I will reinforce the 'don't get stuck on one house' part. In this market, they are coming and going fast. You WILL find another. But also don't give up, until escrow closes keep tabs on every home your interested in.
My wife and I just picked up our new home mainly because of patience and keeping one eye on it. Also, the banks failure to respond promptly can be an advantage to patient types. In our case, the bank had 3 offers @ $320K and 1 offer @ $340K on a REO with an asking price of $375K. The bank countered all 4 offers @ $365K. This was on "opening weekend". Three of us walked away. The people that made the $340K offer accepted the $365K counter-offer. BUT, while the bank was getting final approval they found a compairable home for $320K and dropped out. The home sat with little to no interest for 45 more days. At the 50 day mark, the bank lowered the asking price to $345K. Because I was watching it we had an offer of $320K (again) in that same day. We close on June 4th @ $330K.
The advice about a 'clean contract' is sound advice. But also, it can be done with more traditional concessions if you have to. We got FHA, $8,000 to closing, 17day inspection period, $1700 towards inspections and repairs (if needed), 30 day escrow. We got these mainly because we were the "last man standing".
I would guess our result is a tad unique, but it shows that if you shop around, take your time and DO YOUR RESEARCH you can work some REOs pretty good. I will admit, my January thru May had been draining and a tad stressful.
Hopefully my tale helps you get a few good ideas to think about.
First, lots of agents are posting pending just to stop the flow of offers. Are they supposed to? These guys will tell you know. Are the listing agents with these banks doing it? Lots of them. We have been in on offers with three seperate homes where the listing agent posted it as pending just to stop more offers from coming in. Don't panic about the pending status - my wife and I have been there and done that.
Second, the amount of time is not out of the ordinary. It depends a lot on the listing agent and how much he is on the bank to get an answer. We have dealt with some really good listing agents that get answers from the bank. Look for homes for sale by Brad Young with PMZ if you want answers - he is good and no I'm not him and he is not my agent. He lists lots of REO's though; we have looked at a few of them, and got answers back quickly from him. But, in the end the bank doesn't care about you. They don't consider that you are waiting on pins and needles because you love this house and want to know.
Third, to get an REO you learn from mistakes and you learn from finding out what others do that secures them. As long as you promise not to bid on any home we look at here are some tips we have learned:
(1) Increase your good faith amount to at least $3,000 - we have seen lots of REO's fall out of escrow. A high GF gives the bank an indication you are not going to flake.
(2) Don't ask for closing costs. A lot of the banks don't want to do anything but offload the property. If you don't have the cash consider a silent second to cover closing.
(3) You need a good chunk down. Throw everything you can at the downpayment. They want to see a high number as that once again indicates you aren't going to flake.
(4) Don't ask for them to pay inspections - They haven't seen the property and don't want to see it and don't want to pay for a professional to see it and tell you what's wrong with it. You pay for the inspection.
(5) Have really good credit scores. This is again the flake out factor. Most REO's are asking you to be preapproved through them as well. If you have a good lender your lender will normally take care of getting you prequalified for you. If you don't have one let me know and I will give you the name of the best loan person I have ever met - she works magic.
(6) Make your agent bug the snot out of the listing agent. Lots of these listing agents are making huge bucks just throwing a sign in a yard and doing nothing. They have so many they can't handle all the work and they let lots fall through the cracks. In fact, we calculated that one listing agent would make $560,000 in comission if all the properties he had PENDING closed - figure that out. The point is the listing agent could have an email from the bank sitting in his inbox and he is not reading it because he is trying to close a house that is selling for $500,000.
(7) If you don't have to go FHA, DON'T! As someone else indicated the bank doesn't want the chance of some inspection stopping the sell.
(8) Offer to close in 20 days or less if you can. The banks love this. If your loan person says they can do it then do it, this gives you lots of bonus points in the banks books.
I can tell you that my parents got an REO that was on the market one day. Their offer was not the highest of 5 offers that were submitted in 2 days. What did was offer asking price, ask for nothing from the bank, no inspections, no closing cost, close in 14 days, conventional loan with 20% down, and they have crazy high FICOs. Others offered more but the bank chose my parents because it was no work for them and the house was off their hands in 14 days --> This is the situation the bank is looking for. Do whatever you can to make this situation possible. It's like poker... play your cards based upon the odds so as to create luck. In the long run you win this way but sometimes you lose a big hand here or there - SO DON'T GIVE UP!
My wife and I are picky. We have been looking for four months and could have got a house here or there but it was not what we wanted. We have learned a lot about REO's and so has our agent. We just put in an offer today on a house we really liked, but we aren't set on it because we know what can happen. If you are going for an REO don't get set on a particular house in your heart. If you do youâ€™re asking for heartbreak.
Final piece of advice - stay miles away from short sales. If you think an REO is a pain try a short-sale!
