Foreclosure in Los Angeles>Question Details

Ryan Burcham, Home Buyer in Los Angeles, CA

I am in Los Angeles and literally the DAY BEFORE i went to put an offer on a house (short sale) I called the

Asked by Ryan Burcham, Los Angeles, CA Fri Apr 11, 2008

selling real estate agent and he said the house was going into foreclosure and would be sold at an auction. I've read about the auctions and I've heard that it is rare that these actually sell at the auction and that the bank takes them back and makes them REO. i've heard advice saying to get ahold of the owner (how?) and make an offer before the auction (how does that work with the bank/short sale)? The auction is less than two weeks now! Please help

P.S. The house was listed at 475k for a short-sale, and i was going to offer that or near that. The remaining balance of the mortgage is 565k, and the auction place has yet to list the beginning auction price. The freaking seller is "out of the country" right now and i don't know exactly how to get ahold of him to even make an offer. Thanks,

Ryan

Help the community by answering this question:

Answers

13
I second Oscar's advice. The listing agent should have all the bank's info and you may still be able to negotiate with the bank at this point if there is no sale date yet or it is not assigned to a new agent yet.

Good Luck,
Laarni
1 vote Thank Flag Link Fri Apr 11, 2008
Don't waste your time with short sales unless the listing agent already has a price they know the bank will accept. REOs can be had for the same price or cheaper without the wait.
Web Reference: http://www.condostorela.com
0 votes Thank Flag Link Wed Apr 16, 2008
Ryan, a lot of times the bank will not accept the list price on a short sale. I just closed a short sale where the seller left the country and will not return. It took over 4 months to get an approval from the lender for our offer.

It would just about take a miracle now to get this deal through with only 2 weeks left before the auction. The seller will likely not return to the USA, it will likely be bought at auction by the bank who will let it sit for awhile before putting it on the market.

If you are not in a hurry you might just want to wait this one out and try to buy it as a bank owned property.

All the best to you!

Dot Chance
Keller Williams Realty Studio City
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Sat Apr 12, 2008
In my area, SLO & Santa Barbara County, Calif., short sales can really be a pain in the "you know where". Some agents are refusing to even write offers on them. I'll tell you why and what often happens. The department that handles the short sales is so swamped that it takes forever to get it approved and/or accepted. Usually there are "multiple" offers on them. My buyer was in escrow, ready to close, had loan approval and before we could get approval from the short sale department, the foreclosure department foreclosed on the property. The two different departments were not even in touch with each other. So they could of had a sale, but instead they foreclosed and it ended up becoming an REO and I ended up having a very unhappy and suspicious buyer about just what the heck really was going on.
Connie Winstead, Realtor
Signature Properties
Arroyo Grande, CA 93420
805.441.4601
0 votes Thank Flag Link Fri Apr 11, 2008
Hi Ryan,
We have workied with situations like this and have been successful in approaching the bank to make an offer before it went to auction. It is quite common for banks to sell off these properties right before auction, in hope of getting their money...remember a bird in one hand is worth more than two in the bush! A sure thing is hard to beat.
When it does go to auction, at that point is only attainable by an "all cash" deal...no loans! Id the bank foreclosed the house, the seller is not the owner anymore and not the one who can accept the offer...it is up to the bank at this point. Dont bother trying to find the "seller" as it is a waste of your time.
You can find out more about us at http://www.myLARealEstateGroup.com.
Feel free to contact us to see how we may be able to help you.
Good Luck
Lou & Alex
LA Real Estate Group
info@myLARealEstateGroup.com
http://www.myLARealEstateGroup.com
0 votes Thank Flag Link Fri Apr 11, 2008
To Dan Tepper: You don't know the market in LA as I don't know the market in Fairfax, VA.
Ryan, I am just telling you the normal course of things if you are really in the market. Whether you buy this property today, tomorrow or next year, a VERY GOOD Real Estate Agent will show you the way!

Laarni
0 votes Thank Flag Link Fri Apr 11, 2008
You have to know that when you first get a listing agreement you are a fiduciary for your principal in this case the owner and lender who has an interest in the property, and even though the owner has to sign off the purchase contract, the short sale approval it must be under the conditions and accepted by the lender who is taking the hit money wise. As for the listing agent, it has a fiduciary duty to present the offers to their principal. Once you have your seller's hardship and authorization letters you are able to negotiate directly with the lender in behalf of your seller. The listing Agent should be able to get directions from the lender as far as the terms and details of the short sale because of the above mentioned Authorization Letter.
0 votes Thank Flag Link Fri Apr 11, 2008
I'm sorry "Home buyer in Rosamond" you feel this way about maybe few bad apples in the industry but without the agent's direct link to the mortgage holder also called Bank or Lender, Ryan would've a real tough time getting the info he needs, and this has nothing to do with Realtors or agents, regular people unless are totally invested in buying investment REO's or distress properties don't have the time, patience, skill, and the right information to be able to successfully negotiate a purchase by themselves.
Dentist, mechanics, dry cleaners and everybody else have their place in this society, sure you can save money but at what cost?
0 votes Thank Flag Link Fri Apr 11, 2008
To Waiting For. "Mafia-style way of doing business??? Hmmm! As they say, it takes one to know one.

