Hello Team Newington!

Thank you for your kind response. I appreciate the insight! May I ask you if it is normal for a seller to ask you to be pre-approved with their bank, even if they aren't interested in selling to you? I agree that it makes me nervous to be pre-approved over and over again as I don't want to affect my credit, which is excellent. I just thought that if they (the seller) wanted me to be pre-approved, they were wanting to work with me. Am I wrong? Any more insight would be greatly appreciated!

Hi Mary Ann!

I totally understand your frustration. The Elk Grove home inventory is scarce right now!

I am not sure if the bank is waiting on a cash offer. Has your real estate agent called and asked the listing agent what is going on? Some times larger real estate agents have so many properties they are selling the offers can get lost in the shuffle. Maybe try to send in another offer to let them know that you are still interested. Also not every agent handles all offers like they should. Unfortunately some agents will wait to see if they can double end the deal (bring the buyer and work for the seller).

Be careful how many times you are pre-approved at each bank. It is tough right now because the listing agents will require you to be pre-approved with their preferred lender. If you have to make 15 offers to get into contract on a home your credit score could be impacted. It is tough because these listing agents make the rules since they control the limited home inventory.

Have you thought to a make an offer on a short sale? Often times these types of homes for sale don't have as much competition.

Hang in there and good luck!

For those who are not from my area: It is important to add that these homes that sold in 2006 for $370,000 are fairly small homes at 1200 to 1500 sq ft. That's right. In my area, the slightly larger homes (2,000 sq ft.) sold for much, much more at $500,000-$800,000. YET, even during those very expensive times (before the crash) there were cash investors from the Bay Area that were swooping up these homes like candy.

Anyway, the smaller homes are the ones that are selling for $150,000-$180,000, right now.

You know, everything has just stopped here lately, Sean. Nothing moving. I'm hoping that more homes will be released soon. This is all new to me, and my heart has been so broken. I feel like taking a break, but I'm still keeping one eye open. Maybe I'll look at the ones that have been out on the market for a while. It is just strange times right now....

Also, for those who are complaining, because they want to pay cash.... Where I am located, there are very few homes that are affordable, but it is definitely getting better. I wish I did have $200,000 cash to put down on a home, but I'm not so wealthy, living as a middle class single adult. Elk Grove is just now getting affordable as some of the homes that just three years ago sold for $370,000 are now selling for $150,000-$170,000. Awesome for me as a buyer! There just needs to be more released on the market so that we can ALL have a chance at buying a home.

I hope you find a place as well, Dan!

Mary Ann,

Are all of these properties just listed on the market? Or are you making offers on ones with high days on market. Might try finding stuff that has been sitting. Most likely it is just sitting because its really overpriced. Make an offer for what you think is fair and see if it sticks.


Also 203k is a nice loan to go with if your looking at stuff that needs work like others mentioned below.


Sean Dawes

I had the same question several years ago only in reverse. When will those taking loans be stopped so I can buy with the limited cash I have? Those who took out loans increased the cost of housing beyond anything I could touch.

Had people not been able to buy houses on very shaky credit products I could have bought years ago. There are 2 sides to every coin.

I went from being about $25k short to much much worse. I could not save enough (even with borrowing) to compete with those who could borrow so freely. Maybe it is just the time for a reversal. I have tried for over a decade now. I would like to buy when prices get back to affordability again.

Hi Grace-
Actually, I'm not just looking for an REO home. The market is very, very slow here in Elk Grove, CA. It has been a very discouraging time for me as investors are buying up the little property that is available. I'm trying to remain hopeful, but it has been a heartbreaking time. Thanks for your post.

Mary Ann

Hello Mary Ann and thanks for your post.

First, your Realtor should be coaching you and providing you with advice regarding buying REO properties, since I think some of your problems may be related to a slight misunderstanding of the common requirements to purchase an REO home.

First, prequalification with a specific lender is almost "always" required for any offer to a bank for an REO home. This particular requirement is intended to "weed out" those who are serious about buying the home from those who are not committed. Also, it provides the lender/owner of the home with the opportunity to learn of your credit worthiness. Being asked to prequalify is normal and ordinary and should not have been seen as necessarily a "green flag" toward your purchasing of the home.

Second, although there are a lot of investors looking for great bargains, these buyers are rapidly disappearing in most parts of California as inventory is low, interest rates are creeping up, and the weather is getting bad. So you may soon find that you are one of the few out there looking for homes.

Third, I would not necessarily look at only at REO properties. If you are finding it difficult to buy a home listed as a short sale or REO, look to the private home owner trying to sell his/her home. Often we (as agents) can meet and directly talk with the owner of the home during the offer presentation. If this is the case, a good agent can often be the difference between your getting the home, and someone else buying the property.

Finally, REO sales--much like any transaction involving asset managers who work for banks--is not an immediate transaction. If your offer is less than the bank's asking price, you may find that you are forced to wait while the bank "thinks" about lowering the price. Further, if your offer contains requests for fees, mainteance, repairs or other capital expenditures, it will also slow the processing of your offer. Again, your agent should be advising you as to whether or not your offer is stronger or weaker in the current market.

Good luck and i hope to hear of your new home soon!!

Sincerely,
Grace Morioka, SRES,e-Pro
Area Pro Realty
Tel 408-426-1616

I appreciate the information from Grayslake, IL. I'll keep all this in mind, if I choose to go this route!

I'm an FHA Fee Inspector and want to let you know a little about the FHA 203k loan mentioned as an option below. If you go the 203k loan route be sure you understand the details of such a loan. You don't just get a blank check to make repairs. You need an approved contractor who carries specific types of insurance and all sub-contractors have to be licensed if your state requires it. You can act as a contractor but must get the specific insurance policies including workers' comp in case a sub-contractor gets hurt. You can't just hire a local handyman or make the repairs yourself. All repairs must be made within 6 months. Know and understand the fine print. It can be a great option for some.

Also, get building permits if required. If you don't it may come back to bite you later.

Thank you, Jes for taking the time to comment. I actually do have three pre-approval (actual approval) letters from three different banks. One of these is coming from Bank of America, which owns most of the foreclosed homes in the Elk Grove area. One of my pre-approvals came from a seller, who stated that they wouldn't work with me unless I was pre-approved from their bank. Unfortunately, it appears that they are holding out for a cash offer now, which I find is somewhat unethical, since they were stringing me along for a while. Anyway, I have heard of the 203k loan, and perhaps I will look into this more. Thanks again!

Mary,
I know what you are going through, I have been working with clients for up to 6 months before one of their offers sticks. The highest and best wins, do you have enough room to negotiate higher? You might look into properties that do not qualify for FHA financing and get a 203k contruction loan to bring the property to FHA specs.
If you have been looking for while, have your lender give you a underwriten approval and submit that instead of a prequal letter. Have your lender contact the cross-qual lender. That way your lender can give them and insure the lender that you can really afford the home.
Keep the cross-qual approval letters and submit those if you run across the same cross-qual lender.

You should have a better time after Mid November. Hopefully the competition in your area has gone down.

Wishing you the best and be strong,

Jes Sierra, B.Sc.
Realtor®

(PART 2) I must share that in a way it does bother me that the seller requested that I be pre-approved through the bank of their choice, especially if they may not have been serious in working with me. (I must also state that I did receive a strong recommendation from the potential lender with another pre-approval letter.) Is this a normal practice for sellers, even though they may not decide to accept your offer? It has definitely left a sour taste in my mouth as I feel like I have and am being misled.