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Asked by Melody, 32608 Mon Mar 24, 2008

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Answers

21
Gizmo, Home Buyer, Westchester County, NY
Mon Mar 24, 2008
Wow Paula, with an attitude like that, I wonder why you're even in this industry. You are servicing a client so you should serve... as I do with my clients as an attorney. And yes, the customers are owed something because a buyer's agent can potentially make thousands of dollars off of the closing so answering a few questions and showing a few houses is really not that much to ask. And Paula, maybe the agent doesn't want to deal with foreclosures since he/she will make less money off of Melody as a result ... shouldn't THAT count for something? It's disturbing that there are agents out there like you.

Melody, I would guess that your agent reacted that way for 2 reasons: (1) it is a bit of a headache to invest in foreclosed properties so perhaps she just wanted you to be aware of the consequences of choosing this option; and (2) the agent would probably make a LOT less on the deal since the agent takes a percentage as a commission (so obviously, the less you pay for a house such as in foreclosure, the less the agent will get paid).

I am looking into preforeclosures and reos myself.... my recommendation is (1) sign up with websites that track foreclosed properties (I am using realtytrac) and try doing some investigative work on your own - it lists who you should contact if you want to buy; (2) persist with this agent if you like him/her OR find another agent who specializes in this industry to contact the owner/bank for you OR contact the owners/banks yourself by writing a short note saying you're interested in the property (don't mention foreclosure if it is a preforeclosure since that would be rude). When dealing with this situation, make sure you don't sign ANYTHING without consulting an attorney/agent/those who are in the know. Good Luck!
2 votes
J.D. "Dan" &…, Agent, Orange Park, FL
Tue Mar 25, 2008
Dear Gizmo,

Thank you for reading my post. You have some excellent questions. I was trying to be brief but I will go into a little more detail since you asked.

I say the people are crazy because the vast majority of the homes we see here (my part of Florida) were bought in the past 2 or 3 years. In most cases these were bought by “mom & pop” investors that did not get the whole story on being an investor. Instead they attended one of those seminars put on by the “infomercial guys” and attended the free seminar, signed up for the follow-up and heard a version of the following:
Find a house with pre-construction pricing, get control of the property with a contract to buy. Sell your contract before you close. If you end up closing sell the house before you have to make any mortgage payments. Keep the profits!

The sad part is these folks had no idea what they were getting into and while the market was on a sky-rocket they speculated and that drove up the prices, a lot of builders got stuck with houses that could not close, that drove up inventory, all the houses that did close drove up inventory, etc.

Now, I have looked at the notices of foreclosures, looked at the dates of purchase, and read the mortgages from the public records. When there is an Adjustable Rate Mortgage the initial interest rate is disclosed in that mortgage rider. The first adjustment date is also there. When the judgment is rendered prior to the courthouse auction then the entire amount owed is on display for all to see. Working backwards from the information given I can see where the owner did NOT make any payments ever. It has nothing to do with the ARM since the legal proceedings began BEFORE the first adjustment date.

High end homes have taken a bigger beating in this process than the lower priced homes so using the example of the 80/20 loan that $1,000,000 home is very likely to be not worth the $800,000 of the Mortgage plus the additional costs. Moreover, many owners when they loose the home to a bank strip all appliances, heating and cooling systems, plumbing and lighting fixtures and sometimes cause major destruction to the interior (Ex: An investor I know acquired an older house at the auction that looked like a good deal but the owner, before leaving, took a chainsaw to all of the interior walls cutting thru the studs.)

I say crazy because there are so many opportunities to get burned.

On your second question I can answer that in one word GREED.

Again, it all makes no sense!

One of the fundamental rules of life. “Money will not make you smart!”

WHEN IS BUYING A FORECLOSURE A GOOD INVESTMENT? When the home has been owned for over 10 years and was owned by a little old widow/widower. As we get older things can get tough and sometimes older folks loose their long term home. It has tremendous value relative to the mortgage amount but the person did not know how to get out of the problem. If it’s to be auctioned at the courthouse I will be there to try for it along with some of the regulars. BUT, I try to get it ahead of time and how I do that is the secret stuff I can never reveal….and the person does NOT loose their home either (ain’t I nice) but my real estate business will thrive from it.

