Do Banks Really Want to Sell Their REO Homes?

By
Real Estate Agent with Atlanta Communities Real Estate Brokerage GREC #208281

 Many buyers are looking for a deal.  Georgia is third in the nation in foreclosures so you would think that banks would do their best  to get their REO homes sold.  You would also think that banks would demand the best services from real estate agents in order to maximize the amount they can salvage from a bad situation.  They are professional business people, aren't they?

My typical experience with helping buyers pursue foreclosures is usually one of frustration.   In my city, there are maybe 4 agents who get most of the bank foreclosures to list.  They are REO listing specialists. From the few closings that I have had with them, they seem to get a full commission.  From my perspective, it seems that they do as little as possible.  I often wonder why a bank would pay full price for such little service.  So am I must be missing a key piece of information?

First, the listing usually has only one picture of the house.  It's usually not a very good one.  Many of the listing remarks are the exact same comments that are used for every single home.  Usually something about being sold as-is, where to fax offers, and maybe something about serious offers only.

The homes are always in terrible shape.  Sometimes it's just dirt and dead bugs.  How much would it cost to clean it up just a bit?  Do the banks not know that a clean home will sell for much more?

Forget about trying to get the listing agent on the telephone in person.  If you are lucky, you might actually get a live person on the telephone who will only be able to tell you if it is still available and where to fax an offer.  Most of the time you'll get a message machine and probably will never get a return phone call.

When you fax over an offer, usually you won't get any confirmation that it was received.  You'll be able to leave a  message but who knows if anyone will ever listen to it.

Forget about any quick response.  Usually 48 hours is the turnaround time.  If it's a Friday afternoon, it's probably going to be Monday afternoon before they look at your offer. 

One would also think that a quick closing would be desirable for the bank. I once had a cash buyer who wanted to close in seven days.  I was once told the bank needed at least 21 days to process it through their system. Seven days was totally unacceptable.

I know it's not only me who runs into these problems.  I get buyers who call me to recruit my services because they just can't get anyone to call them back when they call the listing agent directly. 

So what am I missing?  To me, there  seems like a great opportunity for an agent to provide better service to banks in the sale of their REO homes.   Is that market completely different than the average retail market or do banks really don't care about getting top dollar for their homes? 

 

 

Posted by
About the Author:  Tim Maitski has been a full time Realtor since 1999. He has sold several hundreds of homes in areas around metro Atlanta.  Tim started with RE/MAX Greater Atlanta and is now with Atlanta Communities Real Estate Brokerage.

Along with blogging on ActiveRain, he provides one of the best real estate websites in Atlanta at www.HomeAtlanta.com where he has market price charts of 37 areas around Atlanta with data going back over 10 years.  His online Property Tax Calculator allows you to compare property taxes in many counties and cities around the Atlanta area.  He provides the Atlanta MLS Power Search Tool that allows searches of homes using over 35 specific criteria.

A visit to Tim's  YouTube Channel will make you see why RealtyBizNews.com says that "Tim Maitski may just be America' most vocal real estate professional"

Tim is always looking to LinkIn with anyone who is interested in building their social network.

View Tim Maitski ●Atlanta Realtor●'s profile on LinkedIn

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Rainmaker
449,731
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
The Agent Who Uses "Watermelon Tough" Sign Posts
Rich- I understand the situation much better now.  Thank you.  What a great forum this is  to  find people who can shed light on a specific topic.
Feb 09, 2007 08:09 AM #30
Rainmaker
301,553
John Occhi
Mason Real Estate - Temecula, CA
SRES,CPRES.ePRO - Temecula-Murrieta CA Real Estate

Great question and Rich did a great job answering - maybe he could write his own blog article on the subject.

Now Have a Blessed Day,

John Occhi, Hemet REALTOR
http://www.johnocchi.com/

Feb 09, 2007 09:48 AM #31
Anonymous
Anonymous
Anonymous

John - Thanks for the kind words.  I have not really posted blogs in two weeks because of time.  This one will take some time to write, but I will see if I can get to it this weekend.

Anyone looking to get into the REO biz in Columbus, call me.  I need some help.

