Oh, That Wild and Wooly World of REOs: You Never Know What Will Happen!

By
Real Estate Agent with Lyon Real Estate BRE #00697006

reo tipsREOs buyers are some of the most patient buyers in the world, right next to those short sale buyers. While my heart goes out to them, I don't understand how they can withstand the pressure and wackiness of waiting for an answer to their purchase offer. In some ways, sending offers for bank-owned homes to listing agents is like dumping them into the great abyss.

Last week, I wrote an offer for buyers on an REO home in Natomas (Sacramento). Let's say it was priced at $325,000, just to disguise which home I'm talking about. The buyers offered $300,000. The listing specifically stated that the buyer needed to submit a preapproval letter from a particular lender -- not that the buyer had to actually get a loan from this lender, mind you. We called that lender's rep 5 times last Monday and never received a call back.

So, I submitted the offer with a preapproval letter from a corresponding lender and suggested the buyers continue to call other branches of that lender to find a different representative. On Tuesday, we received the preapproval letter from another branch and resubmitted the offer.

I called the listing agent 3 times on Monday and sent him 2 emails asking if he had received the offer. I wasn't asking how many offers the listing agent had received because most don't return phone calls like that. I also wasn't asking what price the bank may accept, because I realize the agent has no idea and it would make me look like I didn't know what I was doing. In fact, I wasn't asking for any information except for acknowledgment of receipt. I called him a few more times on Tuesday and Wednesday, sent another couple emails. No response.

On Thursday, MLS showed a price reduction from $325,000 to $299,000. Now, the price was less than the buyers offered.

Finally, I called the listing agent's managing broker and left him a voice mail asking if he could please verify whether the listing agent had received the offer.

The managing broker did not return my call until the following Tuesday, but, hey, at last he called me back. Immediately after speaking to him, the listing agent called. It took the listing agent only 9 days, but who's counting.

He said the bank had received an all cash offer for $335,000 a week ago and was not accepting any other offers. My heart sank. Of course, he should have noted the sale was pending in MLS but he had not. Wait, this gets better. Then he said somebody else at the bank authorized the price reduction to $299,000, and when the all-cash buyers saw that price reduction, they freaked out. They decided something must be seriously wrong the property, so . . .

The all-cash buyers had withdrawn their offer!

Made me wonder what kind of representation those buyers had and why their agent didn't explain to them how this wacky world of REOS works. The left hand doesn't know what the right hand is doing half the time. Hey, at least we were back in the game. My heart was all happy again.

As a result, the bank now wanted to look at other offers. However, the bank was not going to consider offers without a preapproval letter that contained the buyers' mid-FICO scores. Since our preapproval letter did not contain that particular requirement, our offer would not be considered.

Quickly, the buyers contacted the loan rep at the REOs preferred bank to request a new letter with their mid-FICOs. The loan rep refused to send the new preapproval letter until she verified this new requirement with the listing agent. I was getting ready to call HER supervisor when suddenly the new preapproval letter with the FICOs appeared on my fax. The buyers decided to sign an addendum increasing their offer above list price to better compete against the other offers.

It has been resubmitted, now for a third time.

I emailed one of the buyers: "Can you hear me tapping my fingernails on the desk?"

The buyer responded: "Can you hear me banging my head against mine?"

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Elizabeth Weintraub is an author, home buying expert for About.com, a Land Park resident, and a veteran real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento, as well as tract homes in Elk Grove, Natomas, Roseville and Lincoln. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area with an emphasis on Elk Grove. Call Elizabeth Weintraub at 916.233.6759. Put 40 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. BRE License # 00697006.

The Short Sale Savior, by Elizabeth Weintraub, available with free shipping.

Photo: Unless otherwise noted in this blog, the photo is copyrighted by Big Stock Photo and used with permission.The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate. Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice; it could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Paul Francis 08/14/2008 09:22 AM
Location:
California Sacramento County Sacramento Natomas
Groups:
Realtors®
California Short Sales, REO's, and Foreclosures
Lyon Realtors
Club Chaos
Diary of a Realtor
Tags:
sacramento
natomas
reos
bankowned homes

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Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

Elizabeth, what can I say with regard to your story. Aren't REOs fun? Don't bang your head. You're too pretty and we don't need to see your photo with bruises.

