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I got a new property assignment today, way out in Salinas. Naturally, I had to rush right out and do an occupancy check. I've never had a property assignment that far out before, it's a good 45 minute drive from my office. Salinas is a town that has been very, very hard hit by foreclosures, and property values have been crushed. This particular house is a single-family attached residence, in a neighborhood that seems nice enough.The house had been listed for much of the year as a short sale for $469,000 or so. There was an abandoned "for sale" sign still on the property, and a notice that it had been winterized. I talked to the neighbor lady, she was nice enough, and said that the former occupants had moved out back in January.Tomorrow, I'll go back there with my locksmith. I told him hey, I can just find one in Salinas, it's a long way to drive to make $120 or whatever, but he said no no, happy to make the trip, blah blah - I guess he doesn't want to risk one of his best customers finding another locksmith...after all, Salinas is not very far from Watsonville, where most of my business is.It turns out, this place probably isn't going to sell for more than $200,000. I'll probably recommend listing it for $175,000 - I dunno, I have to do the BPO first. Ahh, BPOs. Love 'em. LOVE 'EM. Not. But now, I have to do one chop-chop, as it is due momentarily.
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Hi,I'm Seb Frey - the Real Estate Guy. Catchy, huh? :) I have a couple of blogs that I already maintain - one at my main web site, SantaCruzHomeBroker.com - the other is on ActiveRain, which I don't really post on too often - mostly, I just put my REO listings on there.I don't talk too much about the REO side of my business on my own blog on my main site. I kind of want that blog to be a general-purpose real estate blog for buyers and sellers. I do mention REOs and foreclosures and short sales quite a bit on that blog, but mostly in passing.I think it will be nice to have a 3rd blog set up which I can write just about the REO part of my business - which at this point is about 80% of what I am doing, and the other 20% seems to be working with buyers on short sales and REOs, since that's where the best deals are to be had these days, for the most part.I think I'll just use this as a space to kind of write about the ins and outs of my business, so you can see what kind of issues come up and how I handle them. Please, tell me what I'm doing wrong. :)Today, I got a new property assignment from my favorite A#1 client, PAS (Premiere Asset Services, the REO arm of Wells Fargo). It was for a house out in Aptos - in a pretty nice older subdivision. Unfortunately, this part of the subdivision is a bit close to the freeway so you get some road noise, but hey, how often do you come across an REO property that's really just perfect in every way?The property had recently been on the market, but was just withdrawn 2 days ago. It hadn't been marked as vacant, so I figured I would find someone home. I printed out a copy of the Affordable Housing Guide for Santa Cruz County, which lists a bunch of local government agencies that help people find affordable housing - not like this house was cheap, it had been bought a couple of years ago for around $900,000 (can you say "top of the market"?). The guide also has legal resources - so people can learn their rights as someone who's been foreclosed on and is facing eviction, and it also contains contact information for transitional housing and shelters, for people who have kids, for example, and are freaked out that they'll literally be put on the streets, which isn't quite the case.Nice enough house, the landscaping overgrown, of course. I knocked on the door, a ferocious sounding dog barked in reply, after a minute or so the door was opened by a big tall guy, clearly not the Mary who was listed as the owner.Turns out, it was her grown son, late 20's, I'd say. Apparently, mom had fled the scene, leaving him with the house. "She told me she worked something out with her old Realtor where I could stay here through the summer," he told me. Yeah, right. I told him I didn't know anything about that, but in any event, I'd be negotiating a cash for keys deal with him, and how soon could he be out?We'll see how it goes. That's the most interesting thing that happened in an otherwise slow news day - lots of phone calls, lots of administrativa for the dozen or so escrows I have going now. I'll write again soon.
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About 5 years ago I was contacted by an AM company to list an REO property. This was during a time when there were not many REO properties on the market in my area. I was unfamiliar with how to market such a property as this was my 1st REO. I was asked to re-key the house and put it in the MLS to sell. I went out to take a look at the house and had no idea of what I was getting myself into. As I opened the front door the stench was so strong, it smelled like something or someone was dead in that house. I took only a few steps in then bolted out the front door. I stood on the front lawn with the grass up to my knees and looked at the house and asked myself. Do I really want to put my sign in the front yard of this house? After a few minutes of fresh air I covered my face and re-entered the house. The house was in bad shape. In my opinion there was no value in the house. The house was not livable. There where big holes in the floors from termite damage and a hole in the roof. I contacted the AM Manager and suggested they get it appraised right away and that there was probably no value in the house and it should be torn down. Here is where I leaned how to sell my 1st REO property. I contacted a builder in town who was buying properties and tearing down old homes and rebuilding affordable housing. He told me he was interested and wanted to buy it, he asked me to drop off a contract and he would sign it and get it back to me. In the mean time the property was appraised and there was no value in the house and the Bank would sell it for the value of the land. After waiting 2 weeks and several calls later to the builder he decided he was not going to purchase the property. I called the AM manage and asked if I could buy it for the value of the land (the appraisal) they said yes. They wanted it sold. I purchased the property for $9,000 and sold it in less than a week. I put a small ad in the newspaper that read “Investor Alert” Free 3 Bedroom 1 Bath house with the purchase of lot for $26,000 cash only. Open for inspection Monday 11:00 – 1:00PM and gave the address. I emailed invitations to my list of investors. That Monday about 12 investors showed up all at the same time. Before the open house was over I had sold the property. We wrote up the contract and closed before the end of that month. I purchased the property myself and sold it for a profit in less than 30 days. Oh by the way, I never did have to put my sign out and I can say I buy ugly houses.Donna Whitacre
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