Massachusetts Real Estate

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Buying a Bank Owned Home

                                                                                                                                                      Buying a Massachusetts bank owned home

In a recent article I wrote about buying a foreclosed home or potential foreclosure property, I discussed the various ways in which you could obtain ownership of a foreclosure. Here is a quick summary of the three scenarios:

  • A pre-foreclosure where you buy directly from the home owner before the bank takes over.
  • At an auction where you may be in competition with other buyers.
  • From a Real Estate company or the bank itself. This is known as an REO aka Real Estate owned.

Here is what you need to know about scenario #3 ~ buying a bank owned home.

The opportunity to buy a bank owned home is one that many buyers often consider due to the fact that there is a prevailing belief that you can buy them for 50 cents on the dollar or less. While as a general rule many bank owned properties do represent a good Real Estate value, you are more likely to be able to purchase one for around 5-20% less than the going rate for a similar comparable property.

Buying a foreclosed home however, is not for the timid at heart and there are many things that buyers need to be aware of going into a REO transaction.

Hire a top Massachusetts Realtor when buying a homeOne of the 1st things you should investigate when you become interested in an REO property is the present market value. This is something a skilled local buyer's agent can do to help you.

A Realtor that knows the local inventory and recent sales data should be hired to help you with the transaction. While a banks goal is to get rid of their inventory as fast as they can, don't expect the bank to consider silly low ball offers especially when the home is 1st listed for sale.

In my experience while working as a Massachusetts Realtor for the past 23 years, I have never seen a bank accept anything less than 10% under the asking price. In many cases the price has already been set aggressively to begin with. Like every other seller the banks goal is to maximize the price they receive for a property.

What most people fail to understand is that banks have to demonstrate to shareholders, investors and auditors that they attempted to get the highest price possible.

It is not uncommon for a bank to reduce the price of a home in their inventory after it has been on the market for a while. A bank after all is not in the business of holding Real Estate.

Do not make the poor assumption that banks are desperate sellers and will do anything to clear out their properties. This is rarely the case!

In order for a bank to consider accepting your offer you are going to want to make sure you have been pre-approved by a lender. Most banks will not even consider an offer without proper financial documentation. If you are making a cash offer with no financing contingency be prepared to show the bank proof that you have the funds in an account somewhere. Most banks will require this as well.

Some banks may also ask you to get pre-approved through them as well although it can not be a requirement to do so due to RESPA laws. RESPA stands for Real Estate Settlement Procedures Act as is designed to protect consumers.

Often times with a bank owned property patience is a virtue. In many cases the bank will take days to respond to your offer. Also remember that on weekends banks do not conduct business so you are losing a few days in the week. The process can be even longer if you find yourself competing with multiple offers on the property.                                                                                                                       Buying a Massachusetts REO property

When you buy a bank owned property be prepared to be buying it "AS IS". Most banks will not make repairs to a property unless it would effect the buyers ability to finance the property. Some of the things that more than likely a bank would be willing to remedy could include:

  • Termite or other insect problems
  • Mold issues
  • Plumbing or heating system issues
  • Electrical issues especially if it involves a safety hazard
  • Septic systems ~ some states require a passing inspection in order to close, including Massachusetts
  • Structural issues

While these are things many banks would consider remedying, don't assume that it would happen in all circumstances. Every bank is different in how they operate and make decisions. Do not expect a bank to make ticky tack repairs - it is not going to happen! You may be able to possibly get a credit for some repairs  at closing but do not expect it.

Most banks have their own contracts that they use. You will be expected to sign their standard form and in most cases you will not be able to make any changes to it! I have seen attorneys try and more often than not they are rebuffed.

Real Estate contract when buying a bank owned homeMassachusetts is different than many states in that we have a two part contract including an offer form and a purchase and sale agreement.

The purchase and sale is a more detailed version of the terms and conditions found in the offer. With a bank owned home you will just sign the banks form and that will be considered the Purchase and sale.

In most circumstances you will be given the opportunity to conduct inspections even though the property is being sold "as is".

It is important that your Realtor makes sure that you have proper contingencies in place that cover your ability to inspect the property for such things as the structure, pests, mold, radon , water, and others.

You will want the right to terminate the contract if these do not meet local or national standards. Be aware that the bank is going to want these inspections to be done immediately.

Lastly, banks will prefer that the closing will be sooner rather than later. You will not see the same flexibility that you could possibly get with some traditional home sellers. As a rule of thumb, most banks will want the closing to take place in 6 weeks or less.

One really important clause that you find in many bank owned contracts is the penalty if you do not close according to the stated contract date. In most cases there is a $100 dollar a day penalty for not closing on time! You better make sure your ducks are in order when buying one of these properties.

One little known issue that most consumers would not think of but that has hit close to home with me is the lack of great representation of the part of Realtors working with bank owned homes. Honestly, I have seen some of the worst Real Estate agents representing banks as listing agents. The issue starts with the fact that banks have not divvied up the business well. There are far to many Realtors that have a stranglehold of all of a particular banks REO business.

As an example I just completed a transaction working as a buyers agent on a bank owned property in whichTerrible Real Estate agents working with REO properties the Realtor did not return calls, changed the commission without notification, misrepresented something the bank did not agree to repair, did not check to see if the home was winterized properly, and did not attend any of the inspections.

I never met the agent during the entire transaction!! She did not even bother to attend the closing. It was a nightmare throughout and the communication frankly SUCKED!! Most of my time during the process was complaining to her about not getting back to me with answers to simple questions.