JD “Dan” Weisenburger, GRI
Broker-Associate REALTOR®
Vanguard Realty, Inc. GMAC Real Estate
Web Reference:  http://www.neflahome.com
1 vote
Gizmo, Home Buyer, Westchester County, NY
Tue Mar 25, 2008
JD Dan, I am curious as to why it would be crazy to bid more than the lender. I am learning this and would be grateful for your advice. Let's say there is a house that a borrower bought for $1 million (with the borrower holding 20% equity and a $800,000 outstanding mortgage). If the bank's bid is $850,000 (because let's just say that is the outstanding amount plus attorneys fees, marketing fees, court fees, etc.), then would it be stupid for a bidder to bid $870,000? Are you saying it's crazy because the house is presently valued less than $800,000? But what if you think the house value has huge growth potential? Another question I have is, if someone is facing preforeclosure, why doesn't he/she try to sell as a regular listing? I wonder because I saw a house I was interested... realtytrac shows that it is under preforeclosure and there is a $2 million mortage outstanding and then saw the same house listed for sale on a real estate website for $4 million! Is it a good idea for this house owner to do this or is he crazy? Of course, there is nothing on the MLS that even states that the owner is under preforeclosing! (Is that proper? I would think it should be a required disclosure!) Thank you.

Paula, who said anything about working for free? All Melody did was to ask a simple question. Her agent should tell her frankly if it is something she can assist Melody with and they can negotiate a commission (perhaps to be paid by Melody a percentage of the amount that she bids on the property). Why would you assume that Melody wouldn't compensate the agent down the line in the first place? As for your comment about attorneys, contingency fee plaintiffs attorney do this type of service all the time -- they evaluate the case and if it is a case the attorney is interested in handling, then the attorney negotiates a fixed percentage to be paid from the settlement/award. You are obviously too cynical, presumptuous and repugnant to be a good agent. Try being helpful on these websites rather than vent your life frustrations at someone who asked a simple question.
1 vote
Gizmo, Home Buyer, Westchester County, NY
Mon Mar 24, 2008
Donna, I think you made an excellent point. It all depends on what Melody wants. Melody, you can either buy a (1) preforeclosure - that is when a house owner defaults on a mortage payment and only has 2-3 mts to either pay it, refinance, or sell the house or risk having it foreclosed (you can get a deal such as 20-40% off the market price because home owner is desperate and doesn't want bad credit) -- your agent can contact the owner for you to ask if he/she will sell and you can inspect the house and make an offer; (2) auction - this is risky because you have to bring a cashier's check to the auction and buy a house "as is" and it may be damaged, have liens, etc. (you can get a great deal but again, it's risky because no time for inspection); (3) foreclosure (REO - real estate owned means bank/govt owned) - this is after the title passes to the bank. You can contact the bank and try to buy the property but banks usually don't want to discount that much from the market price. As Donna mentioned, whether in the preforeclosure stage or foreclosure stage, the owner/bank may be trying to sell through a listing broker so you may want to check the MLS. Interestingly, I was interested in this one house but thought it was overpriced... and then I checked the realtytrac and learned that the house is under preforeclosure stage!

It doesn't seem like your agent wants to deal with this. You should get a realtor who specializes in this type of thing. realtytrac lists realtors who do this line of work, although I decided to just use my regular broker. The way I'm doing it, I find the preforeclosure/foreclosed houses and the contact information for the owner/trustee/bank to my agent (the info is all on realtytrac). My agent will then contact them and persuade them to let me see the place and to sell if I'm interested. If there is a deal, my agent will get her commission (If preforeclosure, I would probably pay this since financially distressed owners probably won't be in a position to pay. If bank owned, I would ask the bank to pay.) Hope this helps. I just started venturing into this myself so I'm glad to share it.
1 vote
John Sacktig, Agent, New Jersey, NJ
Mon Mar 24, 2008
Agents like the woman below are the reasons I got into this business. After many years on Wall St., When I purchased a home I ran in this person exactly.. a too busy mommy back at work being busy in real estate. No regard for the client.. just her pocket.

This attutude is what makes people leary in doing business with the good agents.

I just had a difficult time with a bank owned property.. yes, but my client is extremely happy and already referred his cousin to me. He bought a 600k house for 460,00 with an additional $15,000 in credits to him at closing and it was a 6% commision with a 3% bonus to the selling agent. Was it a lot of work. Yes.
Did I do the best for my client yes.

Am I EXTREMELY busy. Yes. In the same breath I have listings in the millions and litings in the 200k range. I just made a deal last week on a 1.7 million dollar property and closed a $1600.00 rental.

Melody, I bet your agent is a mirror image of Paula. Don't be discouraged.. fire the agent. Get another.
and give the person your referrals.

