Foreclosure in Hayden Island>Question Details

Gary, Home Buyer in Lake Oswego, OR

Why do banks have no clue to the condition of foreclosed homes they own? The home on 254 North Lotus Isle Drive needed will over $100K in repair.

Asked by Gary, Lake Oswego, OR Thu Jun 14, 2012

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Voices Member’s answer
What makes you think they have no clue on condition? It's a bank owned foreclosure and they are selling "AS IS." If it's priced to sell, with the conditions known and unknown it might be a great investment opporunity for some savvy, lucky buyer.

The inspector quoted prices on repairs?!? There's a few inspectors floating around Portland who are notorious for doing this and . . . killing deals. I've had the same deal killer inspector on two bank owned properties who not only quoted outlandish prices for repairs, but just coincidentally had a list of his buddies that could do the work. He handed the names and contacts of his buddies to my clients. I found it borderline, if not entirely, unethical. Let me guess, while Mr. Home Inspector was quoting prices out of one side of his face, he was probably telling you all about the guy he knows out of the other and giving you their contact numbers.

The best inspectors offer unbiased reporting on the condition of the property and they aren't out trying to sub-contract work for their buddies, IMHO.

The property is currently priced at 1999 level pricing. When I represent my clients and if a property has over $100,000 in repairs (and I'm taking the home inspector's "quote" with a grain of salt) . . . I notice the stuff that's wrong. How could I not?? I'm not blind. My buyers aren't blind either. $100,000 in repairs is a lot to NOT notice. So my clients and I have the dicussion PRIOR to writing up an offer on an AS IS property. If they don't have the funds or wherewithal to do the fxing, then we pass. End of story.
0 votes Thank Flag Link Sat Jun 16, 2012
The banks are exempt from disclosures about the property at first and some REO listing agents hide behind that as well. Over time with offers and inspections the problems become known and they must disclose. If they don’t they run the risk of law suit and losing (Happy Valley comes to mind).

The house across the street has been chasing the market down since 2007 and is at $375,000 same sqft, looks like no views, water front or finish levels. This property started at $455,900 in February of this year, so they have made some adjustments for condition.

Kevin Sucher
Principal Broker
503-214-4139
ksucher@prunw.com
0 votes Thank Flag Link Fri Jun 15, 2012
To start with a BPO is not an appraisal, and somewhere in the process, an appraisal was done on that property too. Sometimes a couple of BPO, or some AVM is done as well, and the lender that is in another state, or Country in some cases is relying on these to come up with a value. Yes, beware of it all, and do your own home work and give a bid to purchase that is fair. Then another process of appraisals and other cheap value estimates will be done to see where it is, by another group of people, so hopefully the right number in a changing market will come up.

Best to you, but REO are not normally the best way to go, unless you have cash to purchase do the work your self and either then refinance to stay or sell the home on the open market after the repairs have been done.

HLR An appraiser that has worked for 37 years, and find BPO's a cheap fast way the Mortgage services get a idea of what they have, but have an appraisal on record as well, that they rely on more.
0 votes Thank Flag Link Fri Jun 15, 2012
First, many of them do but lie. They want the most they can get and leave it up to you to decides about what it needs. Its REALLY buyer beware and they dont want to have any responsibility.

Second they may have been relying on STUPID, IGNORANT, LAZY or INCOMPETENT BPO agents who value them for the lenders. BPO (Broker Price Opinion) agents only make an average of fifty bucks to do whats essentially a full appraisal. Many dont feel they should work hard for the lousy fee.

Im a professional BPO agent and treat each assignment as a full appraisal (which would be about $400) and I work to paint a true picture of the property. I have done thousands of homes in the three major counties and could be a blind taxi driver.Ive gone into homes that were 70 years old and almost ready to fall down from carpenter any damage but the last BPO agent called it a 19 year old house and showed no damage. Why 19? Becasue the 1930s house was MOVED onto the lot 19 yeras ago and thats when current county tax records started on it. What lameagent cant tell a 1930 era house from a 19 year old house? Period honeycomb pink kitchen tiles, windows with iron weights, etc. LOL.

And, some lenders will call for 2,3 or even 4 or more BPOs then take the one they like. Its a SCAM, folks. The entire festering system is a huge scam. Hmmm do I sound passionate about it? It sickens me. Some BPOs are DRIVE BY without any clue as to the interior condition. How can we value a home that way? We cant. It shouldnt even be legal.

Remember that our wonderful government doesnt want to let the banking industry fail. Too much payola, folks. The gov is owned by banking and oil. We have no say. They pay the lenders BILLIONS to try and modify loans, which the lenders lie about and dont want to do. Our gov covers bank losses!!! They can foreclouse, sell at losss but come out ahead between private mortgage insurance and government printed fake money. They do NOT want to modify. They do NOT want to short sale if they can do a clean full foreclosure. Top that off with the few over worked and undertraind people within the lenders/servicers who make the decisions about accepting offers. Pathetic.

Houses may be over valued by real estate agents who think that if they are the highest, the lender will choose them to list. EL WRONGO!! That just causes problems for everyone as the props must be lowered until they become reasonable. I could go on for hours. Bottom line is the entire mess is a scam and shouldnt be what it is today. Its because the corrupt banking system and corrupt gov officials let it go to the point of implosion.

So. Buyer Beware is all I can say. Choose an agent who knows values and knows something of construction, etc. Also remember investors are shooting thousands of stupid low ball offers at the lenders/servicers and they are clogged up and resentful.

Sorry---off the soapbox now. Gotta take my blood pressure meds!
0 votes Thank Flag Link Thu Jun 14, 2012
Good banks will even fix up homes to be sold but in most cases the as is rules. They come up with a price and there the house sits. They are getting bold and raising counter offer prices after a home has been on the market for a year. I had a hud home with agreed to price and it was broken in to and washer and dryer and frig when asked if they were going to give a credit the government said no as is. This is where our tax dollars are going to a waste of time for all parties wanting to buy a home. Tom
0 votes Thank Flag Link Thu Jun 14, 2012
If your broker showed you comps you'll see that the closest one is listed at $449,000 and others are well over $500,00. Even the floating homes are over $400,000. There's your price difference. If you don't have a broker, you should get one. Especially if you are going to be dealing with bank owned properties.
0 votes Thank Flag Link Thu Jun 14, 2012
comps in this area are near worthless as homes have been sitting unsold for in some cases over a year. the closest one at 449,000 would probably not sell for over 400K, and the one at 500K at 230 north lotus isle has been on the market since moses was a small child. the only numbers that matter are the SOLD price.
Flag Thu Jun 14, 2012
Sorry typo I meant "well over" $100K in repair, and this was after speaking to our inspector. this home should be listed in the $270000 range.
0 votes Thank Flag Link Thu Jun 14, 2012
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