It got so bad during the process I had to call her broker owner to complain. He apologized sheepishly but made the excuse that she was too busy.

She was the biggest Real Estate clown I have ever seen in twenty three years in the business. The perfect example of an agent that sullies our industry. A quick check revealed she had 31 bank owned properties!!

There has been some talk about banks breaking up the monopoly that some Realtors have on the bank owned inventory but so far that has not happened.

So while many banks owned properties can offer exceptional values there is quite a bit to know. Having professionals in your corner who can guide you and protect your interests is very important. I always recommend to my buyer clients that they use a good Real Estate attorney, especially when buying a bank owned home.

Also see article at Buying a Massachusetts bank owned home.

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About the Author: The above Real Estate information on Buying a bank owned home was provided by BillRE/MAX Executive Realty Metrowest Massachusetts Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

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I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

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Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comment balloon 116 commentsBill Gassett • April 21 2009 07:00AM

Comments

Bill, this is excellent, I think I will send the link to everyone who asks me about what a steal bank owned home HAVE to be! We live in a house that we purchased in 1992 during the S&L Crisis an yes it was a bargain but also a nightmare! Great post!

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) over 10 years ago

what is interesting, I have found that some lenders, lately, have been willing to make major repairs..I have had one even replace the hvac ..i suppose if you don't ask you won't know. :) Don't assume they won't fix anything :)

Posted by Konnie Mac McCarthy, Broker/Owner - VA & MD "Time To Get A Move On!" (MacNificent Properties, LLC) over 10 years ago

Excellent.  Excellent.

The brokers and agents in my network sell foreclosures daily.  I receive phone calls and e-mails from consumers wanting to buy foreclosures daily.

I just have to separate the serious home buyer from the investor/negotiator.

It's a tough job but someone has to do it.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 10 years ago

Bill I have to come back and read this...I am on my way out the door!  I can see it is vital and great info..so I bookmarked it for reading..but I'll be back to comment! :)

Posted by Midori Miller, Online Marketing For Real Estate Professionals (Talk 2 Midori, LLC) over 10 years ago

Russell - Some of the banks owned homes certainly represent a good value but they are not without their problems. I have found the agents involved with them to be very difficult to work with which makes the process even harder to deal with.

Konnie - I have seen them willing to make repairs on larger items as well but they are usually things that the bank know HAS to be fixed like a heating system for example or burst pipes from an improper winterization.

Lenn - I am not suprised you get a lot of business from foreclosures/REO'S as they do represent some potentially very good values.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

This post is really a primer on how to buy foreclosures. it is full of information and well done! Thank youso much for the obvious time and thought you put into this

Posted by Charlie Ragonesi, Homes - Big Canoe, Jasper, North Georgia Pros (AllMountainRealty.com) over 10 years ago

Our busy REO agents here carry anywhere from 150-well over 300 listings at a time so if you call forget getting a response it's true most are overwhelmed and also most bank owned property in our area sells for over asking price now with multiple offers.

Posted by Heather the Realtor Orlando, Lake Mary, First Time Home Buyers, Bank Owned Homes (LemonTree Realty) over 10 years ago

Bill, Great primer on bank owned properties. Some buyers don't want to look at anything else because they have this false assumption that they're going to get such a great deal just because its a foreclosure. Rich

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) over 10 years ago

Charlie - Thanks for the compliment. Buying a bank owned home can have it's ups and downs for sure. As a buyer, the end result can be satisfying if the home does not have a lot of problems.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Heather - There is no doubt that the banking industry should be doling out the listing business on bank owned properties much better than they have. There is a monopoly in the industry at the moment and the consumer ends up suffering with very poor service from agents that just can't keep up. I would love to get in on the action with REO'S but every time I apply to most of the companies they say they already have enough Realtors.

Richard - You are right. I have spoken to a few buyers that just want to focus on foreclosures.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Good information for consumers. REO homes are selling at a rapid pace in the Maryland suburbs of Washington DC.  Many buyers are using FHA 203(k) financing to cover the needed renovations.

Posted by Roy Kelley (Realty Group Referrals) over 10 years ago

Roy - The bank owned homes have been selling very rapidly here in Massachusetts as well. Many of them are in the lower price ranges and are being scooped up by 1st time home buyers.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill-This is an excellent post for both the consumer and for Realtors, no one is to busy that they can not return phone calls. If you can not service the banks best interest, then you are a diservice to the bank and a disgrace to all Realtors.

Posted by Joseph D. Federico, Eastern Massachusetts Real Estate (Donahue Real Estate Co.) over 10 years ago

Bill, this is great. I sent the link to one of my buyers. One thing I've recently run into: the agent has the houses listed as accepting FHA, VA, Conv and Cash. But when I presented an FHA offer she said they probably won't take it. The bank will wait for a Conv so they don't have to make repairs. Gotta love it!

Posted by Dena Stevens Coriz, Putting The Real Into Realtor Since 2004 (Rocky Mountain Realty ) over 10 years ago

I'm too finding buyers only wanting to look at bank owned.  They think the bank just gives them away.

Posted by Mark Watterson, Utah Real Estate over 10 years ago

Bill, excellent.

We get calls everyday from people who want to buy a foreclosed home. True, very few REO agents get back to you.

The issue I am seeing here is this:

  • Buyer gets approved
  • Home comes on the market
  • We quickly go show it, write an offer.
  • 3-15 other offers come in
  • Now it is over what our buyer is qualified for
  • Another one bites the dust
  • The listing price MEANS nothing on foreclosures in our area.
Posted by Missy Caulk, Savvy Realtor - Ann Arbor Real Estate (Missy Caulk TEAM) over 10 years ago

Hi Bill - Excellent information!  We will bookmark it for reference.  One thing we have noticed about foreclosures is that the transactions are like the little girl who was always very bad or very good!  They're usually memorable transactions!  Luckily, we don't have many homes foreclosed in this retirement and second home community although we do handle lot foreclosures regularly.  Those are easy compared to homes.  Thanks for the info and have a great day!

Mary

Posted by Bruce & Mary Smith, REALTORS, Savannah Lakes Village McCormick SC (Savannah Lakes Homes) over 10 years ago

Bill - Another "wow" article you wrote. It is really a shame you had to deal with an agent, who was not cooperative. I can't think that it would help the bank having listing agents who can actually break a deal with their lack of involvement. But then again, it makes agent's like you that are willing to go the extra mile for the clients. Congratulations on your well deserved feature!

Posted by Petra Norris, Realtor, Lakeland FL Homes for Sale (Lakeland Real Estate Group, Inc.) over 10 years ago

Bill, I think it would be opitmistic to expect an answer from a bank in days...I've seen months and months! Great information!

Posted by Linda Greco Rich, ABR, SRES, Harford County Specialist (Exit Preferred Realty) over 10 years ago

GREAT post AGAIN!  I love how you dig deep for ALL the pertinent details that are so helpful to know about.  I actually sold my "baby girl" a Bank Owned home last year and it was an interesting experience.  Worth every minute of it in $$$$ in her equity pocketbook though!  I think we will see more and more of these come available this year.

HAVE A GREAT DAY!

Posted by Debbie Hutchins over 10 years ago

Bill - Good work, as typical.  As Roy mentioned, the FHA 203(K) Loan can be a wonderful product for buyers of these properties.  Yet, as you pointed out, vicious rumors of buying properties at "steals" can offer more fluff than fact.  If folks have the facts, it makes things a lot less tedious than they have to be.

Posted by Jason Sardi, Your Agent for Life (Auto & Home & Life Insurance throughout North Carolina) over 10 years ago

Out team does both short sales and foreclosure listings. The key is always pricing. The advantage of foreclosures in our market seems to be that the discount off the market value is greater. Short sales for us are in greater abundance, and it allows out buyers who are waiting for a home that fits their parameter to find more choice. Because our market has not lost value, short sales are ususally in the 20% off market price. Foreclosures double that to 40%. It depends on the buyers patience as to what they choose. 

Posted by Joe Pryor, REALTOR® - Oklahoma Investment Properties (The Virtual Real Estate Team) over 10 years ago

Hi Bill- good information-there is so much information and education out there about foreclosures, and it is becoming something we all need to be versed in.

Posted by Cindy Edwards, CRS, GRI, PMN - Northeast Tennessee - 423-677-6677 (RE/MAX Checkmate) over 10 years ago

Bill,

Great summary! I've listed and sold quite a few bank-owned properties and done BPOs on countless others.

Started to write a long comment but then decided to do a blog on why REOs are a dream come true.

So thanks both for your post and for the inspiration!

Irene

Posted by Irene Kennedy Realtor® in Northwestern NJ (Weichert) over 10 years ago

Great post and information.  I am sure this agent actually was a clown but the complaining about REO agents really has gotten bad in the last month on here.  i have an reo agent on my team and often hear that he isn't a great comunicator (much like the posts i read on here)  However here is the truth about REO agents.  Most of the time they are beyond busy.  For the average REO agent they are up and working about 2 hours before anyone.  They are getting the locks changed, doing an occupancy check or trash out on the new listing.  After a morning of doing all that (much more with in AZ and CA due to laws and pools.)  My guess is this agent with 31 listings is pretty busy make sure the bank her clients needs are met.  While the agent might not communicate great with you you can be assured she does to her client the Bank.  The agent has to reoprt to them weekly and often update the market info.  During this time the agent is getting hammed with calls about offers that are contingent on other homes selling and complains about why do i have to prequal with your Bank?  I am sure many of these agents receive the complains they deserve but seeing how much work goes into the listings on my Team i can tell you he is one of the best agents i know. 

Posted by Marcus Valdez (Berkshire Hathaway Rocky Mountain Realtors) over 10 years ago
Excellent advice Bill, thank you again!
Posted by Samantha Nichols, Massachusetts Real Estate Specialist (ERA Belsito and Associates) over 10 years ago

Bill it is funny that you should write a blog on this today, because I was going to right one today about a loan that I have going on right now that is on a foreclosed property.  And to say that "Buying a foreclosed home however, is not for the timid at heart" is no stretch.  Buyers better be ready to be patient.

Posted by George Souto, Your Connecticut Mortgage Expert (George Souto NMLS #65149 FHA, CHFA, VA Mortgages) over 10 years ago

Bill--Your story of the real estate clown is no laughing matter...pun intended there. Buyers need to realize that some (Not ALL but some) REO agents can be so busy they don't bother to return calls and sometimes so arrogant they don't think they need to play by the rules. They work for the bank...that's it. Buyers need representation in REO.

Posted by Teri Eckholm, REALTOR Serving Mpls/St Paul North & East Metro (Boardman Realty) over 10 years ago

Bill: Thanks for the information. I appreciate it! I've heard these are not necessarily fun transactions for you guys to do. But it also represents an opportunity and I wish you well with it. Take care.

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) over 10 years ago

Bill - I'm sorry you had such a bad experience with a bank-owned property recently. (Great Post, btw) I wish we could do a bank-owned deal together. I think you would have a completely different take on it ;-)

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) over 10 years ago

Bill,

This is a very thorough explination for buying a REO property.  I am finding that the bank that I list for is getting more aggressive in their pricing and looking to get them off of the books in 30 - 60 days.

Posted by Don Rogers, Realtor, Broker, CDPE, GRI, OnullFallon MO & St Charles County MO homes (Keller Williams Realty Chesterfield) over 10 years ago

Bill, excellent analysis for a potential buyer, many times prospects are trolling for deals in the Bank owned category they assume a big discount can be had. The listing agent has had a hand in setting the price based on a lot of things..so that is very close to the price it will sell at. Steve

Posted by Steve Loynd, 800-926-5653, White Mountains NH ( Alpine Lakes Real Estate Inc., ) over 10 years ago

Bill, very timely. The majority of sales in our area are foreclosures and short sales and everyone is looking for that great deal. The properties that have been vandalized, are the deals that the investors get for virtually the value of the lot.

Posted by Ed Silva, Central CT Real Estate Broker Serving all equally (RE/MAX Professionals, CT 203-206-0754 ) over 10 years ago

Bill -- great detail, I get so many inquiries from people looking for a "deal"... they all want foreclosures, there are not many bank owned properties in our area (if they are they are VERY scary) The buyers think they can go in an offer a low-ball price to the bank... your sales to list price ratio is good to "enlighten" them with. Also is the fact the bank will be looking for a quick closing as compared to a traditional sale and to be very careful about the "AS IS" clause.. working as a buyer's agent you will need to make sure they maintain the right to inspection and have a way out if there is a major problem!  Thanks

Posted by Patty Mortara REALTOR CRS | Hunterdon County (NJ) (Hunterdon County Homes) over 10 years ago

GREAT info. Thanks for this post!

Posted by Realty Dot Com (Realty.com) (Realty.com) over 10 years ago

As always, you have provided very good info Bill. I'm not a fan of the bank addendum but as you said, it's difficult to make any changes to it for your buyer.  I had buyers recently purchase an REO with a bad roof and a bad furnace...bank refused to pay anything out of pocket even though they were big ticket items; buyers still bought the house.

Posted by Patricia Beck, Colorado Springs Realty (RE/MAX Properties, Inc., GRI, CDPE) over 10 years ago

Bill,

 

Excellent post with great information. Congrats on the feature!

Posted by Mike Frazier, Northwest Tennessee Realtor (Carousel Realty of Dyer County) over 10 years ago

Well said...we are seeing more and more REO's in our market. Increased affordability is helping buyers realize opportunities in the market,  some buyers are getting such great deals and of course those are the ones everyone hears about.  

Posted by Kathie Butts over 10 years ago

Bill, as usual you present a very educational post -for consumers and for us in the industry! Thank you for sharing so willingly!  I love the "real estate clown" photo...sounds like you could make a series on that little line  and photo :)

Posted by Jo Olson, HOMEFRONT Realty @ LAKE Roosevelt - Stevens County (HOMEFRONT Realty) over 10 years ago

Yet another informative post Bill. I think I'll give this information to those "buyers looking for these kinds of properties" when I meet them . The media with all the negative hype has the public believing they can get a great deal now. So the mentality is thus.... Thank you Bill.

Patricia Aulson/Portsmouth NH Real Estate

Posted by Patricia Aulson, Realtor - Portsmouth NH Homes-Hampton NH Homes (BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate ) over 10 years ago

HI Bill. I very much like that you said you cannot have expectations to get a home at 50 cents on the dollar in most cases. That myth needs to be refuted.

Posted by Gary Woltal, Assoc. Broker Realtor SFR Dallas Ft. Worth (Keller Williams Realty) over 10 years ago

It is a different animal dealing with a bank owned property. It is just the numbers and no emotion so if you want to buy one don't get attached to it until it closes. Great advice.

Posted by Terry & Bonnie Westbrook, Westbrook Realty - Grand Rapids Forest Hills MI Re (Westbrook Realty Broker-Owner) over 10 years ago

You nailed it!!  Thanks for the good blog.  I tell people this all the time (same thing you said!)  If they don't have the patience to re-hab, the money to re-hab . . . and sometimes the money to put the new roof on BEFORE they are able to obtain the loan . . . those darn snake-oil pitchmen that air at 3:00 a.m on TV with their "How To" books never discuss what you have just done.  And what you're writing about it TRUE.  What the pitchmen are trying to do in their "How To's" is just sell their books -- NOT help anyone buy an REO!! 

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 10 years ago

Great information for the home buyers in your market. I hope they appreciate you!!

Posted by Karen Luke, Henry County Real Estate (South Metro Property Management, LLC) over 10 years ago

Great post. Something that most people do not consider when looking at a bank owned home is that it costs the bank attorney's fees and other fees to take over a home. They don't just let those fees go, as you said, they are responsible to their shareholders. 

Posted by Home Loan Search.Online (Home Loan Search Online) over 10 years ago

Bill - you have certainly done an excellent job of describing the good, bad and ugly of "foreclosures".  It certainly is not for the faint of hear or those who are risk adverse.  Many people have a lot of misconceptions about these properties.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 10 years ago

Bill - this is one of the, if not THE best article I have read from you. Absolutely beautiful, amazing job! I may have to e-mail you... ~Rita

Posted by Brian Burke, Broker & Advising Expert-Denver Luxury Real Estate (Kenna Real Estate) over 10 years ago

Great info and buying AS IS really is not as scary it sounds.  But its important that people know the banks really dont want to fix the house up to sell it.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) over 10 years ago

Hi Bill!

WOW, tonzzzz of info, I am going to have to bookmark and come back at a later time. You have also inspired me to write a post, and I will definately throw a link your way. I will see you later tonight! :)

-Lisa

Posted by Lisa Udy, Logan Utah Realtor ( Platinum Real Estate Group) over 10 years ago

Bill

Excellent.  The public in some cases is slow to respond to the ever changing market. This is a wonderful outline of what to expect and to be prepared and more importantly why working with an expert is so important.

Posted by Allison Stewart, St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904 (St.Cloud Homes ) over 10 years ago

Bill

Right on!  This is an excellent primer. May I reblog it? Here is Phoenix reo's are flying off the shelf like hotcakes.  Just on Saturday we checked on about 20/30 homes and ALL were pending.  And this was just a very small area. I've had some good luck on reo's for the most part.  I have run into some agents that have made things very difficult.  In fact about 2 or 3 of them yesterday.  I was absolutley amazed that they blantly were violating the code of ethics.  These are the type of agents that won't be around once the gold rush is over.

 

Thanks Bill!

Posted by Anna Banana Kruchten CRB, CRS 602-380-4886, Arizona's Top Banana! (Phoenix Property Shoppe) over 10 years ago

Marcus - I think there are valid reasons why there are so many agents complaining about agents that have REO properties. The fact of the matter is that they are too busy to do an effective job of communication. This is the exact reason why banks should be dividing this business up more fairly. It is time that the monopoly with bank owned properties stops. Communicating with everyone is important not just your client.

You mention things that your REO agent does which I really appreciate. The agent I dealt with never showed any interest in coming to the house for anything. I never even met her! She did not even bother going to the closing. The buyers ended up hating her. Not a good situation at all.

Everyone else thanks for all your terrific comments about buying an REO property!

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

I totally agree with you Bill.  I think a lot of the agents are terrible.  I just needed to defend the one i know.  I also think it is wonderful we are becoming more scarce.  You would not believe the amount of agents calling to see if this REO agent will take a 80% offer with a contingence.  I know your situation was not this kind but if your not getting a call back from the REO agent ask yourself if any agent would call back.  This was more of the norm when you had a lot of part time agents.  (not to offend you part time agents)  However a true pro giving his life to selling real estate and perfecting his or her craft would not be calling with silly questions.  Thanks Bill I am a fan of your blog now!  Good work.

Posted by Marcus Valdez (Berkshire Hathaway Rocky Mountain Realtors) over 10 years ago

Marcus - Asking a bank to do a contingent offer is just plain dumb. That is Real Estate 101. It goes without saying unfortunately that there are a lot of our peers that just don't do a good job. There is no mystery why 94% of the business is done by 6% of the agents.

Getting the calls back from the agent didn't happen while the deal was happening never mind prior to the offer.

She also violated the code of ethics by changing the commission without ever notifying me - A blog for another day. Will be heading to a grievance hearing on that one.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Hi Bill -- Great advice.  Your comment on "...skilled buyer's agent..." is very relevant, as a knowledgeable, competent buyer's agent who understands the REO process, pros/cons, etc., can make all the difference in the world.  Great post!

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) over 10 years ago

Great advice for the potential buyer of a REO property as it is much different than a "normal" transaction. To bad you had an agent that didn't do a good job but everyone should remember some of us do a great service as listing agents for REO's.

Seems as the market has turned many are a wee bit jealous that they are not getting REO listings but it is a niche market and when the market was on fire I remember agents who sandbagged their listings to sell them themselves.

Great job Bill.

Posted by Cameron Wilson, The Short Guy - Murrieta,Temecula,Menifee Californ (Labrum Real Estate) over 10 years ago

Bill, Great post, Some many things to take into consideration when buying a bank owned property, Thanks for the great post.

Posted by Sandy Shores FL Realtor®, Melbourne Real Estate, Brevard County Real Estate, Florida's Space Coast (M & M Realty of Brevard Inc.) over 10 years ago

Bill - As soon as Zemanta picks this post up, I'll have to go back and add it as recommended reading to some of my articles.  Excellent explanation, wish I had wrote it.

Posted by Matt Stigliano (Kimberly Howell Properties (210) 646-HOME) over 10 years ago

Bill - This is such a wonderful explanation to help the many buyers out there who don't realize the complexities of dealing with bank owned homes.  This is a definite re-blog for me!  Thanks so much Bill and congrats on another outstanding feature post.

Posted by Julie Dumaine-Russell (RE/MAX Alliance) over 10 years ago

Hi Bill,

If I didn't have my great math blog post going, I would reblog this..maybe in a couple of days. As an REO listing agent, however....I went to a closing Friday and the buyer said "I didn't think bigshot REO brokers went to closings!)   Apparently most of them do not and there are many times that the lawyers tell me not to bother since I do not need to be there. Not that I am condoning lack of communication. I do not. In fact it is a very sticky point with me. I expect a return call or email from everyone within two hours and I do the same. In this day of technology, there is no excuse for not following up.

Posted by Karen Hurst, Rhode Island Waterfront! (RICOASTALLIVING.COM) over 10 years ago

Bill, you hit a home run - again! This post is a wonderful resource for anyone considering buying a foreclosure or a real estate agent who wants to be sure they are covering all their bases for their buyer. 

I agree the REO situation with agents needs to be changed. If they're that overworked, then they have too much business and either need to hire an assistant or take less business. When you can't do your job, something needs to change.

Agree with Missy - the good REOs go so fast and over price that most buyers miss out. The people I have worked with who started out only wanting REOs changed their minds.

Posted by Sharon Alters, Realtor - Homes for Sale Fleming Island FL (Coldwell Banker Vanguard Realty - 904-673-2308) over 10 years ago

Cameron - You are right there are some Realtors that will do a good job no matter what kind of transaction it is.

Karen - I try to go to all my closings unless I have a scheduling conflict and just can't make it. I like to be there for my clients whenever I can.

Chris, Sandy, Matt, Donna - Thanks for your compliments on my article.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill, exellent writing and great post.

Posted by Rebecca Gaujot, Realtor®, Lewisburg WV, the go to agent for all real estate (Vision Quest Realty) over 10 years ago

Bill - Terrific job.  Buyers need to be educated as to the process or else they will become frustrated.  I like the point you made that too few have a stranglehold  on the REO and cannot properly service them, thus making the process a nightmare for all.

Posted by Jennifer Fivelsdal, Mid Hudson Valley real estate connection ( JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571) over 10 years ago

Bill, Great post with tons of good information.  I have been searching for a bank owned property for my brother here in Naples, FL. I have seen some properties that have had the air handler and the compressor stolen.  One property in particular had all the windows in the house smashed into the house.  The air handler and the compressor were gone as well as all the appliances except the stove.  Looking at that property was a real challenge not to step on glass.  I could not get through to a listing agent to even tell them about the vandalism.  I had to leave a message in a "general" mailbox.  What concerns me is our Florida weather can cause mold to grow pretty fast without air conditioning.  I wonder if the listing agents or the banks even know some of these homes are missing the entire air conditioning systems.

Posted by Lynn Wilber, GRI, E-PRO, Naples Florida Real Estate (Downing Frye Realty, Inc) over 10 years ago

Awesome post!  Very informative, yet humorous...love the clown pic!

Posted by Sarah Maus, Your Florida Suncoast REALTOR® (Charles Rutenberg Realty) over 10 years ago

Excellent post.  I've linked it to my own blog on the perils of buying a bank owned property: http://sacramentorealestater.blogspot.com/2009/04/so-you-want-to-buy-and-bank-ownedreo.html

 

Posted by Michael Graham over 10 years ago

Ok Bill, I gotta know how you get all these featured posts.  I mean, just let me know how much it costs.  [grins}

As ususal, nice work.  :o)

Posted by Colleen Lane, Realtor(r) 509.438.9344 www.LaneRealEstateTeam.com (Kennewick Richland (and West) Pasco WA Homes For Sale) over 10 years ago

Bill, Seeing those "AS IS" signs on homes have scared me....I'm not brave enough to buy a home without knowing what's wrong with it.  But this was wonderful information,  I honestly didn't think they would fix anything.  Another new thing I learned today...thank you!

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) over 10 years ago

Great post.  I'm getting ready to teach a first time homebuyers class and will incorporate some of this information.

Posted by Mike Henderson, HUD Home Hub - 303-949-5848 (Your complete source for buying HUD homes) over 10 years ago

Lynn - There have been a few homes up here in Mass that have been vandalized as well. Stealing copper pipes seems to be popular.

Thanks everyone for all your comments.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill,

Great info on buying a foreclosed home.  Right on the money on all counts.  There are many bank owned properties on the market in my area.  Just completed 2 REO closings.  One thing you forgot to mention:  The bank wants everything done on their terms, and qucikly...like an emergency!  I finally decided the banks are all bark and no bite. 

Posted by Antoinette Murphy, GRI (RE/MAX Atlantic) over 10 years ago

Great post on the good, the bad, and the UGLY of REO's. You hit alot of points I find myself telling buyers over and over again, so I definitely would like to re-blog this. In our little rural county, over 1/2 the sales this year have been repos. It's tough to deal with the mindset of buyers who feel the bank will just give it away. But, it has also been a great opportunity to educate consumers and find homes for those who otherwise couldn't afford to make the move to becoming a homeowner.

I had buyers who had an accepted offer, then waited for 14 weeks past the closing date in the contract with no word, calls not returned, etc. (the bank would've made my buyers pay $100/day if they did this) The loan program they were using ceased to exist. They finally gave up and moved on to a new property. Then it took almost 2 months to get their earnest deposit back. These kids did not walk away with a high regard for our profession.  The bank and it's agent lost out as well, when it finally closed 5 months later for 6,000 less than my buyers' offer.

I'm of the opinion that if you are "too busy" to return phone calls, then it's time to "team-up" or hire an assistant. It's disrespectful to the buyers and their agents. And it is NO WAY to run a business.

And not attend a closing? In our state the law requires the agent to be at closings, and I've still seen it happen.

 

Posted by K Frederick over 10 years ago

Great information.  Thanks! :)

Posted by Ken Offidani (Coldwell Banker Select Professionals) over 10 years ago

Bill - Another solid post ! I feel sorry for buyers who jump into forclosures without a buyers agent.

Posted by Claude Cross, Charlotte NC Homes For Sale (Homes By Cross, Inc. ) over 10 years ago

That late closing penalty is a tough one.  I document early on delays caused by the banks and/or there agent.  I have never seen one closed on time, but I have never had one of my clients pay a late penalty.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) over 10 years ago

Bill, great blog with a lot of good info! 