There are good agents that want to help you make your deal and would appreciate your repeat business, not feel that they are owed it. Agents like Paula sell a home..run with the cash and then dissapear on her clients. The Paula agents get all in a huff when that same client calls another realtor to list their home and sell them a new one on the referral of someone that had a good experience with an agent that works.

Fire the agent and get someone willing to help you.
1 vote
Konnie Mac M…, Agent, Manassas, VA
Mon Mar 24, 2008
Hi Melody..Yes, there are challenges with bank owned properties...sometimes the bank can take a while responding to contracts, the condition of the homes may not be so hot...but at the same time I have worked with banks who respond quickly, and some of the homes are in pretty good condition...so the moral of the story is....every situation is different...if you find an investment and it appears worthwhile...go for it!!! I would go for a foreclosure if I were you.....why not...!! Your agent may have had a bad experience with a bankowned property..and they can be work at time..but communicate with them...and, as much as I believe in loyalty, if your agent isn't working for you....you may need to find another...
Web Reference:  http://www.KonnieMac.com
1 vote
Jose Gomez, Agent, Miami, FL
Mon Mar 24, 2008
Hi Melody, The realtor did give you some logical advice and it is true that purchasing foreclosures or bank owned properties can be a teadious process and sometimes yield no results however, it should not discourage you to keep those options in the mix. Now, speaking from experience, buying from an owner directly might be more fruitful and advantageous. Lots of seller's are lowering their prices considerably and even offering incentives and contributions toward closing costs to get their properties sold. If your agent is not showing you properties that you want to see or properties out of your price range, speak up! This person is here to help you and if you are not getting the service that you expect, by all means find another agent who will. One thing though, if you have signed a buyer/agent agreement, you can not purchase a property that the previous agent showed you with a different agent. It's not ethical. It's a great time to buy and there's a house out there with your name on it. Best of luck to you Melody. Jose Gomez - Miami Realtor - http://josegomezfl.sef.mlxchange.com
1 vote
Terry Bell, , Chattanooga, TN
Mon Mar 24, 2008
Foreclosures can sometimes be a little more work, but they can be worth the effort. Have a frank conversation with your realtor and find out why the aversion to foreclosures. Remember, your realtor should be working for you. Exploring all your options including any foreclsures you are interested in is in your best interest.
1 vote
Shannon Moore…, Agent, Port Charlotte, FL
Mon Mar 24, 2008
There's a difference between short sales and foreclosures. In my opinion if the pitfalls have been explained to you and you want to put a contract in then your Realtor should be willing to write it.

In my expierence foreclosures are a whole lot easier to deal with than short sales. With short sales it is usually a long wait to hear back from the bank and often times the price the home/condo is listed at is way below what the bank will even be willing to accept. The Realtor doesn't know what the bank will accept until they have a contract in to the bank.

Now foreclosures will sell for list price or less unless you get into a bidding war with another buyer. You usually can get an answer back from the bank with in 48 hours or less. Some of our buyers have gotten fantastic deals on foreclosures in the last few months.

Hope this helps with your dicission!

Shannon Moore, Realtor®
Re/Max Anchor Realty
Sarasota/Venice/North Port/Port Charlotte/Punta Gorda/Englewood
941-276-8142
http://www.TropicalFloridaProperty.com
http://www.TwoMoores.com
1 vote
Mrs. Davis, , Houston, TX
Fri Apr 18, 2008
Hello I am a realtor in the state of Texas, a realtor is supposed to be able to find the home of your dreams within your price range. and now that is very possible with the market the way it is. and that home can more than likely be a foreclosure......i don't know why your realtor is shying away from finding you a foreclosure, but if i were him/her i will get you the desires of your heart foreclosure or not. (within your price range of course)
0 votes
Glenda Marks, , Charlotte, NC
Tue Mar 25, 2008
Get a Realtor that knows the ropes on short sales, foreclosures, HUD and any other government foreclosure. Good grief! I sell foreclosures all the time, purchase them myself, and recommend doing it. It's a great time to buy!!!
Web Reference:  http://www.queencitygal.com
0 votes
J.D. "Dan" &…, Agent, Orange Park, FL
Tue Mar 25, 2008
Hi Melody,

As you may have gleened from some of the answers below there is a lot of misunderstanding among agents as to what happens when an owner is in trouble with the mortgage on their home.

There are some great investment opportunities available because of the "mortgage crisis".

I Specialize In Clay and Duval Counties and generaly don't venture into Alachua but you can call me if you would like for some FREE consultation.