Good luck and email me at drpepperdude18 at drpepperdude dot com if you have any other questions. Just trying to help out someone else going through the same thing my wife and I are going through.
Happy House Buying,
Hopefully, by now all has worked out and your in your new home.
Let us know how things worked out in the end?
Rocky G.H. Hawrysz
Prudential California Realty
(209) 444-6610 - Direct Office Line
License # 01468373
I know things are frustrating this market is so strange... I have a hand full of clients that are going through the same thing. Just be sure to stay in touch with your agent. It is not their fault and the listing agent is at the mercy of the banks. We have bank owned homes as well and cant even get our own clients into them since the banks make the final pick and are sometimes very slow.
The other option if you are not in a big hurry is short sales. At least there is not as much competition for them as the reo's. Also the people that work for the banks get graded on how quickly they close deals so unfortunetly they are picking cash buyers over anything else wich is not fair to those that want a home instead of an investment.
The banks keep promising that they are getting ready to release more homes so I guess be patient and if you have a good realationship with your agent they should take care of you.
Good luck and know that you are not alone in this process.
PMZ Real Estate
1. You should receive atleast a VERBAL acceptance, counter, or rejection - within a week(at the longest)
2. IF they accept, they will forward the "addendums" to the listing agent, to forward to YOU to sign, BEFORE the contract can be EXECUTED.
3. AFTER all this is said and done, and ALL parties have signed, Escrow opens and you are on your way.
BUT, it should NOT take longer than a week to receive SOME SORT OF INDICATION ON WHERE YOU STAND. REGARDLESS OF HOW OVERWHELMED THEY ARE.
It's very simple: IF the bank wants to sell the property, they are going to do it. They will be fast and efficient when they WANT to be... Just keep this in mind when you find yourself sitting around waiting, watching days go by with no response. Trust ME, I know what it's like. It's a tough road, but it DOES have an end in sight. KEEP ON THE LA's A**, and he should provide you with the answers you seek.....Good Luck and Hang in there!
One thing you might check, this happened to us on one house, is if the bank was redeeded in the last 90 days. Apparently FHA has a no loan until after a house deed has been recorded for 90 days. If that is the case it may explain why they have not accepted your offer and placed it back as active. Otherwise it sounds to me like the bank is just fishing for higher offers - but who knows. That's the crazy thing about these REO's - there are lots of things we just don't know! Get your agent to get on the listing agent and find out what's going on. You need better answers then what you are getting and if the listing agent is not giving you information you need to have your agent contact the listing agents broker (I think that's the right name). Don't wait around thinking you are going to get an answer eventually. Push, push, push!!! Trust me on this one, we lost a great house because of it so learn from our mistakes.
Who is the listing agent on the house BTW? I'm wondering if we have dealt with the same person.
thanks for all the comments. fyi We do have great fico scores and our offer was one of the first in before it was pending. It was only on the market 2 days before we offered. As of now after having our agent try and get anything out of the listing agent she finally replied and told us there was another offer that was the same as ours but conventional but our offer was next and highest ,So we assumed that they were going to go with that....but 35 minutes after our agent spoke with the listing agent the house was posted back active on mls and pmz and is still active with no word on our offer. I think this is kinda crazy . i dont know what our next step should be. we are still interested in this house among some others but we have no idea what is going on.
There are a lot of factors that go into what a bank will or will not accept for these properties.
THis is why you need an expert - and not just a normal agent. An expert will be able to tell you what the bank looks at, how they look at it - and how to structure your offer and determine your price accordingly.
The listing price is the "perfect world" scenario for banks - but these properties hardly exist in a perfect world. In some markets, you may have to go at or above list price if the REO market is hot and you have a lot of investors or would-be investors driving up prices. (really if that's the case good luck regardless of what you offer).
You can call, send emails, make demands, jump up and down and scream and yell till you pass out. It will not make any difference. Waiting a week for word from a bank on an REO is seriously nothing. Some people wait months to get word back as to the status of thier offer.
The REO market does present some great opportunities, for the right buyer and the right property at the right time.
KR - i suggest you do a little research on the subject, and find an agent who is an experienced REO expert. It will make the process much less frustrating, and increase the possibilities of success tremendously.
It seems as though you are approaching this as if it were a typical resale - when nothing could be further from the truth.
Often times - in cases like this, they will actually accept a lower offer - simply so they do not have to deal with the extra overhead that could come with the closing process on these loans.
In terms of not hearing anything from the bank - that's pretty typical of REO sales. If your agent is experienced in REO sales - they should have explained to you that banks operate on thier own time, with thier own set of procedures. That does not include courtesy follow ups to potential buyers.
If just waiting for someone to get back to you is not working - you would be best advised to stay out of the REO market. They are not typical sales, and it requires a good deal of patience and understanding of the process to execute successfully.