Question Details

Carmen Di Bi…, Real Estate Pro in New City, NY

My client is "stuck" on a foreclosure.

Asked by Carmen Di Biase, New City, NY Wed Mar 3, 2010

We have submitted 2 offers, both were declined. With the second offer I submitted a CMA to substantiate the offer. The listing agent agrees that it is significantly overpriced but according to the asset manager, the investor wants full price. Anything else we can do?

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Just keep submitting offers.

Often, banks follow a set schedule in reducing prices of REOs. I've heard of examples where a property was priced for, let's say, $170,000 and an offer came in at $163,000 and was rejected. After a couple of $10,000 price drops, every 6 weeks or so, the home is priced at $150,000. An offer comes in at $155,000 and is accepted. The bank could have gotten $8,000 more 12 weeks earlier. But that's not how they operate. So: Keep an eye on price drops. And whether or not there's a drop, submit an offer every 4 weeks or so. And submitting a CMA to substantiate the offer is good. Keep doing that. Just understand that not all sales decisions are made rationally.

Note: One comment below says: "Especially flippers want over comps." Definitely untrue. Not if they're real investors. The last thing a real estate investor wants is to hold onto properties. If the property was bought with hard money, there's not just the upfront 5 or so points, but interest at about 15%. The flippers I know very deliberately price their properties 5%-10% under market to sell quickly. They know their profit and their numbers going into the transaction.

Hope that helps.
0 votes Thank Flag Link Wed Mar 3, 2010
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
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Just wait, and watch. Most asset managers lower the price on the property every 30 days.

Keep in touch with the listing agent, letting him/her know if your clients are still interested.

Unfortunately, the bank's operate on their own terms. But, for those agents/buyers willing to stick it out, there are good deals out there...

Do your research, find properties "priced like a foreclosure" -- let your buyer know that.... "Not all foreclosures are good deals, and not all good deals are foreclosures!"

Good Luck to ya!!
0 votes Thank Flag Link Wed Mar 3, 2010
Carmen,
Often it appears these asset managers and banks are 'dumber than a box of rocks' but appearances can be deceiving. These folks are working on goals that are not the same as the homeowner or real estate agent goals. Their goal is to maximize the revenue of the asset they have.
They systemicly:
* create default to categorize an asset as non-performing.
* Add the maximum allowable service fees
* Pile on penalties.
* Submit for FDIC "SHARED LOSS Agreement" reimbursement if eligible
* Submit property to bulk buyer
* Ear mark deficiency recovery channel
* If there is still a surviving potential buyer, add their money to the top of the income stack.
There is way too much money to be made to bother with selling these homes.
0 votes Thank Flag Link Wed Mar 3, 2010
Asset managers are learning some hard lessons. Many properties that get offers like yours that are fair - and properly documented - end up eventually going to foreclosure.

After they are bank owned - they are sold at much less then a pre-foreclosure offer price.

Follow some of these properties - and maybe buy them from the bank after foreclosure.

You will be a hero in your clients eyes - and teach a lesson to the bank as well!

Good Luck (From a former "NEW CITY" boy)

Gerry Dunn
0 votes Thank Flag Link Wed Mar 3, 2010
I agree with Steve. Sometimes they need a dose of reality. Especially flippers want over comps and unless someone is willing to pay the difference (and there are buyers who will), it will sit. Or, it will go pending and then back to active after it doesn't comp. Call the agent and tell them your buyer really wants the home and cannot pay over comps and please let you know if or when they are willing to go down a little.

Good Luck!
0 votes Thank Flag Link Wed Mar 3, 2010
Hi Carmen,

If your buyer can do this, about the only thing I think you can do is to let it sit for another 3 to 4 weeks.

If it will appraise at the current price, and you buyer insists on it, they can buy it at full price.
0 votes Thank Flag Link Wed Mar 3, 2010
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