(904) 553-0079)

While I have the floor I wanted to make one thing clear to everyone interested in the courthouse foreclosure auctions here in Florida. Florida Statutes regarding foreclosures are designed to protect the lender. As such, the lender's representative must be present at the auction (this is called the plantiff). If the plantiff is not present the foreclosure is set aside until they arrive or else it is rescheduled for a later date. When the bidding begins, the people in attendance announce their bids, the plantiff bids $100. If someone else outbids the plantiff, the plantif then bids the full amount owed which includes the balance of the unpaid mortgage, the additional charges and accrued extra interest, attorney fees of the plantiffs, court costs, advertising fees and whatever else the judge will agree to. If someone is crazy enough to outbid the plantiff at that point, the lender is thrilled to death! They get all their money and don't have to own the house. I have actually seen that happen! (The world is full of crazy people)

Anyway call me for Free Consultation if you would like (904) 553-0079

JD “Dan” Weisenburger, GRI
Broker-Associate REALTOR®
Vanguard Realty, Inc. GMAC Real Estate
Web Reference:  http://www.neflahomes.com
0 votes
Paula Bean, , Orlando, FL
Tue Mar 25, 2008
this will be my last post on this topic, but I'll bet you that the agents that don't understand what I was talking about are all fairly new in this business.

Not to make anyone mad, (rofl, too late for THAT) but yes - this is a business, and it should be run like one. If you don't do it like that then you will be out of business fairly soon because you will be doing all of this FREE work for everyone because you actually believe you have no value to add to the transaction.

Donna made a valid point with her 'bingo comment' :
>>>well bingo, I am not needed. I would not get a commission. Reality is who would pay my commission? Now if a client wants me to go with them to the sale and agree to pay me a worthy commission without liability then that needs to be set in writing beforehand.

So, while all of you are out there 'servicing the world' the rest of us will still be here, 30 years later.

Sorry if that offends you, but I still have not gotten my 'not for profit' paperwork in the mail and saying 'oh how nice of you!" doesn't pay my mtg payment.

Try that on your CPA, Dr., or attorney and see how far that gets you. You will be asking people if they want to SuperSize their order in no time flat.

oooh! Now lets see how many nasty comments we can get to this thread!!! lol!
We don't work for FREE - and that is a problem???? I'll bet you anything that the consumers out there ALL have a paying job, and if their bosses asked them to work for free with no fear of being fired, they would turn that offer down in a nano-second........ but real estate agents are 'expected' to do their work for free?

uh, no.......I don't think so and I'm sorry if you feel otherwise, but go let someone else help you because you wouldn't do it either, and you get what you pay for.

Done with this whole topic now, so bring it on ;-) I've heard worse in 30 years, tell me your sob stories, because I have BEEN THERE, DONE THAT AND GOT THE T-SHIRT, but it still didn't pay my bills!
0 votes
Jeremy Butts, Both Buyer And Seller, Louisville, KY
Mon Mar 24, 2008
There are many deals out there! If you're looking for "all...options" then consider looking at new construction as well. There are a lot of vacant homes and condos that have never been lived in and the builders are motivated to sell their excess inventory. Just make sure your offers are low!!
0 votes
Donna Grady, Agent, Wilmington, NC
Mon Mar 24, 2008
Okay, I have a question for all the Realtors and attorney who have answered. When clients ask us the same questions that Melody is asking are they talking about houses that have already gone through foreclosure and the bank was the highest bidder? Then the bank list them with certain Realtors to place on the market and in the MLS. Or are they asking us Realtors to go with them to the courthouse steps and watch them bid on the property that is being sold in the foreclosure sale???? Because from what I am reading that Melody has posted, I would have given the same answers that her Realtor has given. In NC, if a client wants to buy at a foreclosure sale..... well bingo, I am not needed. I would not get a commission. Reality is who would pay my commission? Now if a client wants me to go with them to the sale and agree to pay me a worthy commission without liability then that needs to be set in writing beforehand. Thereby my response is exactly like the response of her Realtor. I tell my clients that they do not want to buy a property from the courthouse foreclosure sale for the same reasons that Melody listed that her Realtor gave her. As a previous paralegal who did title searches, I know from experience that most homes that are foreclosed on have other problems -- poor repair, deliberate vandalism to "get back at the bank", Lis Pendens because if they can't pay the mortgage there may be other debts that they can not pay, or there may be back taxes or worse a federal tax lien or two. So her Realtor was looking out for her best interest. Now if she asked her Realtor to find a home that is bank owned through foreclosure then that is a different story. I love to help someone buy a home like that because the title will be clear and squeaky clean. The key to all this is communication - seek first to understand.
0 votes
Gail Lidinsky, Agent, Sarasota, FL
Mon Mar 24, 2008
Melody,
You have every right to ask your REALTOR anything you want> if you don't like their answers -let them know why the answer troubles you. Sounds to me the REALTOR gave you some pretty good reasons that forclosures may not be the best in your situation, you do have to come up with the cash, many of the forclosed houses have a tendency to be problematic as folks owning them, may be having money issues. If you think you can deal with those things let your realtor know, if he or she still is reluctant just ask for a referral to someone that specializes in them and proceed. Check yourself though, Are you wanting to hear the answers? Could it be, your realtor won't be disappointed at all if you find another expert. Like your Dr. and your Dentist , we own our clients the proper answer but if they want to continue to discuss it when it is out of the question. so be it . NEXT
Love my job and Love the clients best when we comunicate well . Honestly, If you were my client I 'd hope you'd move on ---your confidence in me is not there-- it is not the working relationship I'd want REALTOR , DR. or consumer.
Good Luck Melody
0 votes
Paula Bean, , Orlando, FL
Mon Mar 24, 2008
Couldn't stand it and had to chime in again....

