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About foreclosures: How the banks can help turn around the economy and neighborhoods in Macomb County.

I have a very simple plan for the bank owners of foreclosed homes in Macomb
County and the entire Metro Detroit area. In fact, it's so simple that the banks
probably won't even consider it, let alone put it into practice.

Part 1: Turn the utilities on. Pay $40-$60 per month to keep the heat on at a minimal temperature, and to keep the electricity on for sump pumps, security and a potential buyers comfort while viewing the homes.

Part 2: Hire local unemployed contractors and handymen/women to take care of urgent repairs. IE roof leaks, mildew/mold removal, broken windows.

That's it. There are no more steps to my plan.

With 2 simple steps the banks would realize thousands more in sales prices, and
local unemployed people would be gainfully employed and contributing to the economy.

I would be willing to bet that if a bank or asset manager spent $1,000 to $2,000 per home they
would then be able to receive tens of thousands more for the homes they are now trying to
dump sell.

These bank owned homes are being sold for thousands and thousands under market value
and hurting the resale value of entire neighborhoods. The banks should be doing all they can
to start reversing this process.

I wonder why they haven't thought of this? Shame on them.

© 2008 Kris Wales RE/MAX Advantage 1, Inc. Chesterfield Township - A Macomb County real estate agent

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Posted by Kris Wales - Macomb County MI real estate blog & homes for sale search site on 05/01/2008 01:08 PM

Comments (62)

foreclosure solutions in metro detroit, bank owned homes, kris wales a macomb county mi real estate agent

This post has been included in Michigan Information Macomb County, MI Information
Post is included in group: Michigan Real Estate

62 Comments on About foreclosures: How the banks can help turn around the economy and neighborhoods in Macomb County.

MAY

2008

KW,

Banks need to commence in learning how to "Move Product" again.

Many of these banks were able to approve loans in a matter of days,today it`s a matter of months...

Scott: I'm not experiencing much of that here. Turnaround time on new mortgages is still for the most part 30 days or less. Perhaps it's because most buyers in our area are using FHA or VA products. Mortgages aren't the problem here - the real problem is with the foreclosed upon homes that aren't being minimally taken care of and then dumped for tens of thousands less than what they would have received with just a bit of care.

Kris - DUH! The problem is the decision makers don't know how to sell real estate to maximize their investment. They get paid the same no matter what the house sells for.

Nannette: And banks want to get into the real estate business...scary scary scary.

Kris it is scary - but I don't see them as any competition. But I will say I'm smart enough to know not to get in the banking business. :-)

They don't do it because 90 percent of them have no initiative. And the 10 percent that do leave banking

I am an x banker

Nannette: I think I would like to be in the banking industry for the next year or so. On an advisory committee of some sort. They need to hear from those of us who are in the trenches.

Charlie: If initiative means caring then they should damn well care. This situation isn't getting any better and is affecting more than their shareholders.

Nannette
Great comment! They leave a dump on the market that you can't inspect because the power is off, everyting is by their rules, they pay less than the average rate and their inventory is going up.

Marketing genious

Barry: Marketing genious is correct. (Sarcastically said...)

Kris, ditto I don't get it, it would make life so much easier for agents and I agree that they would sell faster. NO water on, electricity off, errrrrrrrrrrrrrrrrr

Missy: Spend a little cash + Employ local people = Win/Win. Simple isn't it? I am more than aggravated lately by the condition of these once nice homes.

Kris, one of the reasons they don't turn on utilities sometimes is due to squatters.

Mike: If listing agents did a weekly check on their bank owned homes that could be nipped in the bud pretty darned quickly. It would also be easier for neighbors to report suspicious behavior if outside lights were on. I don't buy that argument at all. The homes would sell quicker, for much more money, and the neighborhoods wouldn't continue to decline.

Kris, well put, I agree and squatting is not that big of a problem in most areas.

Mike: I agree. I've gone into hundreds and hundreds of these bank owned homes and have not once encountered a squatter.

Kris,
Yes, yes and I think this deserves a feature so I am recommending it. I suggest submitting this to your local newspaper.

Kris, reading this post creates one of those "Du-uh!" moments. It's so simple and obvious and advice any of us would give to our sellers. But wait? Do these guys ask for our advice? Well, some do.

