Bank Owned Real Estate

[PolarBearKing]

Any body have any experience dealing in this area.

I have been watching some BORE prices fall pretty hard over the last six months or so, yet they still can't sell. Mostly because I understand that the banks are being difficult with financing them. This doesn't make much sense to me. I realize that banks are not in the business of owning property, but if they would finance someone at the going rate they could be out from under it. The worse thing that could happen is that the borrower defualts and they take the property back. They still make money (which is what they're in the business of doing) and they're ahead in the long run.

What is wrong with my thought process? What am I missing here?

 

[Instigator]

Any body have any experience dealing in this area.

I have been watching some BORE prices fall pretty hard over the last six months or so, yet they still can't sell. Mostly because I understand that the banks are being difficult with financing them. This doesn't make much sense to me. I realize that banks are not in the business of owning property, but if they would finance someone at the going rate they could be out from under it. The worse thing that could happen is that the borrower defualts and they take the property back. They still make money (which is what they're in the business of doing) and they're ahead in the long run.

What is wrong with my thought process? What am I missing here?

ALOT of Cash !!!!!!!!

 

[BadBlown572]

buying bank owned property is extremely difficult. I put in two offers in the past month and have not gotten an answer back from my agent if the offer has been approved or not. They say that the offers have to go to a committee to be approved or not and it can be a VERY long and drawn out process. Good deals for sure, but you have to jump through quite a few hoops.

They wouldn't be in the process of owning property if they got off their asses and made buyers a deal!

 

[mrs. bordsmnj]

Do you have to finance thru the bank that owns the property?

 

[ChumpChange]

Do you have to finance thru the bank that owns the property?

You do not have to but many people try to as they think the owning bank will be more lenient on terms and not hold it to the standards of a regular purchase or refinance.

 

[essexjet]

Any body have any experience dealing in this area.

I have been watching some BORE prices fall pretty hard over the last six months or so, yet they still can't sell. Mostly because I understand that the banks are being difficult with financing them. This doesn't make much sense to me. I realize that banks are not in the business of owning property, but if they would finance someone at the going rate they could be out from under it. The worse thing that could happen is that the borrower defualts and they take the property back. They still make money (which is what they're in the business of doing) and they're ahead in the long run.

What is wrong with my thought process? What am I missing here?

I agree. They should sell the REO for whatever reasonable price they can get and write off the difference.

 

[PolarBearKing]

You do not have to but many people try to as they think the owning bank will be more lenient on terms and not hold it to the standards of a regular purchase or refinance.

Sounds reasonable.... but is there any truth to it or do the banks get all focked up and can't see the forest thru the trees? Financing division is seperate from the BORE division, so each is looking out for their own bottom line, therefore everyone loses.

 

[TOBTEK]

BANK OWNED "REO'S" Arent bad. "short sales" are worse then waxing your nads! We have purchased 4 Reo's in about 5 weeks. You would think getting your financing through the lender which holds the note would help them recover some of there looses... they can care less from what we have seen. ALSO there are a few builders getting REALLLY agressive. What area do you want to look in?

 

[Angry Inch]

I'm not sure if there are too many deals to be had in this market, as prices are dropping still. The bank is most likely in it for more than it's worth; so, they'll be selling it at market value, not less.

 

[Up 4 River]

BANK OWNED "REO'S" Arent bad. "short sales" are worse then waxing your nads! We have purchased 4 Reo's in about 5 weeks. You would think getting your financing through the lender which holds the note would help them recover some of there looses... they can care less from what we have seen. ALSO there are a few builders getting REALLLY agressive. What area do you want to look in?

Would you mind giving us some insight as to how you've been able to close 4 of these in 5 weeks. We have been looking as well, and like Danny said it is a waiting game with the lenders. We are looking in South Orange County. Thanks for any insight.

U4R

 

[Outnumbered]

Would you mind giving us some insight as to how you've been able to close 4 of these in 5 weeks. We have been looking as well, and like Danny said it is a waiting game with the lenders. We are looking in South Orange County. Thanks for any insight.

