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If the property is listed with a real estate agent I can almost guarantee that this is NOT the most active agent in the area. I have seen several such REO situations and the listing agent is from far outside the area. Basically the listing agent had some connection to the lender's asset disposal people, the agent agreed to some discounted commission in exchange for a big stack of listings, and the agent will list the properties at what ever dreamed up number makes sense for the whole stack of REOs that the lender has come up with. Maybe they are going off some crazy theory that they'll drop the price of the whole mess of them in regular increments, or try and 'test the top of the market'.
If you do make an offer on such a property that is grossly overpriced, and you can afford to get financing that will not need the condition of the property to be brought up to standards the asset disposal person might just go along with it. Of course the agent that is representing this whole mess of properties might not exactly be the most responsive person you've ever met, so prepare for some interesting interactions.
If the property is listed with a real estate agent I can almost guarantee that this is NOT the most active agent in the area. I have seen several such REO situations and the listing agent is from far outside the area. Basically the listing agent had some connection to the lender's asset disposal people, the agent agreed to some discounted commission in exchange for a big stack of listings, and the agent will list the properties at what ever dreamed up number makes sense for the whole stack of REOs that the lender has come up with. Maybe they are going off some crazy theory that they'll drop the price of the whole mess of them in regular increments, or try and 'test the top of the market'.
If you do make an offer on such a property that is grossly overpriced, and you can afford to get financing that will not need the condition of the property to be brought up to standards the asset disposal person might just go along with it. Of course the agent that is representing this whole mess of properties might not exactly be the most responsive person you've ever met, so prepare for some interesting interactions.
Good Luck!
So is there an asset manager that sets the price for the listing agent or does the listing agent tell the asset manager what the property should be listed for?
Also, do you agree with submitting the comps with the offer to support it? I guess I am just confused because I thought that is how a fair real estate transaction took place. (i.e. Using recent comparable comps to come to an agreement on a price in the market.)
Thanks.
...Also, do you agree with submitting the comps with the offer to support it? I guess I am just confused because I thought that is how a fair real estate transaction took place. (i.e. Using recent comparable comps to come to an agreement on a price in the market.)
Thanks.
I agree with submitting comps.
"Fair real estate transaction" and "bank sale" should not be in the same discussion. Banks have their own rules that are usually not in line with "normal" sales, and do not favor the buyer.
"Fair real estate transaction" and "bank sale" should not be used in the same discussion. Banks have their own rules that are usually not in line with "normal" sales, and do not favor the buyer.
How can a bank expect to get the same price for a well taken care of regular house versus one that needs work and on top of that expect a premium for a "foreclosure"? It's nuts.
Every lender has some actual person that is the contact for the real estate agents they have hired. Bigger lenders have 'webs' of these asset managers -- some have a whole complicated hierarchy of such folks. In theory this should be a good thing as it provides some oversight so that no one is running a side business to create sweetheart deals for insiders, but in practice it also means that there are basically 'committees' that have to approve everything.
Some lenders are a bit more streamlined, but really there is just about no lender that can be counted on to conclusively follow the recommendation of the listing agents they have hired. Best case the 'asset manager' agrees with the data that the listing agent (or third party hired to provide a broker price opinion or professional appraiser) uses to set the asking price. If a deal comes in that is within the normal range of list-to-sell ratios it can quickly get approved...
Worst case -- the lender is going off OLD or flat out wrong data with unrealistic prices that took forever to chug through the bureaucracy they've created. An offer comes in that may be close to what current true market value is but they have to get all kinds of approvals of higher ups to sign-off on the bigger than expect loss. Slows things down, costs people TIME which means frustrated buyers and potentially busted deals...
How can a bank expect to get the same price for a well taken care of regular house versus one that needs work and on top of that expect a premium for a "foreclosure"? It's nuts.
They probably won't and it will sit until they realize they need to lower the price to sell.
How can a bank expect to get the same price for a well taken care of regular house versus one that needs work and on top of that expect a premium for a "foreclosure"? It's nuts.
Most of what I am seeing though, are the foreclosures are selling for less. They also are dropping the price pretty quickly if they get no offers. It seems they are dropping them every couple weeks till it sells. Over the summer, they weren't dropping the price that quickly if the home didn't sell. (Sometimes it would be month or longer).
The first house I went to look at in my current search was a disaster. Can't remember if it was an REO or short sale. It was priced about in the middle of the range for the neighborhood and size of the house.
Inside it looked like someone took a sledge hammer to everything. The walls, floor, cabinets and doors. It was a total disaster. Probably needed over 100K of work if not more. It still sits there without a price reduction. They actually managed to take one nice picture of the outside where you can't really tell anything is wrong.
Most of what I am seeing though, are the foreclosures are selling for less. They also are dropping the price pretty quickly if they get no offers. It seems they are dropping them every couple weeks till it sells. Over the summer, they weren't dropping the price that quickly if the home didn't sell. (Sometimes it would be month or longer).
That is what I thought would happen too, but the bank has this house listed some $25-30 dollars per square foot above any kind of comp.. regular or foreclosure. Makes absolutely no sense.
All I can do is submit an offer based on the comps. You were right when you said its crazy out there with these REO'S.
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