Kris--Amen!! And a third step would be to respond to offers in a timely manner...but that might be too much to ask for as well.

It's me again. The real problem is that the banking industry is a lot like the Detroit Auto industry. You can't tell them anything. They know it all. Now don't get on me for this although I live in virginia now I was born and raised in Detriot. I lived on Hartwell one block off Schaffer between 7 and 8 mile rd. I worked in the auto industry a long time and only drive american cars. With that said you can't tell them anything and bankers are the same way.

I leave you again and by the way these are all really good posts.

It seems so obvius to do these simple steps....great ideas. Thanks. Terrie

Banks don't have the long term view...minimal investment with a sale, eventually!

It would even be worth it for them to take it to the next level, replace carpet, paint, etc. People just can't see beyond the appearance most times, but would be more than willing to pay for the extra work in the price, which really would not be extra, just level with the rest of the subdivision.

Let's not talk to the banks about it anymore - let's talk to the investors of the banks!!! Great concept Kris!

Kris: The bottom line is that it is not coming out of their pocket. If any person would follow the paper trail they would find out the bank who did the repo does not own the house. It was sold on the secondary market to who knows (unless they are a portfolio lender who keeps the loans). Banks lend and sell the loans, now they want to be in charge of the appraiser to tell the appraiser what the property value is I suppose. Watch the new laws that are currently making their way through congress, the appraiser will be directly tied to the lender - now does that make sense? I don't think so. Bank bailouts are done by the U.S. Taxpayer so there is no reason to care. Patti - Capital Line Funding Group - CA

Great point Kris. I think most banks beleive if they pur more money into the home that they are losing more money.

I see your point of banks needing to take more of an "ownership" approach to REO properties, and they would probably benefit by hiring people specifically for this job. On the other hand, it does validate a problem, and if/when the market turns, they may have set a precedent that no longer makes financial sense.

Basically you are suggesting that Banks go out of their profession of LENDING, and take someone else's job (rehab investors and sweat equity buyers) so that they can save themselves a couple bucks. Local economy isn't the issue, since real people are there to buy and FIX RIGHT and sell to other consumers. Of course they would net more money if they fixed it up, but that isnt what their business is! It is Lending!

If you so desperately need someone to blame for all this, try the person who put the bank in that position to start with... The Defaulted Homeowner!

Banks don't own properties...they own paper. paper does not need Electricity, water, sewer or someone to take care of it. The buy and sell paper only. The home attached to the paper is called "collateral". Banks are in the business of making money....not spending it on taking care of something they don't have for the benefit of others.

Yes, everyone thinks this is a good idea and they should do it....they are never going to....yes it would help being able to sell the home....for whose real benefit?

You are right it is to simple for the banks to figure it out. They are not in the real estate business but need to step back and look.

We have all been upset with the banks, but they won't do anything until someone MAKES them! Who is that?

It's quite pathetic the way they manage and sell real estate. There is a home in Villa Park Illinois that has had a tree fall on the home since September 2007. It's a bank owned home and the realtor lives who knows where???? The tree is still on that home! I drive by it everyday and shake my head. And I wonder why the village doesn't say something.

I don't show bank owned properties anymore, maybe if we all quit showing them, they would get the hint. But of course, we would be the ones who would be breaking some kind of law for not showing them.\

Kris, Congratulations on your feature, it was well deserved. There are so many people here that are unemployed or looking for second jobs and I bet many of them would love to get some work.....and potential buyers would see the homes in a whole new light....literally.

We've got some great bank owned properties in my area. But, it's an accident of the market. The homes are in good price ranges and they were foreclosed because of mortgage defaults on resetting ARMs. They were in good condition when foreclosed and in neighborhoods where the neighbors will keep the grass cut and watch for vandals.

These homes are good value and we sell them.

However, the foreclosures in some areas across the country are like the HUD owned homes of old. The owners lived rent free for a year or two under a forebearance agreement, did no maintenance and sold the appliances. HUD makes no repairs and sells by auction.

Sounds like some banks are trying to immulate the HUD system of letting the house deteriorate and then trying to pull the old "as is" sale.

