It seems like everybody has a story about a cousin or brother in law or long lost Uncle who offered half of the asking price on a foreclosure and got it. It has almost reached urban legend status in this market. I have bad news for people that believe this story. There are no giant alligators in the sewer. If you say Bloody Mary three times in front of a mirror, she will not appear. Even more terrifying, there are no bank owned properties in Big Bear that you can buy for half of the list price.

As a matter of fact, writing lowball offers is a sure way of losing out on a property you might really like. When an asset manager sees an offer that is over 10-15% low, they automatically put that offer into the crank file. Usually, they don't even bother countering an offer that low. When they do counter, it is usually for $100.00 off of the listing price. The only thing that happens when you write a really low offer is you lose all your credibility. Instead of coming off as a serious, viable buyer who is looking for a good deal, you come off as a shyster trying pick the bones of an unfortunate soul.

When a bank prices an REO property, they don't just pick a random number. They don't price it off of what the remaining loan is. They actually have Realtors give them price opinions on current market value. Then, they price the home at a fair market price. Usually, this a very good deal. Just because there is only $50,000 owed on $200,000 property, does not mean the bank will take $100,000 for it. They will sell you the property for a good, fair price. If you come in at $125,000, they will not even acknowledge you. If you come in at $150,000, they will counter at $199,000. If you come in at $175,000, they will probably give you a real counter to work with.

I am not saying that it is impossible to get a great deal. It is highly possible. You just have to reevaluate what a great deal is. If a home last sold for $350,000, and you buy it for $250,000, you are getting a great deal. You just need to be realistic. Plus, while you are dickering around with lowball offers, the odds are very good that someone who understands what is going on will come in with a respectable offer, and you will lose out. If you think it is a good deal, it is certain that somebody else will too. I feel the best strategy is too give the bank the opportunity to say " Yes."

When it comes to agents that list bank owned properties, they seem to fall into two distinct categories. The first group takes their time and makes sure the house is completely ready to be sold. These agents make sure that the house and yard are clean and presentable. They also post the 18 day notice for the foreclosed owner to remove their belongings. Then, after the 18 days are up, they have everything removed to storage, leaving the house in great shape to be sold.

The other group of agents don't bother with all those steps. They don't wait for the home to be cleaned or, sometimes, even for the tenants to be evicted. They just throw their sign up and put it on the MLS. Because of this, the home is often still fully furnished when it is being shown to prospective clients. This leads to nothing but problems.

Because people have a tendency to covet what they see, furnishings left in REO listings lead to nothing but trouble. You can tell your buyer 100 times that none of the furnishings are going to  be included with the sale, and they will still dwell on it and bring it up. Often. Questions about what happens to the furnishings and why they just won't leave them. " Maybe you can call the listing agent and tell him not to do the clean out" is something you will probably hear at least once. Some buyers will go crazy for the mirror over the mantle and insist it must be a fixture. When you tell them it is not, they will insist that you call the listing agent and offer money to buy it. It is not the listing agents property to sell. It is not the banks property to sell.

For all agents out there, be very firm from the start regarding the furnishings in a bank owned home. If you don't, it will cause nothing but problems. You need to quench the desire for that nice couch from minute one or your buyer may start obsessing over ways they can acquire it. Buyers, you need to realize that there is no way you are going to be able to get the furnishings. The bank may be taking the furnishings and throwing them on an enormous bonfire, as you suspect. They still won't give them to you. They may languish in a dust filled storage bin for 20 years until they deteriorate. You still can't have them. Be happy with the great deal you got on the house and let the rest go. Believe me, it's not worth the mental anguish.

I just wanted to give out a word of warning to anybody considering buying a short sale property. The house is a short sale because the owner is in financial straits. People in this situation can be a little unpredictable and do things you wouldn't normally have to be that concerned about. Things like stripping the house to the bone for instance.

A few days ago I wrote an offer on a short sale with some clients. It was a good deal on a really clean home in a nice area. Luckily, as I always do, I wrote into the offer that all appliances and fixtures were to be included in the purchase price. Our offer was accepted and I was getting ready to open escrow. Then, the listing agent called me and told me that the seller was going to take all the appliances and fixtures with him but we could purchase them outside of escrow for $2,500.00 . When I told her that we considered the appliances fixtures and would not purchase the house without them, she said she understood and would try to get the seller to come around. He didn't. It soon became apparent that he was probably going to strip everything he could take out of the house and then try to " Sell " it back to my clients outside of escrow in an effort to defraud the bank.

