The Bank Doesn't REALLY Want To Sell YOU That Foreclosed Home

I did not realize that the market has shifted in this way Liz and Bill Spear , kind of shocking!

Liz and Bill - I can remember when many of us worried about all the "shadow inventory" lurking in bank coffers.  We wondered if it would eventually rear it's ugly head as an avalanche when it got thrown on the market and cause a glut of inventory.  Who knew it would end like this?

we've seen a smiggin of that here.  And I don't recommend it for first time buyers even with an agent.  Investors might can handle themselves there if they are experienced.  I had one buyer that I couldn't talk out of "trying" to buy one. Thankfully she wised up and got outbid.  She offered a LOT more than it was worth.

Lots of very interesting information.  Funny how things have changed so much when it comes to foreclosures.

Sad.  Sad.  In our MLS a seller can list a home for $1,000 when it's actually going to auction.  The word "auction" isn't mentioned.  Very misleading to consumers.  When they contact an agent to see the home and they are advised of the fact that they can't buy that home for $1,000, they believe that you are part of a scam.

This is a classic "bait and switch".

Liz and Bill Spear What you describe is indeed a true condition. This is a cycle and when Blackrock and other large investors turn away from real estate for other more lucrativ returns, the banks will come around with 'new' programs for individual buyers looking to occupy the homes.

I have an opinon about these auctions. Having worked many REOs and had multiple discussions with asset managers that don't agree with this auctin process, it must be that the auction companies are doing a heck of a selling job to the banks to get them to believe this is in their favor and will produce a higher selling price (cost them less) and make it sell. I had one property that went on and off auction 3 times and in the end I sold it the traditional way through regular MLS methods. The consumer is not necessarily getting a deal and there is always a minimum the bank is willing to take.

Thats just not right.  We get contacted all the time by auction companies and I politely tell them to go away.  Maybe in the long run a foreclosure is not really the right thing for a 1st time homeowner.  I always tell my buyers that if a seller did not make their payments they most likely did not take cae of maintenance and it's easier to negotiate with a real seller than a bank or 2 or 3 in another state.

This is the totally real scenario, it's geared in favor of the cash buyer who will flip or rent the property. The banks don't even pretend to favor the non investor,

I clicked like on your response. It's accurate. I don't want the like to be perceived as approval though of the result from the auction site. You're correct in saying that the auction site that the bank uses will favor the easier transaction in many cases, even at a lower price. Investors have also discovered that if they create a charitable organization they have an improved chance of being accepted when they make the paid in full offer. Now that trustee sales are diminished, this has become the investor hunting ground and it largely escapes public scrutiny.

Banks have been doing that here in my market for years now. The 5% buyer premiums are enough by themselves to ward off actual home buyers and not just investors. Like Chuck Willman just mentioned, I know two different investment groups who have now created "non-profit" organizations so they can get first crack at bank homes. It's a total sham though because they're operating in a complete grey area of the law and I have a feeling, much like so many other shady investor practices, it's going to come back and bite them. 

BLiz- the whole things sounds to me a situation where if you're a first time buyer or not that knowledgeable in real estate sales, you need to get a professional to help you walk through this. Banks are not in the business of real estate.. they're in the money business and that's all they're looking at. 

Shocking, good information.

Brent Albert- Cincinnati Home Inspector