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Hi,
here is my another story.
There is a house on foreclosure that we placed a bid on . It belongs to the US Bank N.A. something. Out agent says that he has never spoke to the listing agent directly even over the phone. All we know we submitted the offer by e-mail and somebody in their "office" confirmed that they had received it. If you google it you will find a single phone number and that is a totally unknown broker firm, which has a bunch of people under the same family names. The phone is occasionally being picked up by somebody whose voice sounds like a high school kid (that is what our agent says).
Now, if we assume that our agent is telling the truth, which we are inclined to think and that he genuinely is trying to help us buy the house which is 30% below the price of what we initially expected to pay for a house... The bid that we made on his advice was waaaay low low low.. But, Ok, we still trust him...
Then what is the deal with this selling agent? Is he working for some investors? is he working together with the guy in the bank?
No, seriously, I cannot imagine how can an agent not provide any reliable contact info. Never get back on any offer...
What can we do? Given that we agree to pay the list price, what can we do?
I forgot to note that the listing price went down once for this house. So they listed it and marked it down without actually trying to sell? Who is being ripped off and by who?
In case it is some sort of scheme to sell the house for cheap to "investor buddies"... But can we do anything at all? The extensive google search reveals that all the houses sold by him are foreclosures if that matters. The actual sellers are different (not the same bank). But in many listing the property actually belongs to US bank Na..
Last edited by Marka; 02-15-2011 at 06:05 AM..
Reason: per request
It is totally normal to only chat with an assistant for an REO broker. They often have 100+ listings and don't often chat directly with agents. Email is the most common form of communication with REO brokers.
Being an REO broker often takes years to build and in this market many, in my area, have left the larger brokerages and formed their own small independents so it is totally normal IMO that you would not have heard of their brokerage.
It often takes 2-4 weeks to hear back from the bank on an foreclosure offer. Offering 30% below list price in my market is a sure fire way for the bank to just ignore your offer. Not sure what they do in your area, but banks either ignore or reject those kinds of offers in my area.
Think about it this way. The person at the bank that is in charge of 1,000+REO's sitting on their desk is faced with reality. They can't process them fast enough. So, they have to prioritize. They counter on offers that have a shot at closing because they are close to the bank's requirements. Your offer might be so bad that it gets you put in the "whatever" pile to never be responded to again.
How long has it been since you submitted the offer?
Thank you for your reply. I did not explain very well. We initially were looking at the houses in the range 220-310, and this house is listed for 167K. So, I mean this house if 30% less than what we planned to spend. I guess our agent may not be very motivated. But I did not have reason so far not to trust him.
So, we asked our agent how much we should offer on the house and he said - 150K - just in order to start the negotiation. He said when we hear back from them - we will pay the price they ask, but suggested that we should still offer less in order to have room for negotiation.
I do not know if that was a good idea, but my husband agreed.
We submitted the offer on Monday. The house is actually worth at least 230K.
I googled the listing agent - he does not seem to have too many listings at the moment. May be 10 at most. All foreclosures, right. I do not know what REO broke means though. And I am not sure if he is a broker actually or just an agent.
Thank you very much for your information.
Do you think we should submit another offer such that it looks more solid? May be we should put more earnest money? may be we should put more downpayment? In our current offer we are only offering 2000 in earnest money. Again, I find it strange.
As Silverfall said, it can take several days to weeks to hear back from the bank (usually within a week). Some want to wait to see if more offers come in. It is not unusual to have difficulty contacting the listing agent. It can be very frustrating. Some are better at responding than others. Your agent is in the best position to give you advice on pricing and terms. Most banks will counter back everyone to see if they can get a better price.
Many banks will drop the price about every 30 days or so until they get offers. So dropping the price as you saw is nothing to be concerned about.
REO means "Real Estate Owned". It is the bank term for bank owned property. An REO broker is a broker that specializes in selling bank owned homes.
In my area an offer of $150 on a $167 property would be fine. Often banks will counter with full price, but you never know.
