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Well, Im in the market, and originally I wasnt interested in REOs or short sales for several reasons.
#1 - Im probably going FHA and the inspection process and appraisal seems like would be harder to make happen on a short/REO.
#2 - The posts from people here and other boards about how long banks are taking to respond to offers makes the entire process very unappealing to me.
BUT, that said, in the area Im looking (Casa Grande/Maricopa AZ), there are TONS of these things...so I might be reconsidering if I can get a nice enough deal...
So, my question is....IN GENERAL (I know there are a million variables), are the starting prices listed on these homes realistic. I E if you make a full price offer on the current MLS listed price will it get approved? OR are these "draw you in" prices and instead of making a lower than listed offer (more common), you end up having to negotiate up?
Is there a difference in this process (and answers to my questions) for REOs vs. shorts?
Thanks....I may just have to consider this option now....literally hundreds of em in these naborhoods...
Some prices are realistic some a just to have you make a call and they try to show you other properties.
There is one short sale that to was a bargain. 3500 sqft for $ 245K , market value $ 310K maybe higher, because of the double lots, and lots of upgrades. After a bad experience with the realtor who cancelled the first showing and who didn't show up when I was at the house for the next appointment, the realtor told me there was an offer on it from a family member who wanted to help out..... 2 weeks later the property is still on realtor.com and listed with another realtor so I call the other agent who was very helpful and digged a little and told me there were 2 mortgages in total $ 369K (property was bought for 345K, previous model home) and on top of that a line of credit, but the agent couldn't see for how much. This agent told me the lender will not do a short sale for $ 245K because the market valeu is way higher and I know it's true.
Sales prices for short sales are made either by the seller (who really has no saying in the trans action other than signing the contract, the lender with their investors are the ones deciding the deal), or by the sellers agent and they hope a lot of offers will come in and present it to the lender. I even have an example of a realtor making a full offer on a short sale but the sellers agent went with a lower offer because the lower offer could close faster. Strange that the closing still hasn't been and the higher offer would have closed at the same time.... so agents can also make decisions and I have no clue if this deal was all legal although the people involved will never admit it. This because the buyer is a realtor as well and why did they go with the lower offer from 1 realtor instead of the higher offer from the other realtor (both needed a 80% mortgage) , we all can only guess........
Location: central, between Pepe's Tacos and Roberto's
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Originally Posted by sh9730
Well, Im in the market, and originally I wasnt interested in REOs or short sales for several reasons.
#1 - Im probably going FHA and the inspection process and appraisal seems like would be harder to make happen on a short/REO.
#2 - The posts from people here and other boards about how long banks are taking to respond to offers makes the entire process very unappealing to me.
BUT, that said, in the area Im looking (Casa Grande/Maricopa AZ), there are TONS of these things...so I might be reconsidering if I can get a nice enough deal...
So, my question is....IN GENERAL (I know there are a million variables), are the starting prices listed on these homes realistic. I E if you make a full price offer on the current MLS listed price will it get approved? OR are these "draw you in" prices and instead of making a lower than listed offer (more common), you end up having to negotiate up?
Is there a difference in this process (and answers to my questions) for REOs vs. shorts?
Thanks....I may just have to consider this option now....literally hundreds of em in these naborhoods...
Thanks.
I'm working on a FHA purchase of a REO property as we speak. It took about a month for the offer to be countered, re-countered, and finally accepted, and another week to hammer out the contract, but we got the banks final approval last week. The inspection was done in a day and the appraisal was received two days after I ordered it. The asking price was $210,000. The final accepted offer was $204,000 with no seller concessions. It appraised for $220,000. So from initial offer to closing it will take about 15-25 days longer than your average RE transaction.
Well, Im in the market, and originally I wasnt interested in REOs or short sales for several reasons.
#1 - Im probably going FHA and the inspection process and appraisal seems like would be harder to make happen on a short/REO.
#2 - The posts from people here and other boards about how long banks are taking to respond to offers makes the entire process very unappealing to me.
BUT, that said, in the area Im looking (Casa Grande/Maricopa AZ), there are TONS of these things...so I might be reconsidering if I can get a nice enough deal...
So, my question is....IN GENERAL (I know there are a million variables), are the starting prices listed on these homes realistic. I E if you make a full price offer on the current MLS listed price will it get approved? OR are these "draw you in" prices and instead of making a lower than listed offer (more common), you end up having to negotiate up?
Is there a difference in this process (and answers to my questions) for REOs vs. shorts?
Thanks....I may just have to consider this option now....literally hundreds of em in these naborhoods...
Thanks.
I do REO work for a couple of the lenders in my area and have worked on a couple short sales and sold a handful of REO listings representing the buyer...so here are my experiences....
