A four letter word

By
Real Estate Agent with HomeSmart International

I hate to admit it, but "bank" has truly become a four letter word.

I was sitting at my desk a couple of days ago, when one of my co-workers going thru the MLS, rhetorically asked:  "price increases?....who the heck increases their prices in this kind of market?" I was busy and did not respond, but the question lingered in my head, bouncing around my skull like a shout in an echo chamber.

It was later that evening when checking e-mails, that I recognized the address on one of the"auto-prospecting" messages.  Sure enough, it was a listing where one of my buyers had a $1,000 over LP seller-accepted offer waiting for seller's lender's approval.

I opened it up, and to my amazement, the listing price had been increased from $120,000 to $126,300, and under "Agent Remarks" it read: "original buyer canceled - send all offers"

I couldn't believe it.....the question in the cob-webs of my mind had been answered! ....it was the banks, trying to squeeze every drop of blood out of their "soon-to-be-theirs" inventory....and it was My Buyer!

......they just weren't content with selling the property at market value, they wanted to see if they could get juussst a little bit more!.....and they didn't even give us the professional courtesy (right or wrong) of notifying my buyer and I!!

Maybe in an up-trending market, this kind of strategy would've made sense, but under current conditions, with the seller already in default, and knowing that out here in the west, the foreclosure fuse is only about 90 days long, they just sentenced the seller to a foreclosure on his record.

Not to mention the extra cost of the foreclosure, additional selling time trying to find another buyer, and the potentially detrimental effect on their solvency, of having yet another piece of property on their books.

One other point comes to mind, they just indiscriminately walked away from a contract without even a hint of additional negotiation ..... if you provide the seller with an offer by a willing and able buyer, at full listing price or above, and the seller rejects the offer, ....isn't the seller liable for a commission?

The bank could argue that they were not the seller and that "they", had not signed the listing agreement, therefore, claiming innocence.  They might even encourage you to take "Joe the seller" to court and try to get your commission money.

But, isn't the bank acting as "seller de facto" when they step-in at the end, and make ALL the decisions that are rightfully a seller's to make?....final sales price, any give-aways or concessions, closing costs, choosing the Title company, COE dates, how much commission to pay the Realtors, changing the listing price on MLS, changing the locks on the property, etc., etc.

It would be interesting to see how this scenario pans out in a court of law .... I guess I will soon find out when I send the bank the bill for my commission.

I guess the banks just don't care.  Not content enough with utterly ruining their industry, they are now stepping-in and trying to upset ours.  They make their own rules as they go, ....they are ignorant of real state law, and regard the MLS/Commissioner's rules with contempt.

In short, they are tromping on the delicately balanced world of real estate law and ethics, with the carelessness and clumsiness of a neanderthal.  They handle themselves in a most unprofessional, unethical and illegal manner. 

They need to be made accountable....they need to be stopped....they are out of control...they got us into this mess!  If we go along with them, we will be just as guilty of messing up the real estate industry as they are of the financial system collapse.

Kind of reminds me of the joke about the color gentleman (politically correct?), on his way to get a vasectomy and his friend asks him: " Why are you wearing a tuxedo to go get a vasectomy?" and he responds: "If I'm gonna be impotent, I wanna look impotant!".

So, if the banks want to act like the sellers, they need to become the sellers

The records show that 3 out of 4 short sales fail, and more and more of them are becoming foreclosures due to the inadequate, time-consuming and cumbersome system used by the banks. It only follows, that short sales need to be done-away with altogether, except in the most necessary of cases.

A Short Sale is only a notch above a foreclosure, and it is at par with a Deed in Lieu of Foreclosure.

So rather than the usual walk thru the fog, dictated by THE DEPARTMENT OF REDUNDANCY DEPARTMENT, where we list the property, get an offer, get it accepted by the seller, and then, we start all over again with the bank as the seller, to find out if they'll counter or even approve a contract weeks down the road ....

 .......why couldn't we just eliminate the middle man, allowing the seller to DEED the PIQ to the bank IN LIEU OF FORECLOSURE, and then just treat it like a normal REO?

At the very least, we would be now clear who the owner is, ....we would know that the bank is signing the listing agreement, ..... the commissions would be set as a percentage or a flat fee ahead of time, ....and the banks would be a lot more motivated to get off their butts and move that  property OFF their shelves!!! 

The days when banks were regarded with awe-inspiring admiration, pillars of our society, are long over. 

Today, their image has been reduced to that of bottom-feeders in the lagoon, no longer able to stand up to the greatness they once commanded.

"So far the industry hasn't shown any kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem."  Quote from: How Banks are worsening the foreclosure crisis ...read 2/13/09 article here http://news.yahoo.com/s/bw/20090213/bs_bw/0908b4120034085635

There seems to be something sinister and perverse about the way the banker's minds' operate....and please excuse the frivolity with which I use such blanket statements, I know that individually there are many good people trying to make a living at these institutions.

It could be the intoxicating effect of swimming in so much money .... maybe it is the God-like power they exert over people's lives .... where they can improve or ruin somebody's life with the stroke of a pen .....maybe it's just ignorance or lack of empathy....

