Welcome to "SpeedyNogales", whose question deserved a little better exposure than the bottom of the "Submit ideas" thread.
We’ve heard all kinds of stories about the wonderful world of REOs. Here’s Speedy’s experience and question:
Let’s talk about stupid realtors and greedy banks.
I put an offer on a home in Rovey Farms that listed for $329,000.00, my offer was for $229,000.00. The home was missing all the appliances, granite counter tops, and needed paint. The tile had been removed, and the carpet had motor oil poured all over it. It also had two broken very large windows, and a green pool.
My agent had the gall to tell me I should have offered more as the bank informed me my offer was too low! Surely the bank didn’t expect me to pay their full asking price for a home that had been vandalized and needed lots of work, or did they? So, I countered with a full price offer and requested they fix all the above issues. Again I was turned down. Their logic was that if they had to fix everthing I asked for plus pay closing costs and that hidden $3,000.00 buyers agent bonus, they’d lose even more money.
So I ask anyone out there, where is the happy medium to get the house I want? What is it I am missing here, or what are they not telling me, or is my agent just not aggressive enough to pull the deal off, or is the bank too stupid to realize that my offer at $229,000.00 was a good deal for all concerned, as was my offer at $329,000.00. What’s the solution here, any suggestions?…I am obviously at a loss.
What do you say Doomers? What’s it like working with the lenders these days?
We put in a short sale offer 12 weeks ago and Countrywide has told us repeatedly ‘24 hrs you will have a response.’…
Needless to say we are still waiting… apparently they are receiving 200-300 new short sale offers a day and are not staffed to deal with it. We’ve dug up all the numbers (mortgage & 2nd etc) and Countrywide, in this case, stands to nearly break even on the property, yet it still takes them 12+ weeks to just sign the thing? No wonder they are hemorrhaging cash.
Sorry for the novel.
Mr. Twist and I called on a REO, I think about a year ago. It was an older home on an acre, south of Chandler.
As I recall, we figured that in pristine condition, it should appraise for about $650K. However, the foundation was cracked, the roof needed to be replaced, as did the air handlers, the sprinkler system, and all floor coverings. It also needed paint, the pool replastered and the pump replaced, and the fact that it had no garage at all also hurt the value.
The agent for the bank said that they wouldn’t consider taking anything less than $630K- and that they had two offers at that number.
The guy that lost the house had owed $850K on it, so $630K was a big haircut, but that didn’t mean it was a good deal.
Apparently those “two offers” came to the same conclusion we did, or they didn’t qualify, or something. The place remained on the market for months. [It may still be, I haven't checked on it lately.]
All the agents I’ve talked to that have dealt with the lenders have had, shall we say, less than positive experiences.
I do know someone who was happy with their short sale purchase, but so far he’s the only one who’s told me he was happy with the outcome.
As you’ve said all along, Twist, prices have to come way down to the affordability level. People like my friend (from my other comment) have this fantasy about what someone should pay for their house
I have another friend who’s been trying to sell her house since last year. She and her husband have already bought another house in another state. Last spring she had it listed for $580,000, which was in line, she said, for the neighborhood. But those other houses weren’t selling either. I told her to drop the price to $500,00, but she wouldn’t until October.
Now she’s listing it for $480,000 and it’s not selling. I told her to drop it to $400,000 but she won’t. The price is in line with other houses in the neighborhood and she’s waiting for the magical springtime of buyer season.
“My agent had the gall to tell me I should have offered more as the bank informed me my offer was too low!”
Not privy to any info other than what is in the post, shouldn’t that read:
“My FORMER agent had the gall…..”
“is my agent just not aggressive enough to pull the deal off, or is the bank too stupid….”
The second one. Apparently the Free Market wants to hand those banker’s heads to them.
I hear this all the time, too. The really stupid thing is…. some people are actually still buying under these conditions.
Danix-
Sellers need to look at their odds. In a market where you have a dozen sellers for every buyer, you had better have the best price of the 12— having a price in the middle of the pack isn’t going to be useful.
My favorite sellers theory is the one for “days on market”. That’s where they figure that if the DOM is at 120 days, you list at whatever and 120 days later, your home sells.
That would be the average of WHAT ACTUALLY SELLS. The delusional who sit there forever aren’t averaged in.
I think the buyers are trying to be back, pendings in Phoenix have risen sharply in the last few weeks. Of course, listings are up too– and it remains to be seen how many of those pendings turn into closings.
I’ve got a friend who works for a big lender with lots of REOs. He informed me that there are many people out there now who are submitting lots of low offers on REO listings. The bank’s position is to get the highest price possible for the property, so when they see a lot of interest and offers coming in, they hold off on accepting any and will wait longer for a high one. They found that holding out and waiting can often lead to offers that are closer to their target.
I think they did you a favor but turning your 329k offer down.
Dude! Take your money and go elsewhere! What are they gonna do?
I am a big fan of the lowball offer. We got into this mess because everyone was paying way too much.
They don’t like your offer? Say thanks and WALK
Two part answer:
(a) The bank may absolutely be too stupid to take your offer, but even if so, they won’t be for long – as the market continues to plunge, you can expect them to pick up the pace in trying to unload these properties.
(b) Don’t forget that your “agent” has a HUGE conflict of interest here – s/he WANTS YOU TO OVERPAY. If you pay more, s/he gets more money – that’s why agents are always trying to get you into a bigger, more expensive place, always telling you to bid more, etc. – for every dime you pay extra, s/he gets a penny of that money. (Well, closer to half a penny, but you get the point.) All of the agent’s decisions will be directed to (i) making a deal happen, whether it’s a good deal for you or not – s/he doesn’t care, because s/he only gets paid when you close a deal, and (ii) making that deal be for as big a price as s/he can get out of you. Don’t forget it, or you’ll pay the price.
