Home Buying in Los Angeles>Question Details

Soupysales, Home Buyer in Los Angeles, CA

Why are there so many REO's/bank owned properties listed for a particular zip code but almost none of them are up for sale?

Asked by Soupysales, Los Angeles, CA Sun Oct 4, 2009

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Hi Soupy:

If you value your time, I need to inform you of a few facts about Trulia, and more importantly, RealtyTrac:

One of the companies that Trulia has a data share agreement with is RealtyTrac. I'm not sure if you are only interested in distressed property; however, RealtyTrac is not a "distressed property MLS", they simply take public record notices and syndicate the information to the web. To the uninformed, pre-foreclosures look like they are being sold at drastically reduced prices; however, the truth is these homes are not for sale since the “prices” listed are balances in default status. Of course, RealtyTrac will also show once a Trustee Sale occurs and the bank itself buys the property, which converts the property to Real Estate Owned (REO) status. Still, this provides no clue as to when and if the particular property will actually come on market.

If you are looking for distressed property you should know that distressed property is almost always sold via Realtor MLS systems (to provide the widest exposure as possible since 99.99% of AOR MLS listings are automatically fed to the national http://www.realtor.com website). The remainder is sold directly to investors via public auction on the County courthouse steps via a Trustee Sale (when the bank does not buy it), or via private auction companies. You have probable seen the commercials for these companies on TV, here’s a website link as an example: http://www.williamsauction.com/

To remove all RealtyTrac “foreclosure” listings from your Trulia search results go to your search results page. Check out the Refine Search box on the left and scroll down to 'Listing Type'. Uncheck the 'foreclosure' selection and your search will update automatically and filter out all RealtyTrac listings.


Regarding why you might see:

1) A large amount of Notice of Defaults without a corresponding surge in distressed property listings, and
2) Property that has reverted back to the Bank that also is not hitting the market is a much deeper question.

I cover this topic in detail here:

"Coming to a neighborhood near you: REO Shadow Inventory"
http://www.trulia.com/blog/steve_ornellas_mba_re_mastersgri/…

Best, Steve
1 vote Thank Flag Link Mon Oct 5, 2009
Hi Soupy,
Some of the "consumer sites" are misleading. They will post anything and everything as a foreclosure, when really some of those are just late payments on the mortgage! You do need to work with a buyer agent to find out exactly what is happening in the foreclosure market.
0 votes Thank Flag Link Mon Oct 5, 2009
Hi, that is the MAIN reason to hire a Realtor. Realtors will have the accurate information.

Buy!
0 votes Thank Flag Link Sun Oct 4, 2009
Soupysales, if they have already been to auction and the bank bought it back, they may decide to hold onto them for an indeterminate amount of time. Sometimes the bank lists the property first, then, if they get no offers, they may try an auction. Sometimes they try the auction first. The banks bid the amount they want to get out of the property at auction so that if no one bids higher, they keep the property. As noted below, the banks own a lot of houses and do not want to flood the market. They also do not own all of the ones you think that they do.
0 votes Thank Flag Link Sun Oct 4, 2009
Hi Soupy;
Great question. As has already been addressed, properties that come up on Realtytrac are being found by their search algorithms based on the criteria they are using, which does not mean they are properties for sale. Any number of criteria are used on third party search sites, such as properties with delinquencies, properties that have gone through foreclosure proceedings, etc. Once the property goes back to the bank, it is at the lender's discretion as to when, or if, the property is marketed to the general public. Currently, lenders have been holding properties back in many areas, waiting for the market to absorb some of its inventory, so as not to flood the market with more distressed properties, and thus drive the prices down, There is word that there will be a new wave of foreclosures coming on the market after January 1, but don't expect any of the lenders to dump all of their REO's at once. It's just not in their best interest.
Debbie Bremner
The Bremner Group at Coldwell Banker Residential Brokerage
Los Angeles, CA
310-571-1364
Email: debbiebremner@themls.com
facebook: http://www.facebook.com/DebbieBremner
Twitter: http://twitter.com/DebbieBremner

Web Reference: http://www.TheBremnerGroup.com
0 votes Thank Flag Link Sun Oct 4, 2009
Hello Soupysales,

Many properties that are listed as Bankowned and REOs are not availble for sale until they are listed for sale with an agent so that's why your not seeing them listed yet but chances are many of them will be eventually. If you would like a saved search by zipcode to see when these properties come up for sale, let me know.

Best,

Monique Carrabba
The Carrabba Group
Keller Williams Hollywood Hills
mcarrabba@kw.com
0 votes Thank Flag Link Sun Oct 4, 2009
Sorry to be unclear, but according to Realtytrac there several bank owned properties in my neighborhood. They have already gone to auction and have reverted back to the bank. I am just wondering why there are so many owned by the bank that have not come up for sale. Thanks for your reply!
0 votes Thank Flag Link Sun Oct 4, 2009
Hello,
I'm not sure where (what website) you are seeing the REO's that are "listed" but they are probably not really REO's yet - just in some stage of foreclosure. For instance, some websites will report it as an REO but when you delve further, you will find that perhaps the owners are behind in payments but it's not really for sale by the bank (the bank did not yet buy it back at auction). There are many, many homeowners that for some reason or another, are not current with their payments. This does not necessarily mean that the house will end up in foreclosure.
Hope that helps!
Lauren Case, Realtor
Web Reference: http://www.laurencase.com
0 votes Thank Flag Link Sun Oct 4, 2009
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