....it reminds me in a sick way of a serial killer's profile, where the crime is committed not for the destruction of life, but for the feeling of absolute control over someones life.

Like that old chinese proverb reminds us ..... "we can't put fresh tea in the cup, until we ger rid of the old tea"  ...... so I say, ....cut the rope and let the dead weight fall to the bottom....most of the banks are walking dead already.......as Realtors, let's stand up for our industry and regain our sesnse of professional pride.  

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Will Nesbitt 02/13/2009 09:37 PM
  2. Diane Bell, Hilton Head Real Estate, Bluffton 02/15/2009 05:58 AM
Topic:
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Location:
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Groups:
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Tags:
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Rainmaker
655,982
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Banks are very tough to deal with -- and there is not seemingly much any of us can do about it.

Feb 13, 2009 11:49 AM #16
Rainer
19,543
Federico Astiz
HomeSmart International - Tucson, AZ

I can sure appreciate all this great feedback, and let's remember that this is the 21st century not the 18th. 

Over time, we have evolved at the state and national levels, with a series of rules and regulations about ethics and laws concerning real estate.

These were systematically put into place, and some adopted into laws over time to avoid confusion and litigation. 

Our combined experience over time guided us into the creation of the NAR, each state's Department of Real Estate, various associations, schools, classes, certifications, licensing requirements, you name it.

In time, this common sense, combined knowledge, ethics, integrety and professionalism culminated in where our industry is today.

Bankers originally had a similar process that dictated protocol and reflected honesty, and it was good.

Over the last few years, a new generation of bankers took over.  They changed the rules, they threw out regulation and oversight, they modified the way business was done....they threw everythig their industry knew out the window, and they focused only on making huge profits, at all costs .....they  filled their coffers ....they were unstoppable..... nothing else mattered.

The old saying: "Price is what you pay up front, but cost....you are always reminded of it"....and this time, the cost is incalculable! 

This band of renegades have brought the globe to its knees....and they still don't care, they still act like the only rules are the ones they make, so shouldn't we all be concerned?.

It's not so much about dedication or venting frustrations, as it is about right or wrong, .....about lawfull or unlawfull, .....about ethical or unethical.

Would you engage in a game in which you did not know the rules?  Would you engage in a game where  the only rules were the ones your opponenet made? ....can you imagine the Superbowl with NO rules or regulations, a "free for all" type of game?....it would be insane ....it would be asking for trouble!

So trouble we got!! ...today's state of affairs is the cost we are all paying for this insolence, and very few seem to be doing anything about it.  It is now, affecting the way we do business in real estate.   

Will I sit on the sidelines this time, like we all did during the last few years, as we witnessed the financial catastrophe develop? ......will I sit and say nothing while I watch the real estate industry continue to suffer because of it?.... I think not!.

Many in the financial world saw the writing on the wall but they looked the other way.  I think that as realtors, and protectors of our profession we must look at these people in the eye, no matter how powerful and scary they seem, and say ....THIS IS WHERE WE DRAW THE LINE!....and it starts with me!

The sad part of this dilema is, that WE the realtors, are their biggest allies, we are part of the solution not the enemy, we are in a symbiotic relationship with them ........they just don't seem to see it....God bless them!

Feb 13, 2009 12:39 PM #17
Rainmaker
2,481,479
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

Hey since we wouldn't let the banks in real estate they decided to get with the government to get rid of Realtors next. Where is NAR in all this? We supposedly have all them lobbyist and RPACs and we can't get noting done.

Feb 13, 2009 12:41 PM #18
Rainer
56,808
LYDIA LAMOREUX
ZipRealty - Volente, TX

I guess it's fun to be the block bully when you have your big brother (Federal Govt.) to bail you out everytime you run into a mess. So the banks' ineptitude and greed cause their downfall. You'd think the capitalism would take over and get rid of the chaff, but NO. The big brother steps in and take from the taxpayers (and their kids, grandkids, and great grandkids) and gives it to the brat (banks) who started the trouble. Needless to say, I'm deeply troubled. Let me know what I can do as a member of NAR.

Feb 13, 2009 01:27 PM #19
Ambassador
2,011,077
Christine Donovan
Donovan Blatt Realty - Costa Mesa, CA
Broker/Attorney 714-319-9751 DRE01267479 - Costa M

Many of the banks are not handling the short sales well (though some do fairly well), and I doubt with the numbers out there and likely to increase, it's not going to get any easier.

Feb 13, 2009 03:39 PM #20
Rainmaker
417,264
Debbie Malone
Londeree's Real Estate & Property Management - Lynchburg, VA
From Lynchburg To The Lake (434) 546-0369

It makes no sense....You send them the market analysis, you suggest listing for x amount, the bank want y, they rejects offers, property sits for 6 months, bank reduces price below the offers. Crazy business.

Feb 13, 2009 03:49 PM #21
Rainer
34,084
Zilkia Olmeda-Martins
RE/MAX North - San Antonio - San Antonio, TX
GRI, Realtor, San Antonio Texas Luxury Homes

Sadly, banks are overwhelmed by the number of short sale requests/transactions in the current market.  I don't think that they have figured out how to put good systems in place to deal with these situations.

