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WHAT HAPPENS WHEN BANKS HIDE THE FACT A HOUSE I BANK OWNED?

By
Real Estate Broker/Owner with Godzyk Real Estate Services NH License 033394

Todays question is how and why banks would want to hide the fact that a property is bank owned and why they would want to do so?

Some lenders are adding wording in their listing contracts with agents that the listing agent can not use the words bank owned, reo or foreclosure or any similar terms.

Why would they want to do this?

The banks believe that using bank owned in the marketing, automatically puts the house at a disadvantage over non reo homes, and it is destined to sell for less.


How will they bring up the value of reo properties?

They are spending the extra money and time to bring the listings up to par with non reo properties. They want their properties to be at their best condition. They are completing repairs that most banks overlook. They are replacing furnaces, hot water heaters, roofs, windows, painting the interior and installing new flooring, new fixtures and new appliances.

What about maintinance issues?

They are setting goals to provide for a greater maintenance of these homes. Landscaping, upkeep and interior cleanings so that the house is in top showing condition.

So how do you tell who owns the house?

The goal is that by looking at the property you would not know it was bank owned. That without a title search, you would not know that the property is owned by a bank.

What is the goal of this new procedure?

The goal is to bring up the value of bank owned properties. To make them more secure and make them less of an eyesore and a catalyst to bring down the values of entire neighborhoods.

IN CONCLUSION... Will it work?

How well it will work is to be seen. Bank owned units are selling because they are priced below market value while other homes are sitting on the market longer. Having a product that is completely redone and ready to move in is always a benefit and a plus, however the price still needs to be attractive enough to make some one want to purchase.

The problems i see are the quaility of the work, if the banks continue to use national preservation companies, the work will be slow and will not be up to standards of most agents. Letting the agents manage the properties and oversee rehab will allow that agent to be hands on and quickly spot any inferior work and control costs. An investor would not spend $30,000 to make $30,000 (or less) so why will the banks? Well all will not adopt this policy of 100% rehab, but hopfully some will learn they need to spend some money to make the property safer and more appealling. By taking the preservation tasks back from the companies doing the poor work and giving back to the agents, the quaility of work will increase, the cost of the work will be reduced for the banks and local contractors will be able to receive more work.

SO WHAT TO YOU THINK OF THESE NEW TRENDS?


Updated July 20, 2010

Blog written by:

Scott Godzyk
Owner/Broker

Godzyk Realty Group
Masnchester NH

Comments (1)

Steve, Joel & Steve A. Chain
Chain Real Estate Investments & Mortgage, Steve & Joel Chain - Cottonwood, CA

Scott,

It only gets you to the table. When the buyer's agent writes up the offer it comes to light. What then? And if they don't mow the lawns and keep them up IT'S KIND OF OBVIOUS.

Steve

Jul 20, 2010 02:49 AM