Needless to say, we refused and backed out of the deal. The seller basically bought the house, mortgaged it to the hilt, defaulted on his commitment to the lender, and then wanted to steal even more money from them. I don't know about you, but I found this unacceptable. I can only hope that the bank catches wind of this and puts a stop to it. I wouldn't be surprised if the window coverings, lighting, and bathroom vanities all end up in the sellers garage. Anybody who deals with somebody like this really needs to be on their toes and write everything they expect to come with the house into the contract. Also, make sure you do your walkthrough at the last possible moment. Don't give a guy like this the opportunity to take advantage of you.

Recently, it seems like every time a good bank owned property comes on the market, it is like blood in the water with four, five or more offers coming in. If you want to have a chance at snagging one of these good deals away from the other sharks, you need to come prepared. I have prepared a sort list of things you need to have ready in order to write the best offer possible.

1. Make sure you are preapproved and have your letter with you. This will let you know what you can afford and also let's the selling bank know that you are already approved and can buy the property in question.

2. Have current bank statements and your check book. You will need to write a deposit check and many banks are asking for proof of funds up-front with the offer.

3. Be prepared to go over asking price. If a home is worth $200,000, but only priced at $135,000, you can be sure that somebody else will offer full price for it. If you really want it, you will have to come in even higher. Most banks will give everybody the chance to come in with a " Best and Final " offer, but not always. Sometimes, your first offer is your only shot. Be prepared for this eventuality.

4. If your Realtor is an experienced agent who has dealt with REO properties, listen to their advice. Odds are they have been in a similar situation and they know what to expect.

5. If there are multiple offers, don't ask for a home warranty, termite work, or anything that is not absolutely necessary. The more you ask for, the less chance you have of getting your offer accepted.

While there are many variables that can occur, keeping these five things in mind will help you get the property you want.

One of the benefits of the market being in decline is the mass exodus of bad agents. If you are a buyer or a seller, the odds are much better that you will get a competent agent to represent you. Unlike days past when an agent just had to sit by a phone to do business, today's Realtor actually has to work his or her tail off to be successful. That being said, you still need to be careful.

There are still part time housewife's out there who do a deal or two a year for some extra money. The checker at the local Von's still dabbles when an unsuspecting victim falls into the web. Even the meter reader for the electric company will try to pass as a full time professional Realtor. They are not doing their clients any favors. The market has undergone a massive upheaval and you can not do business the same way as five years ago. In Big Bear, bank owned properties make up 10% of the inventory and 40% of the sales. If your Realtor is not proficient in dealing with REO's, Short Sales, etc, you are asking for trouble.

I have an example from my last escrow to share with you. My clients put in an offer on a bank owned property listed by an office from out of our area. We did everything we were supposed to do and were just waiting for escrow to open. I have sold around 20 bank owned properties in the last year or so and there is almost always a delay in the bank opening escrow. So, after a week went by I wasn't too concerned. After almost two weeks went by, I became alarmed. I called and emailed the listing agent two or three times a day for three days without receiving a response. I finally had to call his broker and demand that someone who was competent be put in charge of the deal. I was given an assistant who seemed to have some idea of how things worked. Finally, after almost three weeks, I was emailed an extension agreement that stated we were requesting an extension due to the listing office opening escrow with the wrong company and not realizing it for two weeks. Two weeks? If I hadn't called the broker with my concerns the listing agent would have just coasted along obliviously and incompetently until our deal crashed and burned.

I also have experiences that are the exact opposite. I sold a bank owned property a little while back that was listed by Theresa Grant with Coldwell Banker in Lake Arrowhead. Like most bank owned homes, it took the bank longer than usual to open escrow, but everything else ran perfectly. Theresa made sure I received regular updates and her assistant was on top of everything. I got all the paperwork on time and done correctly. Because we both did what we needed to do , the transaction was very smooth and I was able to give my client excellent service.

If you are considering buying or selling, ask the Realtor you are dealing with some qualifying questions before you proceed. Make sure they are a full time, professional Realtor and not a part timer. Make sure they have a good, working knowledge of the local market. If you are planning on buying in Big Bear, it is a very bad idea to use somebody from L.A. or Orange County. If you are planning on buying a Bank Owned listing, it is especially important to use somebody who is experienced in selling them. The banks do thing very differently and a Realtor who doesn't know what they are doing can blow the deal or end up costing you a great deal of money.

Originally posted at www.bigbearilluminated.com

Buying a bank owned (REO) property is a much different process than a traditional listing and it is imperative that your Realtor know the difference. If your Realtor is not aware of the differences, they could not only cause you to lose the property, but also cost you money in the process. Let me explain.