I guess banks benefit more in the tax system by write-downs. There's got to be a financial reason why they do what they do. No one can be as incompetent as they appear to be.

Could they???

Mat Yogerst you hit the nail on the head. Reading through the posts that is exactly what I was thinking! The banks aren't realtors, flippers, contractors, or sweat equity buyers. They are BANKS! They buy money and lend it for a profit. They have no desire to get into the rehab business. A lot of foreclosures get left in pretty bad shape to begin with. So it is going to take more than a couple thousand dollars to get them back to the shape being refered to here. Also the reason they are sitting is there are not enough buyers for them. If there were they wouldn't sit. So if the banks spend money each moth for the several months it's on the market that bill could add up to quite a bit.

I think that all of you think this is such a great idea why don't you pick up these properties for tens of thousands of dollars under market value, turn the power and water on, and hire an unemployed contractor to do the repairs on the house then sell them for market value you'll make that tens of thousands of dollars that the banks are loosing! This will faten your wallet and get those house values back up where they should be. If it were that easy it'd be a win win win situation! The banks get their money, you make a bundle, and the property values are where they should be!

Now don't get me wrong I'm not slamming any of you and I'm not saying that the proposed actions are a bad idea. I think it is a great idea! Just that it's only looking at one side of the issue. There is a lot more to it than what is being lead on to here.

I think they could and are incompetent Lenn. How could a bank let that tree stay on that home? And of course you know I could go on about some of the bank owned properties out there.

I'm not showing them anymore and here's why:

"I have over 50 files on my desk, I can't get to it".

"The person you have to talk to is gone for the day"

I can't make that decision, and I'll leave a message for the person who can. No I can't give you that name".

"The bank wants 5000 more dollars for the home and we don't care that we've been under contract for 6 months, we think the property is worth more." (That property is still on the market and I made that offer last year).

"The bank doesn't care that your client found racoons living in the home".

"It's the realtor's fault the house is in that condition, and he never told us the electric and heat were off for the home inspection, it's as is anyway".

I have more but I'm sick of the banks and writing about them.

I guess I should just say how I really feel......LOL

Kris,

Mortgage lenders and banks have their own mindset and unfortunately it doesn't include proper marketing and property maintenance regarding foreclosed homes. They should listen to your advice.

Excellent thoughts Kris, and since my inlaws live in St Claire Shores I know exactly the homes you are speaking of.

Geoff - How can we get them if the banks won't let them go? They think they are worth more than what they are and that's why they're sitting there! Ok, I'm done with the banks again....

For an expantion of my comment that banks are lenders....see this...

The Banks Need to What? Not in Wisconsin they Don't! And They Won't!

Thanks Geoff... and Matt has 2 t's! ha

Ida if the banks think they are worth more than they are, then how is it that they are so undervalued as stated by the original blogger? Power and water aren't going to get them there. The tens of thousands of dollars in repairs they need might get them there but then they're just recouping the costs of the repairs and not really making much more. Bottom line is the lenders are lenders. Not rehabilitators. This job is for the home flippers, rehab investors, and contractos as Matt said.

Like I said I don't think it's a bad idea. I just think it's only being looked from one point of view. I'm just trying to shed some light on the other point of view why they don't do more to sell their houses.

Kris,

Mortgage lenders and banks have their own mindset and unfortunately it doesn't include proper marketing and property maintenance regarding foreclosed homes. They should listen to your advice.

Sorry Matt I think I must have just gotten in a hurry! Oops!

Thats alright... Just wanted to make sure the SEO gets things right! j/k Every point counts! Haha.

Guys we are real estate agents, please don't give the banks any ideas. Please let them be bankers and for us lets start thinking like real estate agents and invenstors. Buy those reo's, fix them, and retail them for a grrrrreat profit. Believe me better than a 3% commission. I can tell you I did it last year with 22 reo's and made more tham selling 22 houses at 3%, much, much more. This year my goal is 36. Don't complain about those reo's, the market has changed and we must change with it. Invest in real estate because we have the inside track to make a big bundle of money. Don't give the banks any ideas, just keep it quietand buy, buy, buy and enjoy the ride

(here in vegas) I pretty much think it is a requirement by banks to turn on the utilities and get the major repairs done. It is the list agent's responsibility and luckily I have not really run into some homes that were outright dangerous (after listing) or without utilities (even though the heat may be turned way down or the AC be turned way up!)