Monday is nothing in terms of wait time for REO's. So if you submitted an offer on the 7th, then you should hear back by the 18th-25th or so. You just need to wait.
...Monday is nothing in terms of wait time for REO's. So if you submitted an offer on the 7th, then you should hear back by the 18th-25th or so. You just need to wait.
Right, and banks don't respond on weekends, so take that into account too.
The listing agent was hired to represent the seller's best interest and others can go pound sand.
The bank ( more likely the bank's asset management company) may have instructed the listing agent to not present offers under $x or to accumulate all multiple offers or may be considering your offer and a counter.
Maybe the listing broker will come back and ask everyone to submit a best and final offer. Or maybe they will just negotiate a better deal elsewhere.
You seem convinced this property is worth $230K. If so, why then did it not sell for more before the most recent price reduction? How long has it been listed at $167?
Many banks will drop the price about every 30 days or so until they get offers. So dropping the price as you saw is nothing to be concerned about.
REO means "Real Estate Owned". It is the bank term for bank owned property. An REO broker is a broker that specializes in selling bank owned homes.
Hi, rjrcm,
thank you for sharing your knowledge. I understand now, that some banks hire REO brokers. But I do not understand why they do that. Is their commission lower? the reason I am wondering is that I saw houses on foreclosure represented by big firms like Remax, etc. and they did a good job selling the house.
A couple of weeks ago we were looking at some other property represented by Remax, they did open house every week-end and they were there , in the house and answered all the questions. They sold the house at a listing price really quickly - in about 3 weeks.
So, I really do not know why the house does not sell, I see that similar houses in the area are sold for 210K+ and this one only needs a little cosmetics (that will cost around 10K). It was listed for around 190K and now they dropped the price by 20K. The house was on the market for around 50 days and about 15 days it was marked down. I cannot believe that there were no reasonable offers. The whole thing is a mystery. The reason for banks to hire Reo agents is not clear to me.
It is also not clear to me why so many of this foreclosed properties have such inaccurate description. For instance - they say "carpet" and "unfinished" and "no air conditioning" and you come to the house and see:
central air, all hardwood floors and the whole second floor finished. things like that.
In fact, two former Connecticut real estate agents, Sergio Natera and Anna McElaney, recently pled guilty to bank fraud stemming from their involvement in a short sale mortgage fraud scheme. According to court documents, Natera and McElaney worked together to defraud various banks, including Regions Bank, Wells Fargo, and other financial institutions by means of “materially false and fraudulent pretenses, representations, and promises.”
In the case of Regions Bank, Natera and McElaney deceived the bank into agreeing to a short sale on a property for which it held two mortgages on. McElaney, who was the listing agent for the property, received an offer to purchase the property for a price of $132,500. However, she and Natera subsequently directed communications to Regions Bank that the highest offer to purchase the property was for $102,375 by BOS Asset Management, LLC, an entity Natera controlled.
The bank agreed to the short sale of the property for the lower price and released its mortgages on the property. Shortly thereafter, Natera, through BOS Asset Management, sold the property for $132,500 to the initial
bidder. He and McElaney then retained the difference in the two sale prices.
Natera and McElaney used this scheme in various other short sale transactions and have been charged with bank fraud, conspiracy to commit bank fraud, and aiding and abetting. They both await sentencing in August.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by Dressy
I understand now, that some banks hire REO brokers. But I do not understand why they do that. Is their commission lower?
All banks hire REO brokers, but not necessarily brokers who specialize in REO transactions. Why do they do that? because they don't have the expertise to handle a property 1500 miles away from where they administer their foreclosures. I do a few for a bank that shall remain nameless, they take a 37% "referral fee" and a $150 "transaction fee" from my regular listing commission.
They also want me to front the money for things like "cash for keys", lawn maintenance, utilities, and the like. The top listing agent in my county does almost 100% REO properties and does a ton of them, she has two assistants, and generates a ton for her broker. I'll bet I take home almost as much as she does.
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