1. Are the prices realistic? On an REO property, yes they are realistic prices. The bank may be firm on that price, especially in the beginning of the listing, but if the listing agent is decent and gave the bank an honest BPO (Broker Price Opinion) then they will probably not be too negotiable as it will be listed accurately when listed and sold rather quickly. Example---I listed an REO property on December 27th priced dead on. We had an accepted offer 2 weeks later after 6 offers and a bidding war for a little bit over asking price.
On a short sale it's a little different as the bank will not begin to negotiate on a short sale and present it to the board until they have an executed sales contract, full preapproval (normally with asset and income verification already done), and no home sale contingency, hardship letter from the seller stating why they can no longer afford the home, estimates HUD-1 Statement(closing settlement statement), and a financial work up with W2's and Banks statements. This is the normally the standard practice for most banks when negotiating a short sale, maybe some variations though bank to bank. So the listed price may not be acceptable to the bank, however if the seller can prove to the bank that higher list prices(closer to when the mtg balance is or what previous market value was) didn't bring any potential buyers they may bite as they will see that even if they foreclosed on the property they would have a hard time recouping the difference.
So you can see that the process is very different short sale to REO. In either scenario be ready to move quick and have a contract that will not be completely in your best interest....but that's the trade-off you make in getting a better deal on the home. Short sales are more difficult to negotiate and take longer to close than REO deals generally.
You can sometimes get a better deal on a short sale provided you have the patience and stomach to deal with the process, a seller that is willing to put the work into it, and Realtors that have done it before and are knowledgeable with the process. Everyone needs to be on the same page working for the same goal...this is the only time that a seller's agent and buyer's agent have to work hand in hand to get the bank what they need in order to make a deal work which is what makes it so difficult sometimes because you (as an agent) still have to stay within the confines of your agency relationship agreement.
I hope this has helped you. Don't hesitate to ask any more questions if you have any.
#1 - Im probably going FHA and the inspection process and appraisal seems like would be harder to make happen on a short/REO.
Doing an FHA loan should not be that much of a problem provided the property isn't in completely terrible shape and even then you can always do a 203K loan (essentially a rehab loan). Once again, make sure you are working with a knowledgeable mortgage person, preferably a direct lender as you can save yourself several thousand dollars that way.
I do REO work for a couple of the lenders in my area and have worked on a couple short sales and sold a handful of REO listings representing the buyer...so here are my experiences....
1. Are the prices realistic? On an REO property, yes they are realistic prices. The bank may be firm on that price, especially in the beginning of the listing, but if the listing agent is decent and gave the bank an honest BPO (Broker Price Opinion) then they will probably not be too negotiable as it will be listed accurately when listed and sold rather quickly. Example---I listed an REO property on December 27th priced dead on. We had an accepted offer 2 weeks later after 6 offers and a bidding war for a little bit over asking price.
On a short sale it's a little different as the bank will not begin to negotiate on a short sale and present it to the board until they have an executed sales contract, full preapproval (normally with asset and income verification already done), and no home sale contingency, hardship letter from the seller stating why they can no longer afford the home, estimates HUD-1 Statement(closing settlement statement), and a financial work up with W2's and Banks statements. This is the normally the standard practice for most banks when negotiating a short sale, maybe some variations though bank to bank. So the listed price may not be acceptable to the bank, however if the seller can prove to the bank that higher list prices(closer to when the mtg balance is or what previous market value was) didn't bring any potential buyers they may bite as they will see that even if they foreclosed on the property they would have a hard time recouping the difference.
So you can see that the process is very different short sale to REO. In either scenario be ready to move quick and have a contract that will not be completely in your best interest....but that's the trade-off you make in getting a better deal on the home. Short sales are more difficult to negotiate and take longer to close than REO deals generally.
You can sometimes get a better deal on a short sale provided you have the patience and stomach to deal with the process, a seller that is willing to put the work into it, and Realtors that have done it before and are knowledgeable with the process. Everyone needs to be on the same page working for the same goal...this is the only time that a seller's agent and buyer's agent have to work hand in hand to get the bank what they need in order to make a deal work which is what makes it so difficult sometimes because you (as an agent) still have to stay within the confines of your agency relationship agreement.
I hope this has helped you. Don't hesitate to ask any more questions if you have any.
~Joey
I disagree with is that "this is the only time that a seller's agent and a buyer's agent have to work hand in hand to get the bank what they need in order to make a deal work....." I didn't have a buyers agent and the bank didn't need anything from as proof that I can pay cash and the signed contract. Even the sellers realtor, who did more, was basicly out of the negotiations since the lenders investors negotiated the judgement with the seller. I know where you're coming from....your a realtor!
