An overly simple solution to bank REO's

By
Real Estate Agent with Sky Minor Real Estate

So everyone out there writing offers on REO knows the frustration that comes from dealing with the banks on the REO properties. Here in L.A. these banks are underpricing their listings to get 40 offers on it then sending counter offers to the top five at their own pace, totally ignoring the contractual time periods or the fact that they are not licensed to hold blind auctions and have people bid against each other to artificially drive up the price. Furthermore, all of the banks out here (Especially Wells and Countrywide) are releasing only one or two new REO listings per week despite the fact that in California , there are about 700,000 REO properties that the banks are sitting on! Who is floating the tab for those carrying costs? The taxpayers and TARP, of course. In the meantime, the banks can drive up the price on one property at a time to squeeze the most out of it while they foreclose on 25 homes during that one escrow period. This is not right, and it's not OK.

I propose new legislation requiring banks to put their REO listings back on the market with a certain time period after taking them back, say 90 days. The property must be listed at current market value and must be sold at a certain fraction of that listing price or else that bank won't get their TARP check that month. This would serve to open the floodgates of REO that the banks are holding onto and drive the prices down (where they are headed anyway). It would initially be a shock to the market at first, but it would serve to clear out the backlog of properties much faster and more efficently. After all, we need to make room for the tidal wave of oncoming 5/1 ARM foreclosures set to begin in 2010!!

What do you think of my oversimplified plan?

(Too many REOs Lucy!!)

Comments (1)

Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"

I have also seen a bank accept an offer, provide addendums, get the addendums back, and then accept another offer.

Jul 14, 2009 06:46 AM