U4R

It sounds like your agent is showing you "short-sales". Don't confuse short-sales with bank-owned (commonly referred to as REO--Real Estate Owned). BORE is not a common term in the business from my experience.

Short-sales are basically pre-foreclosures and the pricing on them looks attractive because it is set by the listing agent/seller. They price them low to attract buyers and also because they expect to get a counter-offer from the lender in many cases. The sale price will not cover the mortgage(s) and is a short-pay of the note in return for debt forgiveness.

The delay comes in the form of the lender, who controls the sale price, being overwhelmed with these requests and also being reluctant to sell at too much of a loss. This is where it pays to work with EXPERIENCED short-sale agents who know how to put a package together, price the listings correctly, and get answers from the lender. Lots of agents out there now that take a weekend class and think they are short-sale experts

REO's on the other hand are on the lender's books and they need them sold NOW. They will respond quickly if you make a reasonable offer and you are a strong buyer. Again, working with an experienced agent is key.

Good luck!

 

[PolarBearKing]

What area do you want to look in?

I'm not completely sure yet. South Vista has some screaming deals and RBV has a solid baseball program. CBad High sux and they are destrying their pitchers - my son being one of them. But I digress...La Costa is another option. Possibly looking at Rancho Bernardo & Poway but that is kind of far from the beach.

 

[PolarBearKing]

It sounds like your agent is showing you "short-sales". Don't confuse short-sales with bank-owned (commonly referred to as REO--Real Estate Owned). BORE is not a common term in the business from my experience.

REO's, got it...

 

[Ivan Dan]

I currently have 5 offers in on different listings that are all short sales and as Danny, Toby and others have pointed out they are a PITA. We submitted a short sale package to a bank on December 20th and didn't get a final approval until last week. Once we got the approval the buyer decided they weren't interested anymore so back to the drawing board.

What I've learned over the last 6 months is that the banks play by their own set of rules and every bank is completely different. If you find a home you like that is a short sale you just have to be mentally prepared to be patient and DO NOT get emotionally attached to the property in question.

I'd be happy to answer any questions so feel free to PM me.

P.S. I have a super nice house in Moreno Valley (currently owned by a board member) that could be had for right around $399,000 or so if anyone is interested. :skull

 

[catman-do]

REO's shouldnt take a long time to close. We just closed one in Arrowhead and it took a total of four weeks, from offer to close. That includes the bank paying for the termite repairs, shampoing the carpets, and kicking us down 7k to get rid of the wood shingle roof. Paid 185k and it has lake rights. Its the cheapest SFR with lake rights to sell up there in 5 years. Its in fairly decent condition too! (gay dude lived there before, so you know it was kept clean!)

 

[DaveC]

Is there something you are not telling us?

"short sales" are worse then waxing your nads!

 

[Ziggy]

Are the bank owned and short sales easier with a cash offer?

 

[ChumpChange]

Are the bank owned and short sales easier with a cash offer?

You got cash? How can I help you.

 

[Ziggy]

You got cash? How can I help you.

$123.61 $300 something if I tap into my daughters piggy :lmao








:joke
It actually is a serious question. Are all the issues people are having with these sales because they are requiring financing?

 

[TOBTEK]

Would you mind giving us some insight as to how you've been able to close 4 of these in 5 weeks. We have been looking as well, and like Danny said it is a waiting game with the lenders. We are looking in South Orange County. Thanks for any insight.

U4R

BANK OWNED purchases are pretty straight forward, find one, write up your Purchase agreement with your preferred agent. The bank with work the deal just like a owner would. KEEP IN MIND that most REO's are sold AS IS. Make sure you get a good home inspection company to go over the property. we are now passing on all the SHORT SALES, as I mentioned they are BAIT AND BUMPS! They advertise them at super low prices to start the feeding frensey... then they start working everyone against each other, driving the price up. ( ask RiverRoyal.. the short across the street from him sold for way more then the orig asking price. The Short in my neighborhood, sold for over 200K more then advertised) I Have written no less then a Dozen offers on shorts for the investor I've been working with, And not one has worked out. COMPLETE waste of my time and money! Look for Corporate relocation properties, REO's, and sorry to say divorce sales. all good ways to get homes under market value.
IF anyone in San Diego County, or South Orange is interested. I can put you on a email list to receive these listings.