Also this realtor involved in this short sale had no experience, it was his first and he succeeded. A lot of realtors are mentioning that you need and experienced short sale realtor, but you have to start with the first one, isn't it?
I disagree with is that "this is the only time that a seller's agent and a buyer's agent have to work hand in hand to get the bank what they need in order to make a deal work....." I didn't have a buyers agent and the bank didn't need anything from as proof that I can pay cash and the signed contract.
I wasn't stating that you NEED a buyers agent, but merely stating that if there is a Buyer's Agent and Seller's Agent involved in the transaction (and NAR states that Buyer's Agents are involved in 75% of transactions nowadays) that they need to work closer together in getting the bank the documents they need in order to make the transaction a little smoother.
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the bank didn't need anything from as proof that I can pay cash and the signed contract
As stated....every transaction is different and every lender will have different requirements....this is what MOST banks require.
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Also this realtor involved in this short sale had no experience, it was his first and he succeeded. A lot of realtors are mentioning that you need and experienced short sale realtor, but you have to start with the first one, isn't it?
Yes, you are 100% correct in saying that and I started once too....but if I were a buyer and had a choice between an agent inexperienced with the short sale/REO process I would want someone in that agents office who has done it before to oversee the agent to insure that things are handled and managed properly as it's the small tedious details that turn a bank sour to a deal and make them want to move on to someone else.
I'm glad to see that your short sale purchase wasn't that difficult a process, it shows that their is hope and the banks are becoming a little less computerized and a little more human.
Thanks for all the updates...I appreciate it. On the surface I dont think Im up for the back and forth of a short (especially with the time involved these days), Im more of a "lets get it done now" kind of person. But I may take a little more look at REOs....of course my experience so far is that the REOs are not in anywhere near the same shape as the shorts....so thats a factor...
Thanks for all the updates...I appreciate it. On the surface I dont think Im up for the back and forth of a short (especially with the time involved these days), Im more of a "lets get it done now" kind of person. But I may take a little more look at REOs....of course my experience so far is that the REOs are not in anywhere near the same shape as the shorts....so thats a factor...
Again, thanks.
Yes, some of the shorts will be in better shape than some of the REO's, but because REO's are now effecting literally all ranges of the market (I saw an REO property for close to 1 million recently where median is like 349K) you will find that they are in better shape then you thought. It's one of those things that you just take your time and look at everything that's available and you keep your ear to the ground, and when something pops up that fits the mold of what you are looking for, you jump on it immedietly. If you ask your agent to set you up on auto-notification in the MLS to have you immedietely notified via e-mail when any new listings pop up that are REO that way you can have a jump on them.
In my MLS you can tell an REO listing from others because the Owners name is usually listed as "Corporate." That's not normally disclosed to the public, but most MLS systems have the ability to search for VERY specific criteria like that.
Or you can also find the couple of brokers that list the majority of REO properties in your area and ask them to nitify you of anything new coming up that way you can move very quickly on them. Usually there is a small handful of individual agents who have a stronghold on the REO listings, it shouldn't be too difficult.
Stay away from Short sales and concentrate on REO property. FHA loans are not a problem unless there are existing health and safety issues (HUD occupancy issues: missing toilets, no flooring, no roof and the like) so, stay away from those that have this issues as a general rule. REO listings are offered at real prices while short sales are offered any any price the listing agent pulls out of their hat in order to generate activity, attract other potential clients and , not necessarily, in the clients best interests....generally speaking. REO properties are generally priced within 5% of what the lender-owner may accept. The longer they sit, the more flexible they may become. Most will review pricing every 30 days or so and then adjust the price according to movement in the market. Patience is the key and developing a good relationship with somone who knows the market WILL help if looking to REO homes. The cheapest and best homes go long before the average agent or the public even know about it.
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I didn't have a buyers agent and the bank didn't need anything from as proof that I can pay cash and the signed contract. Even the sellers realtor, who did more, was basicly out of the negotiations since the lenders investors negotiated the judgement with the seller. I know where you're coming from....your a realtor!
and the like) so, stay away from those that have this issues as a general rule. REO listings are offered at real prices while short sales are offered any any price the listing agent pulls out of their hat in order to generate activity, attract other potential clients and , not necessarily, in the clients best interests....generally speaking. REO properties are generally priced within 5% of what the lender-owner may accept. The longer they sit, the more flexible they may become. Most will review pricing every 30 days or so and then adjust the price according to movement in the market. Patience is the key and developing a good relationship with somone who knows the market WILL help if looking to REO homes. The cheapest and best homes go long before the average agent or the public even know about it.