Banks hold all the cards in a bank owned transaction. They don't have disclosure requirements and set all the rules. They usually make the buyer sign an addendum that basically takes away most of the buyers protections and puts the ball squarely in the banks court. They set out a timeline you, as a buyer, have to meet or face the consequences. While they don't have to deliver anything until they feel like it.

For instance, I have a bank owned property in escrow right now that I got approval on almost a month ago. Guess what? The bank didn't open escrow until three weeks into the 30 day time period. We didn't get a copy of the signed contract or bank addendum until three weeks into the deal. Of course, the bank addendum we signed at the beginning of the transaction had us agree to pay a $100.00 per day per Diem for every day we went over the 30 days agreed upon in the contract. Then they did nothing on time to make it possible for us to make the deadline.

This is where my experience came into play. I have had this happen to me numerous times on bank owned purchases and I have learned that my buyer just needs to forget about the bank and make sure he does everything he needs to do to stay on track. As long as we can show the delay is not of our making, we can get out of paying the per Diem. I made sure our inspections were all done within 10 days and I made sure the listing agent had the termite inspection done also. Since my buyer is paying cash, the appraisal was not an issue. On a property where the buyer is getting a loan, you need to be on the phone with the lender every step of the way to get the appraisal done before the contingency period is up. You don't want anything going wrong at the last minute if you can help it.

You can't always get everything to go the way you would like, but if you do everything you can do, things tend to turn out OK. I always have to remind my clients that most banks don't really have any idea of what is going on at any given time. They seem to just flounder around in the hopes something will eventually happen. In the last couple of years I have seen numerous instances of banks doing things that make absolutely no sense. It is actually kind of rare to have a bank owned transaction that goes perfectly smoothly. If you hire a good, knowledgeable Realtor and do everything you need to do on time, you will come out ahead in the end.

Originally Posted At www.bigbearilluminated.com

A question I seem to get quite a bit these days from my clients is " What is the difference between short sales and REO's?" I then , usually, go into a whole explanation of the pro's and con's of each, and end up telling them that REO's are superior in every way. I have a couple of dealings over the past couple of months that really bring this point home.

The first case involves a really neat family I have been dealing with for over a year. They are from North Hollywood and have wanted to buy a place up here for a long time. When we initially looked, we couldn't find anything that really fitted their needs. They decided to wait a year and then take a look when the prices had really dropped. So, I took them out a couple of months ago and found a cabin that was perfect for them. The cabin is super clean and situated on a great lot with a ton of beautiful oak trees. Even at the $149,900 price tag, it was a great deal. The one big problem with it was it being a short sale listing. I warned them of the major hassles that usually accompany buying a short sale, but they liked the house enough to risk it.

As many of you know, the majority of short sales do not close successfully. This is usually due to the listing agent not knowing how to do them, but taking the listing anyways. If the listing agent doesn't put in all the work ahead of time, a short sale is a nightmare. In this case, the listing agent assured me that he had done all the footwork and the bank was ready to move. With this information, we decided to offer $120,000 cash for the cabin, knowing it would probably be refused and we would have to come up to make the purchase.

A month into the process  we still hadn't heard back from the bank. At this point I was fairly certain the listing agent was full of it and hadn't really done what he needed to do to get a short sale done. I told my clients that all we could really do was wait and see what the bank would do. After a month and a half, the listing agent called me to say that the bank had just taken the listing away from him and never gave us an answer. I knew sooner than later, I would be seeing the home again as a bank owned listing. I told my clients to hang tight and that I would check the MLS everyday until it appeared.

Sure enough, a week and a half later it came on The MLS for $130,000 as a bank owned property. I called my clients the minute I saw it and we wrote an offer for $115,000 cash. The bank came back the next day at $117,000 cash and we snatched it up. Not only that, but the bank repaired some broken pipes under the house that the original owner most likely would not have been able to afford to do. Basically, the bank took a month and a half and did nothing when it was a short sale. Once it was a bank owned, we bought it in two days for less money and had repairs thrown in as a bonus. Bank owned One, Short sales Zero.

The second situation is very similar. My clients put in an offer of $340,000 on a short sale listed at $389,000. Again, we waited patiently for almost two months while the bank had the home reappraised and numerous BPO's done. In the end, after two months, they rejected our offer and let the home go into foreclosure. Like the last time, I watched the MLS and saw the home come up as a bank owned property for $390,000. My clients and I both felt the home was overpriced and we should wait and watch it to see if it would reduce. After two weeks, it hadn't sold and we decided to make our move. We came in at $333,000, and waited for a response from the bank. This time it took one day to get their answer, which was no. After a week of wrangling, we put the home into escrow for $339,000. So, we got a lower price in only a week when it was bank owned. Bank Owned Two, Short Sales Zero.

