So you’re looking for a bargain. This is certainly the best market in a generation in which to find value. While many buyers appear to recognize that opportunities abound, many also have little idea of what they may expect when they begin dealing with sellers of “distressed properties.” Most serious buyers have heard the horror stories increasingly associated with offers made on short sales– properties offered for sale by sellers who owe more than the home is worth. Since approval of the short sale must be obtained from the seller’s lender(s), these sales involve third parties who very often take ridiculous, unjustifiable amounts of time– often months– to approve or disapprove an offer. There are also those listing agents who advertise a short sale at a price well below what they know the lender will accept, in the hope of generating interest in the property. These agents have no respect for the prospective buyer’s time or emotions, and they have increasingly given the entire process a bad reputation because it is difficult for many buyers to know when they have fallen prey to this practice.
But I am not referring to short sales when I say “expect the unexpected.” I am referring more to REO properties– properties on which the foreclosure process has already been completed and which are now held in the inventory of banks and entities like Fannie Mae, Freddie Mac and HUD. One would expect uniformity in making an offer on a Fannie Mae home, for example. One would think that if one contract administrator accepts electronic signatures on contract documents (which are legally recognized in North Carolina and which can save everyone involved a great deal of time– especially in the case of offers by investors who may be located outside the area or the state), then all contract administrators for an entity would accept electronic signatures, for example. But one would be mistaken.
Most quasi-governmental entities like Fannie Mae and HUD now employ multiple contract administrators, even within a state or within a county. And while the purpose of this practice may have been to promote efficiency, it frequently has the opposite effect. Some contract administrators, and some listing agents, are far better than others. Some understand their role as facilitators of reasonable offers that move properties out of the bulging inventories of REO’s. Others seem to adopt the mentality of petty bureaucrats, taking the attitude that they are doing the buyer a favor by selling them a home. Decisions on whether the seller will pay any or all of the buyer’s closing costs… or how much of an earnest money deposit will be required… become more seemingly arbitrary than rational. And some contract administrators seem to view investors less as one of the market forces that will help absorb REO inventories and stabilize the market more quickly, and more as greedy opportunists who deserve to be thwarted. Indeed, Fannie Mae, Freddie Mac and HUD all have institutional owner-occupant preferences that many view as continued feeble efforts to elevate social engineering over market realities– and in so doing, only prolong the pain and suffering in the real estate market.
How can you know which type of contract administrator you will be dealing with? You really can’t. This really depends on the particular property you are interested in making an offer on. However, this is not a reason to avoid REO’s. In fact, Fannie Mae in particular has been offering some very attractive properties of late in the Charlotte metropolitan area. (See Fannie Mae’s website for a complete list of their inventory in a particular area: www.homepath.com.) It is a very compelling reason to enlist the assistance of a professional, though. “Solid analysis identifies great opportunities,” and after the opportunity has been identified, the offer needs to be moved through the process by someone who will not be intimidated, mystified or discouraged by the unexpected. Opportunities really do abound in this market. But expect the unexpected throughout the process. Be prepared– and prosper.
Eric J. Dorer, BS, JD
NC / SC Realtor/ Broker
NAR Certified Short Sales and Foreclosures Resource
Wilkinson & Associates Real Estate
8604 Cliff Cameron Drive, Suite 110
Charlotte, NC 28269
(980)875-0950
Fax: (877)541-9774
e-mail: ejdorer@gmail.com
website:http://edorer.wilkinsonandassociates.com
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