Foreclosure in Arizona>Question Details

D Sajdak, Home Buyer in Peoria, AZ

What is going on in this weird REO case?!?

Asked by D Sajdak, Peoria, AZ Thu Apr 24, 2008

We offered $450 K on an REO overpriced at $649 K. The listing agent agreed that is was overpriced & submitted our offer. About 2 wks later he came back & said it had been countered at $625 K but that he didn't present it to us because it was still too high. He told our agent there was going to be an appraisal and BPO & to wait for the bank to reconsider our offer. We waited another week only to be told the offer was rejected. So we decided to submit another offer at $500 K thinking it was a fair offer based on comps. Another offer supposedly came in lower than ours the same day. After several more days of waiting he told our agent that our 2nd offer was "kicked out" because the bank is still evaluating the appraisal and BPO. He said the bank's "agent" told him to tell us to "be patient" & that we should hear something back on our ORIGINAL offer on Monday. I thought that was rejected, but our agent tells us they will reconsider it. This all sounds so strange to me. Any ideas??

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We are REO(real estate owned) agents and deal with many banks. The situation you describe is not untypical of some banks. Do you know who the seller is? Some sellers are so incompetent that they literally get less for a property by throwing away market offers. We had a situation where a bank got $100k less because they turned away a market offer and then were forced to take a lower offer 6 months later. The council of "patience" is very sound. Sometimes it’s the "last man standing" who gets the deal. I would continue to put in offers that you feel are market and make them reject them. Sometimes agents do not want to "waste time" by putting in offer they think won't get accepted, if your agent thinks this way, get another agent. Listing agents are required by Canon of Ethics to submit all offers to their seller, unless instructed otherwise by their seller. I find many buyers, that have not experienced buying a foreclosure, are not prepared for the wait, delays, one sided contracts, deed problems, lack of communication, etc. Buying a foreclosure is not for the impatient or those on a timetable. Hopefully your patience is rewarded by a “smoking hot deal”. One last thing, if you think you have not been treated ethically, report the situation to your State licensing board.
1 vote Thank Flag Link Fri Apr 25, 2008
First off, what is a REO property? Today with all the buzz words let 's first define REO...
Real Estate Owned (REO) is another way of saying the bank has taken position of the property
and now has the full right to put it up for sale. This means the bank is going to sell it for all or some percentage of the amount they have invested in it. The property has pasted through the pre foreclosure, foreclosure and redemption period and whoever the banks sells this property to, will be buying it *As-Is, *Where-Is*, pretty much like buying a used car. Once you own it , you own it, so I always recommend to my clients to have the home inspected by a professional home inspector. So why buy a REO property?? First, you are apt to get a better price on the home because it will most likely need some fixing up in most cases, but more importantly there is a good chance, but certainly not guaranteed, you could build a nice amount of equity in home over a short period of time. Get the advice of a professional real estate agent and have them do a complete market analysis for you before purchasing and definitely spend the money to get the home inspected. AND OH YES have some patience because banks are now under a lot of scrutiny not to give away these properties.
REO's are one reason why - All Real Estate is an Investment -
0 votes Thank Flag Link Thu May 8, 2008
Hi Mr./Mrs.? Sajdak,

Right now in this market dealing with the banks in any respect is going to be challenging. Whether it is purchasing an REO property, short sale, or even getting a loan for that matter, we are all going to have exhibit a lot of patience. I know that doesn't help, but don't feel like you are being singled out. These are challenging times we are going through right now. It's no wonder that our financial markets are such a shambles these days when you consider how the banks do business. Hang in there.
0 votes Thank Flag Link Wed May 7, 2008
Having sold a couple repossessed homes in the last few months I have personally gone through this with my buyers. If you want this home you need to be patient, submit all offers in writing and wait for a response. The people working on this property for the bank just work there, their motivation to get things done quickly is different than a seller who lives in the property or owns two houses and needs to sell right away. They also are at the mercy of the agents who do the BPO's for them. This process takes time, if you are patient you may get a great deal on a home. Good luck.
0 votes Thank Flag Link Wed May 7, 2008
Yes it's strange, but I've seen it myself-- I had a bank come back at my buyers with a new, more reasonable offer after we withdrew and moved on to another home.

Asset managers are not real estate agents. From my understanding with many banks, the seller's agent (agent for the bank) is working through a processor that in turn negotiates with the bank.

The BPO is really the important part of this puzzle. Ask your agent to send in your comps with your counteroffer to justify the price.

Good luck!
0 votes Thank Flag Link Wed May 7, 2008
Appraisal is very important, if the appraisal came in at 450K, they will not be able to sell it to you for 500K, so unless you have an extra 50K in cash to close escrow, the bank will not loan 500K for a house that is worth 450K.

If you know someone that needs help with Real Estate, send them my way...Thank you
0 votes Thank Flag Link Fri Apr 25, 2008
It's been my experience that lenders (via their asset manager) do not often consider offers much below 10% of list price. At this point, they have typically already paid for two third party price opinion's (BPO's & appraisal) to arrive at the listed price, so if they accept an offer significantly below that, they will have to answer to shareholders etc. Sometimes properties are in-fact over priced and your agent should supply comps and condition report with photos to the listing agent to support your offer. In time the lender will have to bring the price down in order to move the property so have your agent put the property on a watch system and put you on an auto notification when the price drops.
0 votes Thank Flag Link Thu Apr 24, 2008
Sounds like the listing agent is doing a poor job. It may be in your best interest to look at other properties and not expect this one to happen anytime soon.
0 votes Thank Flag Link Thu Apr 24, 2008
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