Originally Posted At www.bigbearilluminated.com

Originally Posted at www.bigbearilluminated.com

With all the fervor over bank owned properties, it is sometimes easy to overlook homes listed by an actual homeowner. This can be a big mistake. If the homeowner in question is savvy on market conditions and has a good Realtor to advise them, traditional listings can be just as much of a bargain as an REO. Case in point is this home on 385 Glenwood, located in The Castle Glen area of Big Bear Lake. This home is a true beauty. It is full log construction and backs to wide open eagle preserve. The home is 2,200 square feet and sits on an oversized 15,300 foot lot. It has three bedrooms, two bathrooms and a detached two car garage. All for only $599,900.

Believe me when I tell you, there are bank owned homes in worse condition and lesser settings that are priced higher. This seller realized that he was in direct competition with bank owned homes and priced his home accordingly. Since the home is owned by a real person, there would be full disclosure and a chance for repairs to be done. I guess the point I am trying to make is, don't just concentrate on REO's. There are a great many other homes out there that may be even better buys. Enlist the services of a professional Realtor and let them be your bloodhounds. If they are good, they will be aware of the best deals, no matter who the seller. For information on this home or any other for sale in The Big Bear Valley, please email me at izzy.barden@gmail.com or call me at 909-273-8980.

I was inspired to write this blog today by, coincidentally, a blog written by another Big Bear Realtor that I read today. In his blog he made a claim that was so far off base it was laughable. He claimed that home prices in Big Bear are actually rising. Rising? I watch this market like a hawk and I have seen nothing that points to a rise in prices. As a matter of fact, for now, prices are dropping almost 1% per month. I understand seeing the glass as half full but, spreading misinformation like that is helpful to nobody. What is going to happen when he talks somebody on the fence into buying a home based on his made up statistics? When that buyers home doesn't appreciate in value that first year, there is going to be some you know what to pay.

As a buyer or seller, you owe it to yourself to use somebody who is not afraid to tell you the truth. No matter how bad it may be. In fact, honesty should be the number one characteristic you look for in a Realtor. There are definitely some unsavory characters out there. Folks who will tell you your house is worth more than it is, so they can get the listing and then hammer you for a price reduction afterwards. Or, they might tell you that prices have started going back up to get you to buy right now. A good Realtor will give you all the correct facts and let you make the decision.

I don't know where the bottom is on this market. I don't think anyone knows for sure. All we can do is make educated guesses and try to do our best. Are prices going up? No, they are not. Do I think the bottom is close? Yes, I do. Do I think this is a good time to buy? Definitely. With prices and interest rates at a low level, I feel it is a good time to buy. However, only if you plan on keeping the property for at least five years or longer. You need to give the market time to correct itself and start an upward climb once again. If you feel like you are talking to a used car salesman instead of a professional Realtor, don't be afraid to make a change and find somebody you can trust.

Originally Posted at www.bigbearilluminated.com

I am making this post as a word of warning to the buyers and sellers out there. Just because the lender assures you everything is okay, don't take their word for it. A deal can go south at any time. Most times, at the last minute. You have your buyers ready to sign docs and WHAMO! The underwriter just torpedoed the whole thing. In most cases your buyer probably has spent hundreds of dollars on home inspections and related items. The seller may have spent thousands of dollars doing repairs and getting termite work done. When the lender pulls the plug, it can create massive problems.

A perfect example of this happened to me today. I have the buyer and seller on a short sale property here in Big Bear. Typically, the bank that holds the note is a major hurdle in a short sale transaction. Surprisingly, the bank was prompt and helpful this time. They wanted to get this cabin sold and did everything in their power to get the deal to go through. My buyer got pre-approved through GMAC very quickly. He has done two refi's and bought two other properties with them in the past. They approved him for a 30 year fixed with 15% down. The home appraised and GMAC assured us everything was a go. We were scheduled to get docs today and hopefully be closed by next Tuesday or Wednesday. Then, all of the sudden, the underwriter says that they want an extra 5% down from the buyer. This loan has been in the works for a month and they just suddenly decide to change the terms on the last day. Not only did my buyer pay for inspections, he bought new furniture for the house based on his lender telling him everything was fine. What a mess. If they had told him he needed 20% down from the get go, we could have made this work. He could have saved for another month and not bought furniture right away. As it is, the lender has created a huge mess for everybody involved but them. Frustrating.

Originally Posted at www.bigbearilluminated.com