Aug 14, 2008 06:10 AM #12
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Russ Ravary ~ Metro Detroit Realtor call (248) 310-6239
Real Estate One - Commerce, MI
Michigan homes for sale ~ yesmyrealtor@gmail.com

You have to love banks they never have it all together.  Which department really has it

Aug 14, 2008 07:47 AM #13
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C Tann-Starr
Tann Starr & Associates, Inc. - Palm Bay, FL

Elizabeth, what can I say. That was priceless... :-D

Aug 14, 2008 07:54 AM #14
Rainmaker
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Paul Francis
Francis Group Real Estate - Las Vegas, NV
Las Vegas Real Estate Agent - Summerlin Homes

Elizabeth,

Nice post... went through the same thing. For some reason I see horses in the banks logo that you are talking about...

Aug 14, 2008 09:03 AM #15
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Terrie Leighton
Ferrari-Lund Real Estate - Reno, NV
Reno Real Estate Agent ~ Selling Homes in Reno

I think I would have hand delivered the offer to the seller's agent just to get a response out of him! It was frustrating just reading this because, unfortunately, this an all too familiar story!

Once this deal is over for you, the good news is your buyers will love you and respect your patience and professionalism!

Aug 14, 2008 09:08 AM #16
Rainer
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Debbie Small
Long & Foster Realtors - Martinsburg, WV
REALTOR

REO & short sales...enough to drive anyone nuts. Thanks for posting your story.

Aug 14, 2008 09:44 AM #17
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

This is so typical.  Other than short sales, the foreclosure can be the most mishandled transaction in the world of real estate.

I have come to the conclusion that banks hire listing agents based on the length of time it takes the agent to return the qualifying letter.  The last letter gets the listing.

Our foreclosure inventory could be cut in half in 60 days if banks hired real estate brokers to handle these sales.

Aug 14, 2008 11:48 AM #18
Anonymous
Bob Church

Great to have some company. Although I suspect there are many others out there as well. I have a young couple I started working with back in February. Don't have much, can't afford much, so the REO route was their ticket to first time home ownership. Well after 3 go rounds with HMBI and 3 contract extentions and two different lenders we close next Tuesday, 6 months later. List agent ? Well they just list the property, never do a thing with it after that except pick up a check after close in their mailbox. Hang in there everybody it has to get better.

   

Aug 14, 2008 12:32 PM #19
Rainmaker
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Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Chris hit the nail on the head. It is a drunken merry-go-round. At least if you're drunk and on a merry-go-round, I'd imagine things would appear a little blurry as you leaned out and tried to grasp the brass ring, because you could see it, although not clearly. In some of these REO situations, it's like you're tossed barefoot into the desert without a map and no water.

And Carolyn, your prices are a bit higher so maybe you have room for a $100K negotiation, no? Or are your buyers simply so uneducated about the REO process that they think they can get Oak Park prices in Davis? I have worked with some really great REO agents. Some have systems in place that automatically notify you when they receive your offer.

The thing is, Lenn, where are banks going to find an agent to handle REOs sans volume and still be happy they're paid their measly two bits? Often they whittle down the listing commission so low that the agent needs to do 100 deals to make any money, so they can't afford to pay attention to the listing.

Paul: You are very perceptive.

Everybody else: Thank you so much for responding. I'm sorry that I don't have time to respond to each and every one of you individually, but the truth is I'm working on a book and juggling my own deals to such an extent that there are no hours left in the day.

elizabeth weintraub sacramento land park real estate agent

Aug 14, 2008 01:06 PM #20
Rainmaker
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Cameron Wilson
Labrum Real Estate - Murrieta, CA
The Short Guy - Murrieta,Temecula,Menifee Californ

 It's no wonder buyers get frustrated and move to another property. When I have an Asset Manager who doesn't respond in a timely manner I email them for a response until we get it. Some of the AMs are handleing 300 + files and they overlook things at times.

