Why? A. Because they can. Why would you hurry to take a loss on one of your investments if your Uncle had given you 172 Billion dollars to shore up your portfolio? It's known as the "golden rule"...he who has the gold makes the rules!
Hang tight and be the squeaky wheel.

Matthew is right, I was describing the short sale process. I must have accidentally posted that comment to the wrong thread, so thanks for the correction!

Hi Leora.

This all depends on the offer you put in. If you gave an offer well below list price, the bank will most likely just sit on it until a better offer comes in. Usually, the listing agent will use your very low offer to get a few other offers in by telling them that an offer has been submitted. It might be unfair to you to do that, but it is in the banks best interest and it is the responsibility of the listing agent to make sure the bank gets the highest price possible. That's the risk you take with a low offer.

If the offer was within 5% of asking, I'm surprised you haven't heard back. It usually doesn't take that long for an REO. If you are mixing up and REO with a short sale, then it is very common for a short sale to take months if not 6 months to a year.

Brendan is wrong in his description of REOs. He is actually describing the short sale process. REO (Real Estate Owned) or more commonly known as Bank-Owned homes, are post foreclosure-meaning all the junior lien holders have been wiped out and there is only one owner to make a decision, the bank.

The short sale process is pre-foreclosure and usually follows the process Brendan describes. Also, the toxic assets you are referring to are the CDOs (Collateralized Debt Obligations) that were so popular among institutional investors over the past 10 years. That's a whole other conversation.

One other point to add to the good answers below. If the home owner had multiple mortgages etc. then the bank has to run the offer by all of the other lenders for approval and wait for their responses. Each interested party is going to take a hit, and therefore must see the offer and okay it. You may be waiting on several banks and the IRS, not just the bank that owns the house.

If the property owner owes back taxes, things are even more sticky because taxes are first in line for payback on a foreclosure, and they won't accept a reduced payback. A a result, while your offer may sound good, if the previous owner owed $40k in taxes that is $40k less for the various lenders to recoup and makes the whole thing sound less attractive to them to accept.

You may want to ask your agent to look up the property info and see if there were multiple mortgages, taxes etc. This is something they can pull up for free and very quickly, surprised they didn't do that for you already. This may help inform where you stand, and should have been done before you even made an offer. REOs and short sales can take a long time and can be very frustrating. If you're going to pursue a foreclosure just accept now that you will have to be patient and wait it out.

Welcome to the real world. Buying foreclosures and bank owned REO property is not the lucrative, "piece of cake" the talking heads and seminar gurus would lead us to believe. There are many possible reasons why the bank's asset manager has not responded including the simply answer that your offer was unacceptable. And by that I don't just refer to the price. Offers that are incomplete or lacking proper financial qualification documentation are often discarded. The asset managers do not have the time or patience to chase down poorly packaged bid proposals. Other reasons may be the account or file is being move to another asset management company or the investor is foot dragging or the strategy of the lender is wait to see whether the Federal bailout will get them a better deal. We are seeing, in the opinion of many, what appears to be hoarding of properties by lenders who predict a Spring resurgence in buying activity. For more tips, you may be interested in attending HOUSING EXPO '09 on May 2nd (10AM til 4PM) at the San Mateo County Event Center. There will be an excellent presentation entitled: "The Risks and Rewards of Buying Foreclosures, Short Sales and Bank Owned Homes."

Hi Leora,

There are several factors involved with selling an REO listing. It is not always easy and fast sell. As mentioned below there may be litigation involved. Previous owner may still have some issues with the bank and the bank is involved with that.

Another is what kind of buyer the bank is looking for. My experience is that they tend to favor cash buyer and buyer with large downpayment over a buyer with FHA loans with no downpayment. Because once they accept an offer they like buyers to close escrow in a very short amount of time. A first time buyer with no downpayment with FHA loan does not fit in that category. Remember that a loan is an important continguency and if that was removed by selecting a cash buyer the whole transaction can close faster. That is not fair but who said banks play with fair and just rules.

The other thing is the price that you offer. I always price the REO by search the comparable properties if the asking price is unbelievable low and if my buyer really wants that home I sugguest an offert price of 5% over the bank asking price. In my area there are multiple offers on these bank owned homes and you are in competition with other buyers. You need to find out from you agent whether the bank has accepted an offer.


Sincerely,

Homa
Prudential California Realty
Mission Viejo

What are the buyers agent and the listing agent saying and doing to get a answer? Is the bank involved or is it an asset company handling the reo? If I was you and want an answer I would contact the bank, sounds like something fell through the cracks!

The only other thing I can think is that maybe there is a bankruptcy or litigation that may effect how a bank can respond, if I give the bank the benefit of the dought.

I am in the same boat here in Virginia and posted the same question a few hours ago. No one seems to have the answer for me, either.