Feb 13, 2009 04:49 PM #22
Rainmaker
75,034
Jason Neumann
Century 21 Assurance Realty Ltd. - Kelowna, BC
Realtor - www.KelownaRealEstateNews.com

Federico, it sounds like a very unfair system that does not work for anyone at the end of the day.  Take care and happy blogging!

Feb 13, 2009 05:29 PM #23
Anonymous
kzbvintagehomes

The banks are running this country and are only interested in their bottom line..don't give a hoot about anything else...In Sweden they nationalized the banks..our founding fathers believed that capitalism served the democracy...NOT democracy serving capitalism....WE need CHANGE Obama and it starts with the BANKS.

Feb 14, 2009 12:21 AM #24
Ambassador
684,828
Paul McFadden
Paratex - Seattle, WA
Pest Control, Seattle, WA.
Federico: Thanks for the post. It's true banks reputations have been sullied. And its about to get worse. The projections over the next 3 years are that over 100 banks will fail. It just goes to show you not everyone knows what they're doing. Take care.
Feb 14, 2009 01:27 AM #25
Rainmaker
2,558,030
Rebecca Gaujot, RealtorĀ®
Vision Quest Realty - Lewisburg, WV
Lewisburg WV, the go to agent for all real estate

This post really depicts how bad the banks are, and will be in the future.

Feb 14, 2009 02:26 AM #26
Rainer
26,354
Lynn Kenton
Troop Real Estate Ventura - Ventura, CA
Ventura Real Estate

Isn't the listing agent required to notify you and your buyer that the bank turned down the offer? It would be at the least a professional courtesy.

Feb 14, 2009 03:16 AM #27
Rainmaker
314,440
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
858-777-9751

How about we let the darned banks just foreclose those properties and set up their own real estate brokerage divisions?  That's teach 'em, right? How about we force the darned banks to foreclose on those properties and set up their own real estate brokerage divisions? 

Ooops, y'all don't want that competition.

Feb 14, 2009 06:10 AM #28
Rainer
25,795
Sandy Gleason
North Pointe Realty - Buhl, ID
Realtor for Southern Idaho-Magic Valley

This is a whole new world to me. I have done a few short sales but back several years ago, they

went pretty smooth then. We have alot to learn with the new banking system.

Feb 14, 2009 07:54 AM #29
Rainmaker
230,902
Linda Jandura
Raleigh Cary Realty - Apex, NC
Realtor, North Carolina Buyer & Seller Specialist

This band of renegades have brought the globe to its knees....and they still don't care, they still act like the only rules are the ones they make, so shouldn't we all be concerned?.

I couldn't agree more. The Arrogance of the bankers and the previous administration is appalling and insulting to every America.  When Obama was elected he should have been made President within a week. It's amazing how much wrong was done to us average Americans in the last 2 months of Bush's presidency.

Great post and comments. If anyone figures out how we, as Realtors, can change this (and not through the NAR), they should be made King or Queen or Active Rain.  Let's get some kind of movement together.

Feb 14, 2009 10:03 AM #30
Rainmaker
76,753
Jennifer Walker-Derby
Re/Max Westside - Marietta, GA
Real Estate Extraordinaire

I am curious, if this is a short sale and you are trying to go after the bank for your commission, do you know for certain that the bank had agreed to that price at all?  I ask because as the listing agent of several current short sales, I price the listing under market (and where my experience has shown a price that banks will take) and ask for the blessing of the bank.  If the seller and agent placed the price on there, even if at full price, I don't see how you are owed a commission

Feb 14, 2009 10:49 AM #31
Rainmaker
272,675
Ross Quintana
Real E Smarter - Spokane, WA
Real E Smarter Real Estate Coach - 509-362-1966

Yes, it is a game of supply and emand and that ultimately sets the price.

Feb 14, 2009 12:13 PM #32
Rainmaker
325,921
Esko Kiuru
Bethesda, MD

Federico,

It is puzzling how short-sightedly many banks approach their foreclosure and REO problem. They often appear to act against their own best interest. Just plain bizarre.

Feb 14, 2009 02:38 PM #33
Rainer
19,543
Federico Astiz
HomeSmart International - Tucson, AZ

Jenifer,

Thank you for the feedback.  My point exactly. In a short sale youare dealing with a "ghost seller"(the lender).  The owner of title (the seller) has no say on anything, so why even do paper work with him?  Why not just eliminate the middle man with a Deed in Lieu, and just deal directly with the bank from the gitgo?  It would get rid of all the fuzziness and waiting and confusion.

Feb 14, 2009 04:12 PM #34
Rainmaker
375,787
Donna Yates
BHGRE - Metro Brokers - Blue Ridge, GA
Blue Ridge Mountains

I think this is the sort of thing that needs to be sent to our senators and congressmen and women!  It really is time for banks to change the way they do business.  Greed!  Look where we are all because of greed and might I add, incompetence.

Feb 15, 2009 12:27 AM #35
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Federico Astiz

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