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Different Banks, Different Rules

By
Real Estate Agent with RE/MAX Big Bear Village

Originally Posted At www.bigbearilluminated.com

Like most Realtors today, I have been dealing with quite a few bank owned properties. Like conventional listings, they come in all shapes, sizes, and conditions. Some banks price them to move, others not so much. For every REO I see that is a great buy, I see another that is only so so. Some banks respond to an offer right away, some take a long time. Some banks will negotiate with other, while others will not budge.

For instance, a few weeks ago I had some clients who made an offer on a bank owned home in Erwin Lake. The home was priced at $126,000 and was in decent condition. Like everyone else, my clients were after the best deal they could get. In that spirit, we put in an offer of $100,000. I didn't expect the bank to accept it, but I thought their counter would give us a good indicator of how low they were willing to go. When we received the counter offer, I was a little surprised to see the bank had not moved an inch. Surprised in the fact that this home has been on the market for quite some time and it seems rational that they would at least move a little in order to get it off of their books. Not the case.

Believe it or not, I have encountered this same scenario several times. Contrary to what is being reported in the media, getting a ridiculously low price on a bank owned property is not a sure thing. As a matter of fact, in Big Bear there is only a 5% difference between listing and selling price on REO's. If a bank owned property is priced well, it will usually garner multiple offers and actually sell for above listing price. If your Realtor tells you that something is a great buy, bickering may only serve to cost you the deal. Now if I can only get my clients to listen to me:)

Simon Conway
Orlando Area Real Estate Services - Orlando, FL

Israel - if it wasn't an REO, what would it be worth? I find that starting at that point educates clients in terms of how good/bad the deal with the bank actually is.

Aug 07, 2008 07:57 AM
Anonymous
Anonymous

I'm seeing much of the same thing here.  The REO's are priced well, and to get more than 5% off of the asking price is pretty much not happening.

Aug 07, 2008 08:16 AM
#2
Randall Schrader
Competitive Insurance of Dundee - Dundee, FL

You should read the slightly newer post.  She is negotiating 40% off regularly.

Aug 07, 2008 08:21 AM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Israel,

Here in my market if the bank gets a ridiculous offer, they either come back at same price or do not counter.

Aug 07, 2008 08:44 AM
Jacinta da Silva
Atlanta Communities - Marietta, GA

to add to this conversation i would like to say that i have been having trouble with lenders that are brokers because the rules have been changing so much...has this happend to you.

Aug 07, 2008 08:46 AM
Israel Barden
RE/MAX Big Bear Village - Big Bear Lake, CA

Simon-I was amazed my clients liked this home. This occured over a month ago and it is still sitting there like it has for the past eight months.

Mike- Same here. I've told some clients again and again. The something for nothing tale is a myth. But, of course they have a cousin who's best friends sister got a $500,000 house for $100,000.

Jacinta- I have been running into problems across the board. Lender's, bank's, escrow, etc.

Aug 07, 2008 10:18 AM
Heather Wood - REALTORĀ® Midwest City, Oklahoma
Metro First Realty - Midwest City, OK

Even with a full price offer I'll have problems getting a response, clear titles, etc....

Aug 07, 2008 11:11 AM
Carey Pott
January Financial - Foothill Ranch, CA

That definitely is in direct opposition to a lot of what we've been hearing. Good luck getting your clients to listen! :)

Aug 12, 2008 06:09 AM
The Bartley Group SouthEast MN Real Estate
Coldwell Banker Home Connection - Owatonna, MN

Israel, we have found here in Minnesota thatthe ONLY reason to by a REO property is because it is a good deal price wise.  Otherwise why would you waive every right you have by law to by a house AS IS.  We have seen a few awesome deals and actually participated in 2 of those, however many of them sit in our area for months on end at the same price.  Many of these lenders are costing themselves more money in the long run because of how poor they are handling the properties.

Brian Bartley

Aug 12, 2008 06:24 AM
Israel Barden
RE/MAX Big Bear Village - Big Bear Lake, CA

Heather- I'm know what you mean. I have encountered difficulties with almost every bank owned property I have dealt with. That is why I feel like my knowledge is very helpful to my clients. Almost everybody wants to know about them, and it's something you need to be able to discuss.

Brian-Many times, a client will think that they want an REO, but after we get into it, they realize a traditional listing may be better. I will usually show them REO properties and then phase in some regular homes.

Aug 12, 2008 06:41 AM