Aug 14, 2008 01:23 PM #21
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Ronald Gillis
Southwest Florida Notaries (Mortgage Notary Signing Agent) - Port Charlotte, FL
CNSA Southwest Florida. Notaries, Port Charlotte, 941-7-NOTARY

HEY, when did you stop by and take my picture while working?reo tips

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Aug 14, 2008 01:28 PM #22
Rainmaker
236,381
Debbie Summers
Charles Rutenberg Realty - New Smyrna Beach, FL

Elizabeth, It's all about the listing agent! I'm working an REO and the buyer had an answer in 48 hours. So far, so good!

Aug 14, 2008 01:47 PM #23
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Brad Andersohn
Executive Director of Education at eXp Realty - Fairfield, CA
ActiveBrad - 707.646.1876

Elizabeth, That has got to be one of the best smiley trolls I've ever seen.  Your post isn't too bad either, congrats on the feature and thanks foreclosing foresharing this.   :-))  

Aug 14, 2008 02:27 PM #24
Rainer
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Carolyn Gjerde-Tu-Davis
Lyon Real Estate - Davis, CA
Ca Real Estate

Eizabeth, my typical REO buyer is not looking in Davis (there are very few REO's here) but are looking in Woodland, greater Sacramento or Dixon.  My Davis clients still are making offers with "traditional" sellers.  For some reason the majority of the buyers I have been working with in the past few months have been under $250,000.  There are a lot of homes out there in that price range, but there is also a lot of buyers who had been priced out. 

Aug 14, 2008 03:46 PM #25
Rainmaker
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Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

May your buyers get the home. These sorts of stories are more frequent that one would think.

Aug 14, 2008 06:30 PM #26
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Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

Last year we were swamped with Pfizer relo people, you relocate that many sellers and you expect it. I waited for 8 weeks to get a good offer back, verbally they had accepted, however the relo company would not let us do inspections until it was signed.

Finally we got the signed offer back, had a few days to do inspections, all of mine were busy so they had to hire a different one. Mistakes were made that were huge.

It all comes down to the agent on the other side, if they are communicating with you and you can trust your verbal acceptance. This year I listed a Pfizer home and it went fine, but there wasn't 1000's of people relocating.

Aug 15, 2008 12:05 AM #27
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254,432
Robert Machado
HomePointe Property Management, CRMC - Sacramento, CA
CPM MPM - Property Manager and Property Management

I have seen everything from quick acceptances to completely ignoring my offers.  I just  figure the bad ones were not meant to be so I move on.  What else can you do?

Aug 15, 2008 04:34 AM #28
Rainmaker
2,173,631
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Cameron: I know what you mean. I've talked to AMs who are handling more than 400 files a month.

Hi Debbie: Lots of agents right now are on vacation, too. I've worked with very responsive REO agents, and they sure do make your job easier.

Hi Brad: I kinda liked the smiley guy myself!

Hi Carolyn: I suspect the reason you have so many buyers under $250,000 is because that's where the buyers are.

Hi Bob & Carolin: Well, they got it, so all that patience paid off!

Hi Missy: Being overworked and overloaded can put a damper on communication. Some agents just let their v/ms fill up so they don't have to listen to any more v/ms.

Hi Robert: I've never had an offer ignored. But I'm kinda pushy. Persistence, my fellow. That's what you need. :)

elizabeth weintraub sacramento land park real estate agent

Aug 15, 2008 06:55 AM #29
Rainmaker
182,295
Debra Kukulski, Broker Associate
RE/MAX Unlimited Northwest - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

You just never know what to expect with the bank sales, except expect to be patient!  Good point that it is not only the banks and asset companies that take so much time to respond, but even the selling agents in many cases.  I have found that in most cases the REO's have a quicker response than the pre-foreclosures and short sales.

Oct 10, 2008 01:16 AM #30
Rainmaker
2,173,631
Elizabeth Weintraub Sacramento Real Estate Agent, Top 1% of Lyon Agents
Lyon Real Estate - Sacramento, CA
Put 40 years of experience to work for you

Hi Debra: Absolutely, REOs are much faster than a short sale, no doubt about it. Some can't close within 30 days but the majority of REOs close within 45 days.

elizabeth weintraub sacramento real estate agent in land park

Oct 10, 2008 04:50 AM #31
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