 

[TOBTEK]

Are the bank owned and short sales easier with a cash offer?

CASH offers doesn't seem to do influence the lenders at all. We have tried.

 

[EmpirE231]

anyone have a list of REO's out in havasu? are there many?

 

[Ivan Dan]

CASH offers doesn't seem to do influence the lenders at all. We have tried.

The banks that are working the SS could give 2 flying focks if its cash or financing. It is a $15/hr person sitting behind a desk shuffling papers and they could careless if the buyer or seller get the property sold. It is a VERY frustrating process and I would highly recommend to avoid if possible. The problem is, it seems like 60+% of homes on the market right now are SS.

 

[ROZ]

I have two friends who bought REO's. Both transactions took less than a month from beginning to end.

It seems that the short sales have been taking about 2 months to get keys.

 

[RodnJen]

I am going to look at one today that was orig. listed for $1.25 million. The current price is $799K. I called the listing agent to ask if that was the actual price, he said they would have to submit the offer to see if the lender woudl accept.

WTF, is it the price or isn't it? Isn't that the equivelent of bait&switch?

 

[Outnumbered]

The banks that are working the SS could give 2 flying focks if its cash or financing. It is a $15/hr person sitting behind a desk shuffling papers and they could careless if the buyer or seller get the property sold. It is a VERY frustrating process and I would highly recommend to avoid if possible. The problem is, it seems like 60+% of homes on the market right now are SS.

Hey Dan, I'm sure you have noticed it too lately--there are some pre-approved short-sales on the MLS now. This seems like it would make the SS process go a little quicker. I imagine that the seller and the seller's agent can get most of "the wait" out of the way before they waste their time and put the property on the market at a price that the bank won't go for. Have you had any experience with these yet? I think the experienced SS agents are taking this approach to rise above the crowd.

 

[Outnumbered]

I am going to look at one today that was orig. listed for $1.25 million. The current price is $799K. I called the listing agent to ask if that was the actual price, he said they would have to submit the offer to see if the lender woudl accept.

WTF, is it the price or isn't it? Isn't that the equivelent of bait&switch?

Read my long post above, it explains how the short-sale works. The basic concept is that the owner is begging the bank to let them sell the house for less than is owed and the bank does not have to accept the terms.

 

[GET SOME]

What is a good Web site too look up BORE or REO propertys?

 

[Ivan Dan]

Hey Dan, I'm sure you have noticed it too lately--there are some pre-approved short-sales on the MLS now. This seems like it would make the SS process go a little quicker. I imagine that the seller and the seller's agent can get most of "the wait" out of the way before they waste their time and put the property on the market at a price that the bank won't go for. Have you had any experience with these yet? I think the experienced SS agents are taking this approach to rise above the crowd.

The problem is a lot of banks (3 of the 5 I'm working with now) won't even look at the package until there is an offer on the table. That would definitely seem like the correct way to approach the process instead of making the buyer sit and twiddle his thumbs for an answer. The bank we are working with for one of the deals told us up front we were approved and what price to set the listing at. We set that price, then got an offer and submitted that, then they told us 30-45 days for approval. Right about now you are thinking, wait, he said they gave an approval and that is exactly what we thought as well. Nope! The story gets better, the bank took 75 days to approve the deal. Wait for it.....and the kicker on the story...the buyer walked away from the deal after we finally got approval.

That is the first question I ask the bank once I have authorization to speak with them. Can we get this package approved prior to putting it on the market or getting an offer. As I explained earlier the banks all seem to have different procedures and methods to their madness.

 

[Cabo San Chez]

Question? I heard if you have a second lien and the home goes into foreclosre. The lender can go after you for the amount, or let say you have another property place a lien on that property.