R

Feb 09, 2007 10:07 AM #32
Rainer
25,955
Glenda Crowell
John L. Scott, Bend - Bend, OR

The same in Oregon! Although with the market slowing down calls are returned within a few days. The homes are still rather messy and the deals are tough to get through. A foreclosure is deadweight and should be marketed and moved quickly (in my humble opinion...)

Feb 09, 2007 07:13 PM #33
Rainer
78,048
Vicky Poe
Good Ole Rocky Top - Crossville, TN
Realtor/ Auctioneer
It has been my expericence that it is not just the  agent but the entire extended family of reos that actually specalize in being a bottom feeder.  I had an offer on a VA property that was within $2000 of asking price.  We had to write our offer on their forms, and did they have forms for everything.  We did them over 5 times before they would accept them.  This went on for almost 6 weeks.  When they did finally accept our offer they wanted it closed in 7 days.  There is no way you can get a loan processed in 7 days.  By this point we told them to stick their forms and 7 days up their posterior end and moved onto someone serious about selling.
Feb 09, 2007 08:53 PM #34
Rainer
2,375
Sandra Wells
Fortune Realty - Four Corners, WY

Amen to that Tim I am a hardworking concientious Realtor and have gotten a few foreclosure listings myself and I treat them just like i do any other listing. If I get one worthy of it I have even been known to do a virtual tour of them. I get so frustrated with the Reo companies that ask for a CMA and then totally ignore the recommendation, over price them so no one will even look at them and then take them away from a Realtor who is trying to do a good job and give them to an agent who could care less and then reduce the price where they can sell them. I think I'm going to let them have them. It's just not worth all the extra paper work and some of them even want me to turn on the power in my name pay the bills and reimburse me at their leisure which can be as much as 60 days later. Forget the cash for keys, I'm not going to lose my life over a $10,000 home on wheels because I rapped on someones door and told them that they were moving out one way or the other. People don't take kindly to being told they are getting ready to be homeless.

Sally from South Carolina

Feb 09, 2007 10:17 PM #35
Anonymous
Anonymous
Anonymous

All,

As promised, I have started a brain dump on REO.  Please check my blog over the next day or two.  I am going to give what I can about finding the listings, working in the system and what to expect as a buyer agent and buyer.

Thanks for bringing up this topic, Tim.  And thanks to John for the prod.  I needed to get bak in the blog saddle.

Rich

Feb 10, 2007 07:35 AM #36
Rainmaker
449,731
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
The Agent Who Uses "Watermelon Tough" Sign Posts
I look forward to it Rich.
Feb 10, 2007 08:01 AM #37
Anonymous
Anonymous
Subman
Does anyone know about subcontractors for HUD?  Cleaning up forclosures, I understand that only a few real estate companies have the initial contract, and they are the ones who decide which subcontractors to use. Any insight will be helpful
Feb 10, 2007 07:44 PM #38
Rainmaker
59,025
Ann deVane
john greene, Realtor - Naperville, IL
Naperville Real Estate, GRI, CNC, CSC, ePRO

I must be living in the wrong state?

I am currently working with a buyer who's looking to purchase a REO in the Chicagoland area.  The listing agent has been wonderful, and the home is in great shape, and on lock-box. 

I was warned going in that when an offer is made, there will probably be no response for approx. 48 hours, as a committee has to meet and approve or counter.

I set my clients expectations to be prepared for this, thus eliminating any anxiety and stress from the situation.  I liken the scenario to the pilot coming on the PA and telling you "we'll be flying through some turbulence, please fasten your seat belt".  Having been warned, it's not a big deal if you get knocked over in the aisle returning to your seat.  However if you were unprepared, it might come as quite a shock.  If gong in your client knows what to expect, it's not a big deal.

We haven't got to the real paperwork yet, so we'll have to see. 

Thanks everyone for all the informative posts.

 

Feb 20, 2007 12:44 AM #39
Anonymous
Anonymous
Daniel Trevino

 

Hi

 I want to be a REo agent in southern California a have a real estate license and I work for a broker in the Palm springs Area.

