What Happens When Banks Get into the Real Estate Business?

Annoyed-banks are selling houses, I don't think there can be much debate  on that issue.  Banks have for years been lobbying to open their own brokerages to go along with their mortgage business.  One stop shopping for home buyers.  Until all of the recent chaos in the market they had not been successful.  Now they are sitting on huge amounts of inventory and they are dictating the terms to buyers and agents as to how to handle a transaction.  Many of them require that the buyers must pre-qualify with them.    Talk about data capture.  Even if the buyer decides to use their own lender all of their information is now in the lenders database.  How much mail do you think the buyer is going to get from that lender in the future?

The asset managers who are handling these transactions don't know how a real estate transaction works.  And why should they?  I don't fault them for not understanding the real estate business any more than I would expect them to fault me for not knowing the mortgage business.  However now that they are sitting on all of these assets they need to learn about the business.  If that means they need to "hire" realtors as advisors or as processors then they should.  It would never take two competent agents 2 weeks to ratify a contract even when there are multiple offers. 

I'm sorry you think it is the "stupidest" thing you have ever heard.  For me the stupidest thing I've heard is the clerk at the local drive through resturant asking me if I wanted my order to go!

Mary-I'm okay with a bit of chaos and certainly keeping the lines of communication open is paramount in any transactions.  And I don't fault the lenders for not throughly understanding a real estate transaction.  I do have an issue that we are well into the problem, no matter who we want to say created it, with bank owned properties and I don't think we are seeing any improvement in the process.  In our area there were another 800 properties that the lenders acquired in May and I'm sure an equal amount in June.  They can't handle the inventory, yet there are plenty of buyers out making offers and getting frustrated and walking away.  I've had multiple deals die because the bank just couldn't or didn't respond.   I continue to hold out hope that it will improve but just as other industries I've worked in when through business process reengineering I think it is time for our two industries to put our heads together and work this out.

Todd-I'm a believer in a variety of business models and if working as a salaried employee to sell real estate is appealing then by all means why should someone fault you for that.  I can envision this happening in my real estate lifetime.  I say that strictly from a buyer's agent perspective.  There are already some real estate brokerages out there following this model.  I'm ready to be hired as consultant by any lender who wants me to help out with reengineering their processes to help deal with all of this mess.  The sooner we clear out the inventory the better it will be for everyone.

Jim-Yes there are real estate companies that have their own relationships with mortgage companies but do they require a buyer to pre-qualify with them before they can make an offer on a property?  NO!

You can throw out all of the junk mail you receive from the pizza parlor just remember that they haven't asked for your SSN, your employment history, your bank account information or any of the information required to apply of a mortgage loan.  I think that is a lot different than being in a geographic area for a free pizza.

If my clients need assistance with home inspectors, contractors, lenders they get a list and have the freedom to choose anyone they want.  It isn't a YOU MUST USE situation.

I have regular conversations with mortgage lenders to ask what are the latest products available.  What I don't do is try to process a loan or tell a lender how they should process a loan.  That is their primary business.  My primary business is putting together the best offer for my clients on a property they want to buy and having a lender control that process instead of being a partner in the process is where the difficulty resides.

We have agents in our area that are handling 100's of REO listings.  There are processes that can be put in place that would eliminate some of the time it takes to review an offer and make a decision.  In a previous "life" I spent a good deal of time working with large institutions on business process reengineering and the process can be streamlined and improved. 

You have the choice at Home Depot to go to self service or to go full service.  People have begged for self service in just about every industry you can imagine.  Now that they have it they complain about the lack of customer service.  Talk about a no win situation. 

Deborah-if builders can have non-licensed people selling model homes I wonder if lenders could have an employee model that might allow non-licensed individuals to sell home?   Currently the bank isn't technically selling the house since they have them listed through an agent or auction house.  They are however controlling the process of how the transaction takes place.  I've dealt with some folks who have "VP" in their title so I'm going to give them the benefit of having experience just not with selling a home.

Frank and Jodi-I lost a deal by $500 once but that was when an agent, who I now know is famous for this trick, sold it to his own client after he got our "best and final".  If they had taken our originally addendum they deal would have gone to us.  I've never made that mistake again.

Deborah-short sales are a whole different game.  I'm amazed that a lender who can respond to a foreclosure sale in 48 hours can hold onto a short sale for 90 days and still not make a decision.  Common sense alone should prevail but doesn't seem to.