I think there is a song by Supertramp. "Dreamer, Dreamer, you're nothing but a Dreamer" But it is a good dream!

I normally see a title like this and know that I am going to poop on the post... but i'm not going to poop on your post. Good job.

I second the idea about sending this to your local paper--or as a letter to the editor. How about the Wayne County Community College, Wayne State, U of Detroit Mercy, Lewis Business College and University Prep Academy student papers too? Just for starters...

MAY

2008

Cynthia: Thank you. I very much appreciate it and also your kind words. Hadn't thought of submitting this to my local paper. It's a good idea.

Patricia: As I'm not a listing agent of these properties I don't know that they ask for advice from those who do, but from the shape of some that I'm seeing I would guess not.

Teri: C'mon girl, let's not get greedy :-) If I got the first 2, I wouldn't dare ask for timely responses also.

Barry: That's quite a good analogy. The automakers are finally starting to listen, but they've been financially hurt through those years of keeping their head in the sand and the "boom" years deceiving them. ( The area you grew up in was quite the auto worker-blue collar area.) BTW, thank you for driving American made. Those of us here appreciate it.

Terrie: Thank you.

Gary Waters: I've noticed that... making a bit more money should be enticing you would think.

Barb: I'd be happy with just the first 2. Buyers don't mind doing some of the work, in fact they'd prefer to do it if it meant getting a better deal. But the biggies that cause mortgage issues for a new buyer should definitely be considered.

Dawn: I hadn't even considered that. They're called "Bank owned" regularly here, the term just sticks in our heads.

Patti: As I said to Dawn above, the homes are called "Bank owned" that we seem to forget who the holder of the "paper" is. You're right though, by the time the foreclosure process is done someone else is holding on to the paper investment. I've been reading about the new laws making its way through. The shake up is going to felt for quite a while if it passes.

Mike: I'm sure that is part of their thought process. It also could be because it would require more people to keep track of the account payables connected to each home.

Joe: I really could care less about the precedent it would set. Perhaps my head is in the clouds, but I'm more concerned with the now and real families and neighborhoods suffering. But I'm sure you're correct in your thinking of what their approach to all of this is.

Matt: First, I'm not interested in placing blame. I'm interested in solutions. Second, I don't know about your area of the country but in my local area the issue came about largely because of enormous job losses. Blame the homeowner when Mr. Smith lost his 20+ year job and then ran out of unemployment and had to leave the state to find work? Can't do that. Yes, the banks are in the business of lending. I understand that. I also understand that with a bit of effort that they could help be part of the solution. Maybe it's my head in the sand. If it is, I'm choking.

Chuck: I understand that. Truly I do. I'm looking for solutions, and there can be simple solutions to reversing the disturbing trend I am seeing in my local area. Whose benefit? Neighborhoods, people, families. When families benefit the economy gets stronger.

Greg: Thank you. I wish they would take a step back, a deep breath and really look around.

Ida: That's a sad story. Hard to believe that the village hasn't stepped in and cited the home, cleared the tree and debris and placed the cost on the tax bill. We have no choice here but to show the homes. If we cut out the foreclosures then they would stay on the market even longer and do more harm to the neighborhoods.

Carole: Thank you. Everytime I see one of these homes I think "I bet someone who is unemployed would love the work..".   Simple things.

Lenn:   Only one time have I walked into a home as the first example you described. Your area is very blessed. The buyer bought it. Most are like your second example. In fact, if you didn't have to use the special little key to open up the home you wouldn't know the difference between a HUD owned home and another foreclosure property. The sadness gets deeper and deeper each time I see these homes.

Geoff:   The last thing I'm trying to do is fatten my wallet. Come up and visit me sometime, I'd be happy to take you on a tour. I'd love to show you the homes where the family that had been foreclosed upon left it in good shape, clean, and did their best in very trying circumstances. Then I'll show you what happened months later when the "paper holders" finally put it on the market.   Frankly, my buyer clients are getting great deals and I'm happy for them. On the flip side we have the homeowners who desperately want to sell, but have to compete price-wise with the foreclosures. One $100,000 sold home in a neighborhood of $150,000 homes creates a neighborhood in declining values. I agree that there is a lot more going on then what I could possibly write here. Again, come take a look. Even in the midst of the foreclosure crisis going on around America all real estate really is local.

Esko:   Thank you. I doubt they'll listen though. This article was simply my way of shouting out "Wake up!".

Ida: I had to chuckle when I read your list. I'm also glad that you can choose to not show the homes to your buyers. It isn't the case here. There are so many of them that I haven't had one buyer in the last year who hasn't viewed a foreclosure.

Greg:   Ahhh, you've been to the Shores for a visit lately :-)   You know what I am getting at then.

Matt:   I'll jump over and read your article. Thank you.

Rafael: I don't know what are of the country you are in as you didn't leave your signature link..however, I will state publicly that I understand it is a great time for investors. Investing is an integral part of our economy. I have had an investor client purchase 2 foreclosures in the last year and was happy for them in their smart investments. I am also very much concerned with whole neighborhoods declining and feel that with a bit of routine care that the downward spiral can be halted if not reversed.

Renee: Not that is fascinating. Why is it that one are of the country has this as common practice and another does not? Amazing.

Russ: I think you're beginning to know me too well. Yes, I am a dreamer.

Lane: You're kind :-) Thank you.

Kent: What I'd really prefer to do is take out some reporters and photographers to view these homes and let them write their own stories. Wouldn't that be a great expose series to read? Thank you.

Kris,
Actually I lived there before that it was in the 50s and early 60s. My next door neighbor was a Prof at Wayne State and most of the others were small business owners. I was a kid then and in the middle 60s we went out to Redford Township. I went back last year for the first time in Many years. Sure has changed.
Buy anyway my point is not to have banks rehab it is to have them listen to us, pay us a full fee and let us move the houses. They don't have to be perfect but they need to be broom clean with power on so that you can show it.
For you Michigan fans I want to say the reason I went back was that I am an Appalachian State football fan and came for THE GAME. We won the game as you know but you won the hearts of 2000 people who you treated as guests. You made me very proud to be from the state of Michigan. Now I need to tell you that we learned or offense from your new coach. He is a good man. For you State fans Sorry

Kris, I just wanted to stop back by and congratulate you on your featured post! This is quite a good thread you have going here. Great job.

Barry: my point is not to have banks rehab it is to have them listen to us, pay us a full fee and let us move the houses. They don't have to be perfect but they need to be broom clean with power on so that you can show it. Barry, you've said so much with just the 2 sentences. Thank you. And yes, the area surely has changed. I bet you had a hard time recognizing it. Glad to hear that when you came back for the game that you had a wonderful time. Michiganders are hospitable aren't we? Thanks Barry for your comments, they've meant alot to me.

Mike: Thanks so much. I'm glad you had a chance to read it and make your own views known. One day perhaps the powers to be will listen to those of us who are out there daily and not behind an Excel spreadsheet.

Kris, excellent idea. It would produce jobs plus keep the neighbors happy that the homes being kept up by it's "owner."

I agree completely. You would think they would want more money! I guess they are just too busy for more money. They certainly don't mind dragging everyone else down.

MAY

2008

Kris.... it sounds like a great plan. The banks are already losing money and might receive lowers bids because of the work that would need to be done. If they put in a few thousand into the repairs as you mentioned, it might increase their return 5 times that amount.

MAY

2008

Kris, having visited many bank owned properties and pre-auction homes on the market I agree that utilities and maintenance would spruce up so many of these homes and get them in show ready condition. A little lawn mowing, bush trimming, and landscaping wouldn't hurt either. Great thoughts.

MAY

2008

Kris, I show a lot of foreclosure properties and agree with you completely - the utilities are the biggest problem since lack of power and water hinders the showing, the offer, and the inspection. My buyers and I don't care how comfortable we are, we just want to be able to see if there is a foot of water in the basement, if mold is growing as a result, and if the furnace and other appliances are out of service too. The banks are being asked to take less than value because the unknowns are so great, all for a meager monthly utility bill.

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