Why Isn't That Bank Owned Home on the MLS?

I get a ton of phone calls from buyers who saw a house with tall grass, or a vacant property that needs work, or a house that's been in foreclosure for what seems like forever. The caller wants to make an offer on the house.

The problem is there are times when they can't.

Here's the secret in the world of foreclosure... it's a slooooowww process.

When I get a new bank owned listing from a lender or asset management company assigned to me, unfortunately I can't immediately run out and stick a sign in the yard. In fact, sometimes it takes months from the first time a home is introduced to its new listing agent to the time a buyer can submit an offer.

First we have to check to see if someone is living in the property. Many times they are. In Ohio, a person losing their home has 30 days after the sheriff's sale to redeem the property (make good on the money they owe the bank) and keep it. I've never had that happen, but they have that time.

If the person doesn't move out on their own, the lender will often offer "cash for keys" to entice them to move out without being evicted in the amount of $500 or $1000 or sometimes more.

Some people won't agree to cash for keys and then the bank has to evict them from the house, which can take even more time.

Then the agent has to change the locks, get the utilities on, tell the bank what they think it's worth, wait for the bank to agree on a price, etc. Many REO properties spend a lot of time in limbo.

When it's all worked out the house will then be listed on the MLS and bids will be accepted.

People ask me if we can just call the bank and tell them we want the house and make an offer direct. Nine times out of ten they will direct you to the listing agent (if they even know who it will be) and then you will have to..... wait for the listing agent to put the bank on the MLS and submit your offers. LOL

There are very few ways around this. The bank is too busy to field calls from prospective buyers which is why they have this process in place with agents and third party asset management companies to dispose of these properties.

The number one question I get from buyers is "Isn't the bank glad to get rid of it faster?"

Well, if there weren't twenty layers of red tape and a million people involved in the process yes that makes sense. But nothing in life is simple, including the sale of bank owned homes, so they will typically force you to follow the process because it would be chaos otherwise.

Also, at least here in Ohio, a property cannot be sent to the sheriff sale and foreclosed on overnight. It's a lawsuit that takes time and effort and can be a months and occasionally years long process. Until the auction, the bank does not have the right to sell the house without the owners permission (that's why we do short sales but that's another blog entry altogether). If an owner files bankruptcy and includes the house loan in the filing, it can stall the auction and repossession even more, which is why you sometimes see homes vacant with no action being taken to sell them.

It's sometimes frustrating, but in the end if you get a great deal on a foreclosed home the wait is worth it!