As for you Ryan. Perhaps the listing agent can't get a hold of the seller either or maybe he had an offer and the bank did not accept it. Unfortunately, the listing agent can't sell the house unless the seller accepts the offer first. While you don't have much time before the foreclosure sale, the bank can postpone the sale if they have a viable offer on the table. I just closed a short sale and the bank postponed the trustee sale for a month while we were going back and forth negotiating the sale. The escrow closed a few days before the postponed short sale. Believe me, there's a way where there's a will.

If the house indeed goes to the trustee sale, then it will most likely resurface on the MLS as the banks usually list their REOs with local real estate agents. You are right, these days not many properties are bought at the trustee sale as the opening bid is many times higher than the most recent asking price because the opening bid is usually the amount that's owed on the loan plus some foreclosure costs. I'd ask an agent to let you know when the property comes back on the market. Banks do not sell individual properties directly to buyers. By the way, you may also think that you might be able to pick up a good deal at the real estate auctions, but I can tell you that you'll most likely not get a good deal there. I went to a big real estate auction in Sacramento a few months ago and I did not feel that any of the properties were good deals. I sat an open house for one of the properties and the house sold at auction for $155,000 plus 5% buyer premium. Another house with the same square footage in the same neighborhood was on the market for $120,000 at that time. No, there was no significant difference in the condition as the house that was sold at auction had been vandalized and needed a lot of repairs. The house that was on the market could not have been in worse in condition than the house that sold at auction. I know I am giving you more information than you asked for, but I thought I throw my two cents in on the auction issue since you are interested in possibly buying a bank owned property. Good luck to you.
0 votes Thank Flag Link Fri Apr 11, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
First of all, are you sure the house is a good value at $475,000? Do you have comps? Has your agent done a CMA? All real estate is local, but I know of properties in Northern Virginia, where I am, that sold at the top of the market for $565,000 that aren't selling as short sales or REOs at $375,000 today. You could be overpaying by $100,000 in today's market; you would be if the same deal came up in some areas around here.

As for the conflicting advice below about contacting the agent, while I don't agree with Waiting's description of Realtors' "mafia-style way of doing business," I will say that you don't need an agent to do a short sale. Most investors I know have their own systems set up, and those systems don't involve Realtors. There's a package of information that has to be prepared and submitted to the lender, but that can be done by anyone. It's really comparable to a FSBO. And it is time-consuming and detail-heavy. I would rather have someone else do all that, and then follow up frequently with the lender, rather than doing it myself. Still, you don't need a Realtor to do it.

As far as the owner being "out of the country," maybe yes, maybe no. There are lots of ways of tracking someone down. If he's got an unusual last name, call other people with the same unusual last name in the phone book and tell them you're trying to reach your target. Or check the tax records and see if he's the only name listed as owner. Maybe he isn't, and the other owner is still in the country. Or, knock on the doors of his neighbors. Usually, when someone goes out of town, he/she will let the neighbors know, with some contact information. (Just in case there's a problem and he has to be reached.) Try about 3-5 houses in each direction. Or it's possible he left a limited power of attorney with either the Realtor, or someone who the Realtor is aware of. So, you might be back to contacting the agent. Or track down the owner's e-mail address. That's usually not too difficult. Then send him an e-mail. There are dozens of other ways, too.

But, before doing any of that, get the comps. Make sure whatever you plan to offer actually represents a good value, not just a discount off a hugely inflated price.

And recognize that if the house doesn't sell at auction, it'll eventually come back on the market as an REO, often at a lower price still.

Hope that helps.
0 votes Thank Flag Link Fri Apr 11, 2008
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Real Estate Agents will always tell you to contact an agent to maintain their mafia-style way of doing business. Forget about the house. The market is going lower. Don't let any agent instill a sense of urgency in you. Do research. I recommend a book about "Mortagage Rip-offs and Money Savers" by Carolyn Warren.
0 votes Thank Flag Link Fri Apr 11, 2008
First get in touch with the listing agent, ask about the trustees sale date, that will tell you how long you have to submit an offer before somebody buys it at the auction or if nobody buys it will become an REO then you may have a good chance to buy it for a good price too by submitting an offer to the REO listing agent but that will take time anywhere from a week to three depending on the Bank and the REO listing agent. Make sure you have your financing lined up to be able to actually buy the property. Forget about the Owner, the current listing agent should be able to sort things out for you. There are few more things and variables but I’m sure your Realtor will be able to guide you trough all of them. Please feel free to contact me should you have more questions. Good Luck Ryan
0 votes Thank Flag Link Fri Apr 11, 2008
Is the property no longer listed? I would try to proceed as before, through the listing agent. If the lender(s) (and seller) agree to your offer, they would most likely cancel the auction.
0 votes Thank Flag Link Fri Apr 11, 2008
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2015 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer