FORECLOSURE REALITY CHECKâ€¦. The only â€œsellers marketâ€ in america is the foreclosure market. Donâ€™t expect any deals from a foreclosure as the bidding process brings 20-30 people to bid on almost every deal. A deal that was already priced at market. For government foreclosed homes, by law, they have to be priced â€œat marketâ€.
The REO manager has a short list of â€œcash/close in 2 day buyersâ€, they always get the first right to bid. Then they have to wait for the â€œpublic auctionâ€ Which drives up those prices. After a 30-60 day period. Then the REO picks the best bid. Sometimes, only sometimes does a REO manager take a property directly to a buyer he knows personally. Why should he, he has a bunch of people bidding and driving up the prices.
My REO manager friend likes to joke about all the â€œfirst timersâ€ who continue to drive up the bid when they donâ€™t hear anything from the bank. Every time I see the â€œhow come I havenâ€™t heard from the bank about accepting my foreclosure bid after 30+ daysâ€ on trulia, I have to let out a chuckle because heâ€™s so right. For those newbies, this is real. They know that when you donâ€™t hear from them that a large percentage of people drop a second or third offer higher than the previous one. **WARNING, YOU ARE BEING TAKEN ADVANTAGE OF HERE**
You want a deal on a property right, everyone wants thatâ€¦. So the moral of this story is:
1. the 60 days you have to wait to hear from a REO, you could have made 2 or 3 better deals with a property that has been on the market for a long period of time. A good realtor will drop an 80% offer on a property and get one accepted.
2. You are attempting to make a deal in a house covered in a cloud of bad energy, donâ€™t be surprised when it rubs off. Personally I stay away from these for this reason entirely.
3. One way to get a deal is dropping a hand written note on ANY house in a neighborhood you want to buy that says â€œmy girlfriend and I want to buy a house in this neighborhood and yours looks cute from the outside. Do you know anyone that is looking to sell?â€ I always get responses, better prices and positive energy into the home.
Tell them why the price is so low, and property history (how you tried to sell at a certain price, could not, drop the price, and drop again, etc). show them the comps; not with the normal lilstings but the comps for short sales, NOD, foreclosures and REOs in the area. Not just the comparable propeties but also the ones right below / above your property and have impact on the marketability of your home.
If you can educate them before hand, you might have a better chace to get it right.
My $.02 also.
YES inflated BPO's are a nightmare. It has been my experience that BPO's are mostly done by rookies (newbies if you prefer). They have been told by the more seasoned agents in the office that it's a good way to get listings. The fact is in the case of a foreclosure BPO the future listing agent is usually decided. Other BPO's are done for re-fi's.
I did 'em when i was young and silly. But there was another problem, my broker wanted the 50/50 split on them. The Franchisor wanted 6%. Hmmm that left me with less than the tank of gas and the lunch I ate while I did them.
After a while I got smart. I will still do them BUT, my fee is $250 for a drive by and $400 for an internal. When I told the BPO clearing houses my new fee structure they said I priced myself out of business and I said "GOOD".
My theory is they can get a real appraisal for $300 bucks or so. They are asking me to work cheap. My time has value.
BTW: I have actully been asked to do BPO's out in the sticks since then and when I reminded them of my fee they flinched but they paid it. It's been a number of years now since the asked
Just my $.02 worth
Problems with REO - you don't have disclosures as the bank never lives in the place; you have one-sided banked created contracts to deal with, you have a house that could potentially be a big mess to rehab, you have limited time to close; but most hold true for short sale also.
Some banks also artificially price the house lower so they can generate interest - they are mostly successful because buyers/agents see a good opportunity, they know it and they jump on it. Often times, those properties are getting multi offers and the bank is treating it as auction or eBay (except you don't know the lowest price they'd accept), rejecting one by one until it reaches the desirable price.
Oh, speaking of a hassle when dealing with short sale - I have one right now the whole operation is outsourced to India. I get a different person everytime, and THEY have absolutely no idea what's going. After waiting on the phone for so long to just get connected, they ask you to wait because they have to read the previous comments and make sense out of it.
Very frustration experience, indeed.