I represent a TON of buyers for these REOs in San Diego (everything from the first-time buyer to the investor) and have closed transactions with most of the banks and major REO listing agents in San Diego.  Everything you put into this post is right on!  Especially about the low-ball offers.  Banks just will not take them, especially if the property is new to the market.  For the most part we are seeing any where from 4-6 offers on properties, and I've even seen up to 20-30 on some. 

You need to be really careful as a buyer and work with someone who has a lot of REO experience in your local market to be successful.

Posted by Michael Barrow, Realtor, San Diego CA Real Estate (Keller Williams Realty - San Diego Metro) over 10 years ago

Karen - Your situation sounds more like a short sale and not a bank owned home. Why on earth would the bank not get back to you for 14 weeks?

Michael - I have seen similar circumstances with multiple offers on bank owned properties. I had the winning bid recently on a bank owned home in Hopkinton Mass where there were 20 offers.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Great post!  This is excellent information for buyers and Realtors alike.  As bank owned properties are becoming more and more common, it is extrememly important that all parties proceed with caution - and lots of patience!

Posted by Lisa Miller over 10 years ago

Excellent well thought out post. I think that you've covered most questions that a buyer would ask.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) over 10 years ago

Bill - Great article! I have not had good luck dealing with REO's, the agents that I have dealt with have had their own pools of buyers and always just so happen to out bid the offers that I submitted.

Posted by Maria Mastrolonardo, Realtor, Naperville, IL Real Estate (RE/MAX of Naperville) over 10 years ago

Bill,

   Terriffic post.  I do a Foreclosure Bus Tour here in Virginia Beach, and my partner and I are always looking at REO's.  We are seeing a little better than 10% on homes here.  Of course those are the ones on the books for more than 90 days.  However there are some real nice homes still on the books after 90 days.

   I agree with you on agents holding to many REO's.  I have not received calls back at all, and here we are trying to show their properties to a large group of potential buyers.

Once again, great information.

Scott

 

Posted by Scott Harrison (Sea Shore Realty) over 10 years ago

WOW Bill!  You've OUTDONE yourself on this one!  I'm telling you, this information needs to be front and center for every potential foreclosure/short sale buyer.  Like Lenn, you have to separate the serious buyer from the investor/shopper who wants a steal and remember that things are just not going to progress as a normal re-sale.  I have to say, representing buyers for these properties can be SO incredibly frustrating because you can leave messages for WEEKS and not get a response.  It's no wonder these homes are just SITTING here FAR more than they should be.

EXCELLENT post and congrats on that little gold star! ;-)

Debe in Charlotte

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) over 10 years ago

Bill ~ Thank you for sharing some of your expertise with us. You are not only helping consumers who are considering buying a bank owned home become better prepared for the process, but you are also helping real estate agents who read your blog better agents!

 

Posted by Terrie Leighton, Reno Real Estate Agent ~ Selling Homes in Reno (Ferrari-Lund Real Estate ) over 10 years ago

This is so very helpful for me, as I'm working with some near & new foreclosures. I'd love to re-blog this. We get plenty of buyers coming in at 25 - 30% less than the already reduced price It seems that some just believe a bank wants to 'get rid of them' which is apparently interpreted as 'giving it away' for pocket change. You are a wonderful teacher, Bill, always having such important concepts so well spelled out and organized for easy understanding. A valuable and appreciated quality. thank you!

Posted by Mara Hawks, Inactive-2012 REALTOR - Homes for Sale Auburn Real Estate, AL (First Realty Auburn ) over 10 years ago

Lisa, Lynn, Maria - Thanks for your compliments on my article!

Scott - Very nice marketing idea. I am sure your bus foreclosure tour is a great service to consumers and brings you some notoriety as well.

Terrie - Thanks a bunch. Writing this post about REO's has been one of my favorite articles.

Mara - Go right ahead and re-blog and thanks for the compliments:)

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Thank you for sharing once again, Bill! You know I love to spread your word...and compliment YOU...by reblogging!  I look forward to your next post! ~ Judy

Posted by Judy Boyle, MBA CDPE CRP (RE/MAX Signature Properties) over 10 years ago

This is great information for all buyers.  Many might be hesitant when it comes to short sales and foreclosures, while others are getting it and jumping all over the opportunities of today.  Providing such added value as you've clearly taken the time to do provides better understanding.  We can't get the word out enough about taking advantage of this amazing time in real estate.

Posted by Jason & Amber Gardner, We're Committed to Your Success! (Hasson Company, Realtors) over 10 years ago

Bill Even in this day of electronic everything you should put that in print form for prospects and clients  Karen

Posted by Karen Kruschka, - "My Experience Isn't Expensive - It's PRICELESS" (RE/MAX Executives) over 10 years ago

Bill - excellent job of explaining the various pitfalls to be encountered in buying a REO.  The REO agents arounf here have so many listings that they cannot adrquately service them.  Between the sellers agents who won't return your calls and the assetmanagement company who won't return your buyers attorney's calls these deals are nightmares.