Please let me know how ca i become an reo agent

thank you,

DANIEL TREVINO

760-218-7936 CELL

 

Mar 25, 2007 08:31 PM #40
Anonymous
Anonymous
sandy

I WOULD LIKE TO TELL YOU ABOUT MY EXPERIENCE BUYING AN REO PROPERTY. I HAD BEEN WORKING WITH A WONDERFUL AGENT AND DOING MOST OF MY RESEARCH ON THE INTERNET. I HAD PICKED OUT A NUMBER OF PROPERTIES IN A PARTICULAR DEVELOPMENT IN CANTON GEORGIA. THE AD HAD ONE PICTURE OF THE OUTSIDE OF THE HOME, SOLD AS IS. THE HOME WAS ONLY 4 YEARS OLD. WHEN WE WALKED IN MY AGENT LAUGHED AND SAID THAT HE NEEDED TO GET A SALES CONTRACT IMMEDIATELY. THE HOME WAS DELIGHTFUL WITH WOOD FLOORS, GRANITE COUNTERTOPS AND FLOORS, STEAMSHOWER, PLUS A 60.000 ADDITION WITH A HOTUB. THERE  WAS AN ALARM AND SPRINKLER SYSTEM AND EXTENSIVE OUTDOOR LIGHTING AND EVEN A WATERFALL. NONE OF THIS WAS ON THE LISTING.  IT WAS GREAT FOR US, AS WE SAVED AT LEAST 30 TO 40 THOUSAND DOLLARS. IT WAS A LITTLE AGGRAVATING WORKING WITH THE LISTING BROKER WHO JUST DOES REOS BUT MY AGENT DID A GREAT JOB. HE PROBABLY WOULD NOT HAVE SHOWED ME THIS PROPERTY ON HIS OWN BECAUSE OF THE WAY THAT IT WAS LISTED AND HIS DISTASTE FOR DEALING WITH FORECLOSURES. I AGREE WITH MANY OF THE THINGS WRITTEN ON YOUR BLOG. I FEEL THAT THE LISTNG BROKER DID NOT DO A PROPER JOB FOR THE BANK BUT HE DID US A WONDERFUL FAVOR. WE ARE THRILLED WITH OUR HOME AND IT WAS WORTH WAITING FOR.  I WAS CURIOUS IF THE LISTING REO AGENT EVERY SAW THE PROPERTY. AFTER MY OWN EXPERIENCE I WOULD NOT HESITATE TO BUY ANOTHER REO PROPERTY.

 

 

 

Jun 04, 2007 06:19 PM #41
Rainmaker
449,731
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
The Agent Who Uses "Watermelon Tough" Sign Posts

Sandy,  I guess you got a great deal.  It reminds me of a similar situation with an REO.

This property was listed as a tear down home on one acre.  I had a client who looked up the deed at the courthouse and found out that it was actually 2 acres.  He bought it for $225,000 and sold it a few months later for over $400,000 to a builder who several cluster homes on it. 

If they would have done the math and calculated the area from the plat, they would have seen their mistake.  I thought for sure they would wise up before closing but everything went through without a hitch. 

