Institutional Sellers -- What do they think they're selling?

Real Estate Agent with 281-804-2291 0549609

Buyes should be open to all options when it comes to purchasing a home.  Foreclosures are not always the best deal.  Sometimes it can be a short sale or part of an estate or even a divorce.

Original content by Bob McCranie 0503820 TX
Over the last several months I have been showing a lot of houses. Ninety-One homes in 60 days to be exact. Probably 70% of the homes I am showing are owned by "Institutional Sellers", banks, Fannie Mae, and HUD.

Many buyers think that these homes are a bargain. It makes sense, you would imagine that they could buy a distressed home for a big discount. Unfortunately that's not how the institutions see it. I have found that these institutions want to hold to their prices despite the condition of their houses. They take a long time to respond and work multiple offers simultaneously.

When one of my buyers got frustrated that HUD would not discount a home for the condition, I told him this: "Imagine you're asking an ATM for a loan. It's a machine. It doesn't care how much you may need or deserve the loan. It only know how much it can give you." The institutions are machines. They look at the numbers and hold out for what they want.

My personal opinion is that it is still better to buy a home from an individual seller who actually wants you to buy their home, who often discount their price to meet the distressed homes, and who offer compensation for repairs. They provide seller's disclosure and often stage the home so it looks presentable. So think about it before you make a purchase that seems penny wise but ends up being pound foolish.

Bob McCranie
Texas Pride Realty - Broker / Owner
972-754-0582 cell 469-574-5108 fax

Copyright © 2011 All Rights Reserved

Texas Pride Realty

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Comments (5)

Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

The real problem is it is not a machine but functions like one.  It's a machine that does not think.

Apr 24, 2011 06:17 PM
Catherine Ulrey
Keller Williams Capital City - Salem, OR
Equestrian and Acreage Property Specialist

It cracks me up when someone contacts me only interested in foreclosures.  "Really?  Do you really know what you are giving up?"  And then I explain all the drawbacks.

Apr 24, 2011 06:18 PM
Beverly Femia
BlueCoast Realty Corporation - Hampstead, NC
Broker Realtor Stager - Greater Wilmington, NC Are

Some of the "dogs" that couldn't sell any other way are now being snapped up like delicacies.  It's so ridiculous.  I completely agree that much better homes could be bought for very similar prices.  Especially once the cost of updating is included and most need some updating, renovating or repair.   

Apr 24, 2011 06:38 PM
MichelleCherie Carr Crowe .Just Call. 408-252-8900
Get Results Team...Just Call (408) 252-8900! . DRE #00901962 . Licensed to Sell since 1985 . Altas Realty - San Jose, CA
Family Helping Families Buy & Sell Homes 40+ Years

A machine that doesn't think, that is exactly what it is.

Apr 24, 2011 06:51 PM
Doug Bullwinkel
Envoy Mortgage,NMLS ID 6666 - Sacramento, CA
Mortgage Loan Originator NMLS #281609

One of the problems is discounting these properties at a bargain price is that the next seller won't be able  to get their appraisal to come in at the normal value, due to most recent closed comparable sales.  The giveaway prices now become the new market value for the neighborhood.  The banks are pathetic is their ability to get short sales approved in a reasonable time but there is a good reason for not giving away these homes.

Apr 24, 2011 06:54 PM