Posted by Pam Dent, REALTOR® - Charlottesville Virginia Homes / Horse (Gayle Harvey Real Estate, Inc.) over 10 years ago

Pam - Your story and those from many many others are the reason banks should be dividing the business up from a larger pool of Realtors. This would have a big impact on giving consumers and other agents much better service.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Well put Bill.  We are starting to see the requirement (and it is stated in the listings as such) to pre-qual with the lender/owner or another specific lender.  I need to track down the specific RESPA law to combat this as most buyers I work with are already pre-qualified with a lender and the lender is often the referral source of the buyer.  I'll confess to not having read all 91 comments in case it was mentioned somewhere above :~)

Posted by Terri Visser, CRS - 12 Years Selling Central Oregon Real Estate (Desert Sky Real Estate, LLC) over 10 years ago

Hi Bill, You have done a great job with this post in educating buyers.  Most people don't realize how complicated these transactions are.

Posted by Shirley Parks, Broker, 210-414-0966, San Antonio TX Real Estate (Sands Realty 210-414-0966) over 10 years ago

Hi Bill, You have done a great job with this post in educating buyers.  Most people don't realize how complicated these transactions are.

Posted by Shirley Parks, Broker, 210-414-0966, San Antonio TX Real Estate (Sands Realty 210-414-0966) over 10 years ago

Thank you for a wonderful article.  With your permission, I will forward the content to Buyers interested in REO's.

Posted by Chris Cohn, Berkeley California Real Estate (Pacific Union Real Estate) over 10 years ago

Terry, Shirley amd Chris - Thanks for your compliments on my article about buying a bank owned home. There is no question as a Realtor you need to be on top of your game with these properties.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

If only all the real estate agents out there knew this as well! :)

Posted by Stephen Kappre, Helping You Home (KW Hometown) over 10 years ago

Great information Bill. Well written post. I am so happy that I didn't miss it. You are right about the real estate lady who didn't attend closing. She is a clown. Great post.

Posted by Lanre-"THE REAL ESTATE FARMER" Folayan, I don't make promises.I deliver results.SOLD HOMES (Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC) over 10 years ago

Steve & Lanre - It would be great if the bank owned properties were divided amongst more Realtors. The lines of communication would certainly be improved quite a bit.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

I hate it when those Realtors don't return my multiple calls. I just want to "tell on them" to their broker but I'm sure I'll just get the same response you did: they are too busy to take any calls on their listiings. Let's spread the "wealth"! Thanks for the post.

Posted by Kelsey Barklow, 423/948-9154 (Hurd Realty) over 10 years ago

Kelsey - Unfortunately I have found that some of the Realtors with the poorest business skills are also the ones handeling many of the bank owned properties. There are a couple of exceptional Real Estate agents I have come across working with bank owned property but that is the exception and not the rule.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill- Agree with your last comment regarding many of the agents handling the bank owned properties.  That is the case here too in Philadelphia.  It is quite often that they end up doing both sides of the deal and it takes awhile to get that response.   More importantly, great post regarding this option for buyers.  Basically, buyers who like this option are looking for a deal and you are right, the 50 cents on the dollar theory works very little.  I have found that these properties are best for the experienced investor or the super handy homeowner.

 

Posted by The Somers Team, Real People. Real Dreams. Real Estate. (The Somers Team at RE/MAX Access) over 10 years ago

Bill,

This is really good information.  It's true many home buyers will think about the deal they are getting with REO properties and not realize all the facts before entering into one of these transactions.  It makes it especially tough if they do not choose a good real estate agent and real estate attorney.

Posted by Rebecca Levinson, Real Estate Marketing and Online Advertising Consultant (Real Skillz-Clear Marketing for Your Real Estate Vision) over 10 years ago

Chris & Rebecca - Thanks for your compliments on my article about bank owned properties. There is certainly a lot to know if you are looking to purchase one of these homes.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Wonderful!  Detailed and saved so I can refer to again .... :)

Posted by Celeste "SALLY" Cheeseman, (RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE (Liberty Homes) over 10 years ago

Sally I appreciate your thoughts and compliments on my article about buying a bank owned home.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Excellent post Bill! Very well written and full of detail. I aso love your graphics!

Posted by Monika over 10 years ago

Thanks Monica I appreciate your compliments about buying a bank owned property.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Hello Bill,  once again, well done!  In our part of the country we can echo your comment about some of the busier REO agents lack of due-care and their behaviors towards we Buyers agents.  It is further exacerbated by at least some of those REO agents that have their own buyers agent(s).  My recommendation to home buyers is to work with a Buyers agent you know and trust, as their first and best option in successfully securing a great deal in this market time! -- John

Posted by Alexander- Slocum, Realty Team- Vancouver WA Real Estate (Premiere Property Group, LLC - Vancouver Washington) over 10 years ago

Alexander - It is hard to fathom why the banks would not be adding more Realtors willing to work the REO market. It would be nice to know you can get a return phone call when you need information.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

This is an excellent and comprehensive post.  I'm forwarding it to some clients who have made inquiries about buying bank owned homes.

thanks

Stuart

 

Posted by Stuart Dobson (eLoanRates.org) over 10 years ago

Thanks Stewart this article about buying a bank owned home was one of the more enjoyable posts I have written.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Bill-So...true...so true...so true! When all the dust settles with that agent and her REO's will her reputation still be in tact? I would think not! The banks really need to break up the listings. Thanks for the great info!

Posted by Mary Kent, Grand Rapids to the Lake Shore (Five Star Real Estate ) over 10 years ago

Mary - I will certainly agree with you on that. Bank owned properties have their challenges. The last thing anyone needs is the Realtor to make it worse.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

Great information thanks for sharing

Posted by Terri Onigkeit, GRI (Keller Williams of Northern Colorado) over 10 years ago

Thanks Terri. I am glad you liked my article about buying a bank owned home.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 10 years ago

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