JimAtLaw: You’re so right, she is sssooooooo fired!
And I forgot to mention the home I made the offer on has been on the market 910 days, 2yrs and 6 months to the day! Maybe Deutsche Bank needs to hatch it before they sell it, so they can sit on it another two years.
Thank you housing doomers for all your input! Y’all are great! And thank you Mrs. Twist!
Keep in mind that banks are designed to move money around.. That’s it.. Nothing else… A 10,000 square foot spreadsheet right next to your local drugstore.
Want to understand what’s going on? Get in the drive thru at your local Wendy’s and when the guy comes on the speaker, ask him for 3 gallons of white Dutch Boy paint.
So the only way the banks can handle this is to turn it into a “money moving” problem.
I expect that “Joe Wall Street guy” (you know the ONE guy that actually knew what was coming and stashed some cash.. Well that guy will meet with the CEO of MegaGlobalMonsterBank. Mr CEO will transfer 50,000 homes to Joe Wall Street for 30 cents on the dollar so that Mr. CEO doesn’t have to admit that his bank is insolvent.
Then the auctions start at 35 cents on the dollar and bid up from there.
What are you doing making offers NOW? You are way too early. Wait until the economy is really in the dumper and loan restrictions are so tight, Warren Buffet can’t qualify.
About one year ago, I read an article that stated the lenders don’t want to sell because that would translate into a loss on paper. However, as long as they hold the property, it is an ASSET! I suspected this a long time ago, even though the press and realtors told me that the banks don’t want to hold the properties….blah, blah, blah. It’s all about perception, not reality. They don’t care it the place falls down, just as long as they look good on paper.
stevec hit it on the head. You’re 1-2 years too early (and overpaying by about $50k).
The housing bubble has barely started to burst. Housing prices have a LONG way to fall. Inventories of homes are still near all-time highs (and will break records this summer). Banks have written off at best 33% of their total losses, and likely much less. We’ve barely started into the recession; by all indicators it will be the worst one in a while, and likely fairly long lasting.
This is the beginning, not the end. Wait it out. As longwaver said, the day will come when banks welcome pennies on the dollar for these things. They think they’re overwhelmed right now, but I want to see what happens when things really get going. Didn’t they say that 10% of people are underwater now, and CNN said that 35% will be by the end of the year?
Under water just means an upside down mortgage. People may still be able to pay it without too much pain. An upside down mortgage only matters if you want/need to sell. I agree though that the pain is just beginning.
I also think that if prices fall too fast it hurts the banks more. More houses become worth less than thrleir debt– although that problem is diminishing since the inventory is getting so big that houses are virtually unsellable at any price. “Catching a falling knife.” Once one house is on the market at a low price, that becomes the new market value. Now everything else has to drop to meet it.
Dan
Well my experience is beginning to get ugly. I wanted to refi my home, had it on the market but was able to settle with the ex on a price to purchase. So I pulled it off of MLS last month, at which time I spoke with a lender and we locked my rate at 5.375, when the rates hit the bottom in January. Finished all paperwork and was ready to go to title and then the lender comes back with this. “We are sorry the underwriter has decided to change their requirement of 30 days to 90 days delisted from MLS”. We have another lender that will do the 30 day seasoning, but your rate will be 6 with additional .5 points to buy it down to that. Or you can extend the 5.375 original agreement by paying .625 points to extend it by 60 days.
So, first has anyone else had a similar experience? This is my take, since the mortgage brokers are starving, because underwriters are pissing and moaning about “ANYTHING and EVERYTHING” on borrowers and disqualifying them in herds, they are trying to ticky tack any expense they can so as to stay afloat and stay off the Ramen.
This behavior only makes their industry look that much worse. I mean greed was the cause of this pain, and now we are seeing bottom feeding behaviors so as to survive. Here’s a clue, go out and get a real friggin’ career, Engineer, tradesman, anything that benefits society instead of trying to feed and damage it.
Sorry about the rant, but UUUUUggghh!
Danix-
Certainly upside down is not the end of the world. I’ve been in that position several times. Once I had to bring cash to closing as a seller, but I didn’t own the house very long either. The other times I had that happen, I was able to stay in the home long enough to come out ahead.
I had a couple of things going for me though when I was underwater. One was that a had an affordable house payment, so moving didn’t seem worth the bother. The other thing I had going was the conviction that if I just waited a couple of years, the house would increase in value.
Unlike my situation, a lot of borrowers currently can get a much better monthly housing payment by moving. It remains to be seen how long they will be confident about home prices rising eventually and hanging on.
As much as I make fun of Yun for his bullish predictions, I’ll admit I’m pretty chicken about coming up with my own. There are way too many variables in the equation and not enough constants, and market psychology remains a huge question.
Just got back from the Hudson Marshal REO auction for Illinois. In my opinion lots of shrill bids. I was sitting in the front of the audience looking back and no one was raising the bid card yet the auctionaire was pretending like people were bidding and raising the price of the bid. These auctions are full of smoke and mirrors in my opinion. Be carefull. Boarded up house in gangland infested neighborhoods were supposedly bidding up to unrealistic prices. The auctionaire was just raising and raising price even when no one was bidding. More dirty tricks by banks and auctionaires beware. Don’t get caught in the B.S. My opinion is about 20% of the bids were legitamite.
This piece is missing information. What are the comps, was the asking price taking into consideration the condition?