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Bank Owned and Winterized! YAY or Nay? Buy at Your Own Risk

By
Industry Observer

Buying A Property in "AS IS Condition"

Huh?Banks have a new way of doing things lately in my area. Seems they ask an agent to list a home for sale prior to putting it on the market at auction. All of these homes are in questionable condition and many have been winterized to hopefully fool mother nature into NOT freezing the pipes. (frequently the results are less than the intended) Very sad houses with no family inside, that are waiting for a new buyer to sift through the MLS and the system allowing them to find this new home.. As an agent this process seems to get worse and as we deal with many banks with an "I don't care attitude"( I do get it, it is business) the process is flawed.

What I find very interesting is that the system has made it more confusing for buyers and their agents. As an agent I am not allowed by my MLS to list a home that can't be sold. I would have to put in "temp off market" and stop showings and any offers. We don't have a "coming to market" status the way it works in other parts of the country. Some way the banks have manipulated this system, figuring out how to get an agent to list the property that is basically unavailable.  The banks hire the REO agent that lists the house with vague terms of an "auction pending", but then no information and no dates as to when this mysterious auction is happening. Great advertising for them, but not allowing the actual agents and buyers any details. The MLS listing states that any agent is welcome to put in a preauction bid with the listing agent, but no information about how this works. The listing agent refuses to speak with other agents and won't return phone calls. Hmmmm.???

Today a client wanted to know about home inspections. We were told that none are allowed for this house. No mechanical inspection as there is no electric or water turned on at this house. The home is not listed significantly low and does have some major outside issues noted that will require repairs. A buyer can bring in an inspector to look at the structure only. This home will not be able to get bank financing. 

The mystery around these homes selling, at what price and when has become more a mystery for buyers when they are looking to view homes. They can't understand why an agent has no information about a home, and what the process is for them top purchase it. In the past there were many hoops to jump through, and a terrible process to navigate. Our new inventory of these homes seems a bit more like buying a blindfold and then wearing it to go house shopping. 

I'm sure that some will be happy to take the risk, but as an agent that sees these homes on the market I find them a nuisance. Buyers want to look at what they can't have and I don't have the time or reason to show a home that can't be sold.

Auctions are dotting the landscape of our foreclosure market. Are you seeing these too?  

Comments (10)

Roger D. Mucci
Shaken...with a Twist 216.633.2092 - Euclid, OH
Lets shake things up at your home today!

The system.....they do seem to complicate most things, so no surprises here.

Apr 24, 2016 09:05 PM
Janis Borgueta

No surprises indeed Roger D. Mucci The banks know exactly why things work the way they do and are running the show. Clients only hear what they want to and the process can get really ugly. 

Apr 24, 2016 09:12 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Janis. No, not seeing what you are describing in my area. Would not want to be the listing agent unless paid in advance for my time and loss of reputation. Enjoy your day!

Apr 24, 2016 09:16 PM
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Janis - Reading your post has made me glad all over again that foreclosures have all but disappeared from our market. The banks have never accommodated our systems or good sense in their approach to real estate sales.

Apr 25, 2016 04:43 AM
Janis Borgueta

We still have them and they are not going away all that fast.  The banks rationed them out over the years and are in total control of how this plays out. Seriously flawed system. I wish we could be done with this, but I am afraid that is just a dream.

Apr 25, 2016 05:18 AM
Andrea Bedard
Thompson Company, REALTORS® 240.593.2860 - Silver Spring, MD
Fluent in Real Estate & German, M.A. ABR ASP CIPS

Could the "sellers market" (or perceived) have anything to do with it Janis? You know they figure they'll do it just because they can?

I've also seen the auction listings in our local MLS.. it's a grey area IMHO. They have no intentions of selling it the "normal" way, they just want to advertise the auction. And that would be why the listing agent is not responding, me thinks.

Apr 25, 2016 01:09 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Janis we have virtually no REO's and this game was never played, you can inspect the daylights out of the property but do not expect to get a discount for it...the choice is buy it or do not buy it... simple...Endre

Apr 25, 2016 02:48 PM
Janis Borgueta
Newburgh, NY
Retired RE Salesperson

Yes indeed. The buyers know that the home inspection is "for info only" that is not the problem. The problem lies more in the way the banks/agent is using the MLS and not allowing for an exchange of information that is important. It goes to auction without anyone knowing when. They have no intentions of allowing agents to actually have access. It is for the auction company to use as an advertising tool. Yay for them, smart business. Our biggest problem is that our clients see these listings and think we are not doing our jobs. They are abusing our MLS.

Apr 25, 2016 10:10 PM
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in Southern RI and beyond

Janis, what we find here is similar...piping, heating & all gone..you are buying the land & everything else is a bonus I tell investors!

Apr 26, 2016 09:31 PM
Janis Borgueta

These are $500,000 houses sometimes Ginny. One right now has the previous owners living in it. (not sure how that is happening) No viewings at all. The situation is ugly as the people wanting to buy are NOT investors. 

Apr 26, 2016 09:35 PM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

This is a strategy they have been using for awhile. I tend to think the auction companies are pushing this method and sometimes it works and sometimes it doesn't. I had a few properties that actually sold like this. In some cases the auction comes with a full set of tenants that haven't paid in months and the new buyer has to deal with them too.

Apr 26, 2016 10:54 PM
Janis Borgueta

All sorts of bad scenarios indeed. It seems that the banks are letting the auction houses do their thing. I have no issues with that until it hits our MLS. It clouds the system and makes for some really difficult problems when clients don't believe us. We get blamed for oh so many things, and this is another one.

Apr 26, 2016 11:53 PM
Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

Hi Janis, interesting article.  Looking forward to seeing you at my Meet Up in May!

Apr 27, 2016 02:11 AM
Janis Borgueta

It is on  my schedule and someone is going to have to have a REALLY good reason to keep me from joining you this time!!!!!


I can't wait! What can I bring? I'm thinking a fancy salad of sorts??

Apr 27, 2016 02:14 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Janis Borgueta ,

Thank goodness we have few foreclosures and even those are overpriced! The banks are so busy they don't have time or the personnel to over see these type of transactions so are letting the auction houses do what they please.

Apr 27, 2016 10:10 PM