Are Banks Harming Themselves By Being In The Real Estate Market?

Real Estate Sales Representative with The Charles Reinhart Company

Are Banks Harming Themselves by Being in The Real Estate Market?  Or, more importantly, are they harming the Real Estate Market?

At last week's sales meeting I announced an upcoming listing I have.  It is located in an newer subdivision just outside of Ann Arbor.  The sub has some homes on the market but not an overabundance.  There are a few homes that are either bank owned or short sales.  A couple of them even have SOLD signs on them that have been there since Fall but have not closed yet. 

One of my colleagues contacted me about my upcoming listing.  She has clients looking specifically in that subdivision, however, they are not interested in any bank owned or short-sale situations.  Thankfully, mine is neither.  It is a real seller who is not in distress - imagine that - remember those days?  Anyway, we set up a showing.  The buyers like the house and are going to write an offer.  The story is that they have an offer in on another house in this subdivision that happens to be a bank owned foreclosure.  They have not gotten a response to their offer in 3 months.  My listing happens to be the exact same floor plan and priced approximately $33,000.00 more.  The buyers know that the Seller will not consider an offer as low as the bank owned property.  Ultimately, my listing will get more money on the sale because the Buyers are now paying for time and convenience not having to deal with a bank.

I recently experienced a situation that I was representing a Buyer and we put an offer in on a short-sale listing.  We waited and waited and waited, for nothing.  After 2 1/2 months of silence, no response from bank, the property came up sold/closed on the MLS for $5,000.00 LESS than what my buyer offered.  So, not only did my Buyer not yet buy a property the Bank got $5000.00 less for a property they are already taking a loss on.  I don't understand the logic???

Both of these scenarios are really putting a negative spin on the already struggling real estate market.  And, those are just two examples.  I know around the Ann Arbor area these are all too common situations. 

Are the banks harming themselves by being in the real estate market?


Comments (3)

Scott White
Land Home Financial Services, Inc. - La Crosse, WI
Sales Manager at Land Home Financial, NMLS 82835

Its better to be good at one thing than mediocre at everything... banks should keep this in mind when they dive into investing, insurance, mortgage loans.. and it now appears... real estate.

Jan 24, 2010 06:58 AM
Randy Schulenburg
Schulenburg Realty, Inc. - Pingree Grove, IL
Schulenburg Realty, Inc.

Logic?  Banks seem to have forgotton the very word in many circumstances.  But in fairness to the banks, they have so much regulation that they can't be swift to move in many cases.  Hopefully the regulators will cut them some slack so that they can move with speed for the best of all involved.

Jan 24, 2010 07:50 AM
Colleen Hood
The Charles Reinhart Company - Ann Arbor, MI

Scott and Randy, I agree with you both.  What are we to do?  With the home buyer credit going away in a few months, at least at this point, don't you think Banks should pick up the pace so we can get some deals closed?

Jan 24, 2010 08:18 AM