Jun 04, 2007 09:12 PM #42
Anonymous
Anonymous
Maria Sweet
Having worked for a top REO Specialist in Atlanta...I can say that the the banks are not always the blame...how about an REO Specialist that is "greedy" and has far too many REO properties listed to maintain and respond to offers in a timely and professional manner.  I've seen it happened!  Agents:  if you want to successfully market an REO,  you must communicate: return calls to interested agents, potential buyers, correspond with the asset managers, maintain the property (or the HOA will send the Sheriff after you) I'VE SEEN IT HAPPEN! and have accurant listings input in MLS detailing the property so the interested party won't need to call you for information that should already be listed in MLS/FMLS.  If you can not keep up....become a broker and hire more agents to help you market and maintain the properties or "cut back" on your REO listings and let another agent market the property.  There is plenty to go around with the foreclosure rate in Atlanta.
Jun 16, 2007 01:43 PM #43
Rainmaker
449,731
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
The Agent Who Uses "Watermelon Tough" Sign Posts
Maria,  You are so right.  I just had a person call me and told me he couldn't get any kind of response from the listing  agent for a REO home.  I would think that banks would demand better servicing of their listings.
Jun 16, 2007 07:07 PM #44
Anonymous
Anonymous
thecleanhouse10940@yahoo.com
THIS IS A VERY INTERESTING DISCUSSION. I'VE BEEN CLEANING PRIVATE HOMES AND OFFICES FOR SEVEN YEARS AND I'M JUST NOW GETTING INTO FORECLOSURES AND SHOULD BE STARTING MY FIRST THIS WEEK. MY BOYFRIEND AND I WILL BE RESPONSIBLE FOR THE CLEANING, INCLUDING GARAGE AND SHED, "SECURING THE PROPERTY", WHICH IN THIS CASE IS BOARDING UP AN OLD RICKETY POOL GATE AND COVERING THE AIR CONDITIONER OPENING, TAKING AN OLD ABOVE GROUND POOL DOWN THAT HAS A SMALL TREE GROWING RIGHT THROUGH THE LINER, AND REMOVING IT FROM THE PROPERTY AS WELL AS ANY TRASH AND ITEMS LEFT BEHIND BY THE OWNERS, LANDSCAPE AND LAWN CARE WHICH IS CUTTING AND WEEDING THE GRASS, AND MAINTAINING THE PROPERTY UNTIL IT SELLS. WE ARE OUT OF ORANGE COUNTY NEW YORK AND BERGEN COUNTY NEW JERSEY IF ANYONE IN THE AREA NEEDS OUR SERVICES. WE ALSO PAINT AND STAGE TO SELL. 
Sep 24, 2007 09:39 PM #45
Anonymous
Anonymous
Kit

Hi Daniel Travino,  did you get any calls on how to service REO properties?  I am interested in servicing REO's in Northern California area.  Email me at mkerr@comcast.net if you have any luck.

May 06, 2008 10:18 PM #46
Anonymous
Anonymous
Janice Gatlin

Hello All,

We specialize in REOs in 2 states: Calif and Nevada.  We love our reo's. They are a tremendous amount of work and very costly to maintain, but being given a property that is guaranteed to sell (they'll drop the price until they sell) is a great gift in this market.

We take great care of our reos. In the season, lawns are green and yards weeded. The nteriors are always cleaned, utilities on and we answer our phones, always!!  We advertise, have lots of photos, hold open houses, always have signs and brochures out.

We have a long list of agents awaiting each new REO we get because we take great care of themand we're very easy to work with. We also have a strong rapport with our asset management companies.

Other points: Lots to know if you want to be an reo agent. We have 18 years experience.  BPOs aren't cma's. You can get the price you want if you know how to work the bpo and the asset manager knows you.

Yes, typically, only a few agents get the reos in each area. Most all banks/asset management companies like to work with as few agents as possible and load them up, up to 100 properties per bank per agent.

Pretty much all the reo sign ups are closed now due to the great demand. But some still allow waiting lists. Before you jump in though, you need to know how to do bpos and all the rest of what is required.

By the way, in our states and for our clients (WaMu, Chase, Deutsche, EMC, US Bank,++), the ppties go through assest management companies who generally take 30% off the listing agent's commission and that commission is generally 2.75-2.5%, not the typical 3% paid in CA and NV

It IS the agent most of the time if you're looking at a dirty property and not getting a quick response.

Feb 18, 2009 04:52 AM #47
Anonymous
Anonymous
brandon

I got a offer accepted on a REO owned byFreddie Mac, but I close in a week and there are structural problems that are estimated at 10k plus to fix. The agent for the bank says they are getting second bids. My question is how likely is the bank going to pay to fix this problem prior to closing?

Sep 30, 2009 08:19 PM #48
Anonymous
Anonymous
Coy860

Here is my view as a potential buyer:  I have found a wonderful REO, and find the bank horrible to work with.  My first offer was countered at 500. less than asking price.  This is not your ordinary REO, the asking price is 384,500.  We finally agreed on price, and received the addendum to the contract, all blanks left empty.  We were instructed to initial or sign each page, leaving the BLANKS blank.

That is a no no and we refused and withdrew our offer.  How does one actually get to a closing in a situation like this?  My buyer's agent had no answer, and the listing agent insisted we sign the blank pages.

HELP

Nov 16, 2009 02:59 PM #49
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Tim Maitski

The Agent Who Uses "Watermelon Tough" Sign Posts
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