it seems the all of the consumers out there think they are owed something.... and most of the agents seem to agree. That is odd..... this is a win - win situation, and most of the experienced agents are not going to deal with some pie in the sky person.

Sorry if this seems a little 'off the cuff' but as a consumer you must put the shoe on the other foot and realize the if someone who does this for a living isn't willing to wast their time then isn't there something up with that?

If I were an unifnformed consumer, I'd want to know this information. You are either worth working with - or you are not, and that does not mean that your motivation level is good or not, just what your expecations are and your timeframe.

We are not in this business, as some mistakenly assume, to serve, but to survive and make a good living. Hopefully this sheds some light on the situation that everyone is confused about.

THIS is a business, not a party, or a hobby! We have many things to worry about, not the least of which is dealing with someone's biggest asset.

Paula Bean
0 votes
John Sacktig, Agent, New Jersey, NJ
Mon Mar 24, 2008
Bank owned properties are tough to deal with, but the right realtor should be able to make them work.
Get another realtor. Sounds like your person either does not know how to proceed with foreclosures or does not want to take the time and effort.

There are all of the above problems.. yes, but that should not be a factor in YOUR descision. You should see what is availabel, yes all of it.
0 votes
Hi, , Virginia
Mon Mar 24, 2008
If you are looking for an investment
wait until prices drop another 30%
could take a while
no hurry
going to take a long time for housing prices to go up
just think, they went up drastically from 2002-2006
so it will probably take about the same time for them to adjust down
if you are in a hurry, then maybe ok to buy for long term investment in 2009 or 2010
prices have nowhere to go but down.

anyways

good luck

psssst, i will probably get the "thumbs down" for telling you this.
0 votes
Paula Bean, , Orlando, FL
Mon Mar 24, 2008
Your REALTOR may be telling you this for a variety of reasons... #1: Because of the way you need or want to buy, she or he knows it won't work out for you, or, maybe they aren't familiar with short sales or the foreclosure process.

These are NOT easy transactions, and in light of all the other answers to your questions, you have to remember that we are all in this business to make money, not waste our time or be a hand-holder. If you want something that is not predictable for you in your situation, then you need to hear what you may not want to hear........which is what I'm thinking - that the foreclosure/shorsale route is NOT for you.

Have you asked your agent why they feel this way? what is their opinion on why they should not pursue this avenue? If so.......and you have been truthful and honest with this agent, then you should stick with them.

If not, then move on down the road, but not just because you don't hear what you want to hear, because our job is to be truthful with you, not Molly-coddle you and make you think you can get what you can't.

Isn't that what you'd want?
0 votes
M, , Florida
Mon Mar 24, 2008
Melody,
Foreclosures have their place in our industry and I would recommend they they be considered. I suppose across the board, foreclosures may require additional work, additional paperwork and a sale process that is a little different for some realtor's. Email me with your contact information and I can refer you to a few websites and a colleague we work with in your area that is comfortable with Foreclosures. I also need your budget.
Best of Luck and hope to hear from you.
Marian Schaffer
The Schaffer Realty Group
877-886-8388
http://www.marianschafferrealty.com
0 votes
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