 

[C-2]

Question? I heard if you have a second lien and the home goes into foreclosre. The lender can go after you for the amount, or let say you have another property place a lien on that property.

Correct, the second owner can pursue collection as an “unsecured” creditor if the second loan gets wiped via a foreclosure on the first.

UNLESS, it was a “purchase money” second, where the loan was obtained in order to purchase the property (usually an 80/20, 100% financing deal). In that case, there is an exemption and they cannot pursue any collection (the one-action Cali rule).


In today’s foreclosure mess, the chances of a REIT trying to collect on a second is pretty slim. If the loan originated and stayed with a mainstream lender like WAMU, BofA or Wells – then they might pursue it. HOWEVER (again) the general consensus is that if your first was foreclosed on – you don't have any money, and are not worth pursuing. Lenders rarely, RARELY do an asset investigation before deciding whether or not to sue.


----------------------

A lien cannot be placed on anything until after a lawsuit has been filed and a judgment entered. The “lien” is actually an Abstract of Judgment and does not attach to a specific residence – rather, it attaches to the person and ALL their real estate or potential RE purchases.

 

[Outnumbered]

The problem is a lot of banks (3 of the 5 I'm working with now) won't even look at the package until there is an offer on the table. That would definitely seem like the correct way to approach the process instead of making the buyer sit and twiddle his thumbs for an answer. The bank we are working with for one of the deals told us up front we were approved and what price to set the listing at. We set that price, then got an offer and submitted that, then they told us 30-45 days for approval. Right about now you are thinking, wait, he said they gave an approval and that is exactly what we thought as well. Nope! The story gets better, the bank took 75 days to approve the deal. Wait for it.....and the kicker on the story...the buyer walked away from the deal after we finally got approval.

That is the first question I ask the bank once I have authorization to speak with them. Can we get this package approved prior to putting it on the market or getting an offer. As I explained earlier the banks all seem to have different procedures and methods to their madness.

Does not surprise me at all about the banks.

About the buyers, they are bailing because the house has depreciated durring the long escrow and they see now that the SS deal is not as good a deal as it was 3-4 months ago. Especially in the 4th quarter of 2007, that was a beating in most markets:smackhead

 

[Sherpa]

I too looked at a bank-owned property a couple months ago. we were told
we had to be fully approved by countrywide home loans to be able to just
view the property. well that was not true, but having to be fully approved
by them to make an offer was true.

we already had told our agent we were full-on cash buyers.... get this: the
bank dude told our agent we still had to be approved by countrywide, and
that they took normally 45-70 days to view a package.......

by then, in this market, that price offered could now be quite different....

--I'm still looking around........

--Sherpa

 

[Outnumbered]

...bank dude told our agent we still had to be approved by countrywide, and
that they took normally 45-70 days to view a package.......--Sherpa

Again, sounds like a short-sale, not an REO. Most people get confused with the two and up until recently most agents and lenders had no idea what they were. Now, they are so common everyone is catching on.

Cash buyers typically only need proof of funds submitted with the offer and there is no "package" in an REO like a short-sale. REO agents should be able go get answers back within days unless you are unreasonably low-balling, in which case they may not ever respond.

 

[Ivan Dan]

Does not surprise me at all about the banks.

About the buyers, they are bailing because the house has depreciated durring the long escrow and they see now that the SS deal is not as good a deal as it was 3-4 months ago. Especially in the 4th quarter of 2007, that was a beating in most markets:smackhead

I think in this case it was combination of shadiness, nerves (they were going to buy this home non-contingent and rent their old house), the interest rates went up quite a bit durring the approval period, and lastly the house may have depreciated a little durring that period as well.

Mind you these people had me show them the house and talked to me extensively about buying it and then used another agent to write the offer up. So they weren't the straightest shooters to begin with anyways.

 

[Outnumbered]

I think in this case it was combination of shadiness, nerves (they were going to buy this home non-contingent and rent their old house), the interest rates went up quite a bit durring the approval period, and lastly the house may have depreciated a little durring that period as well.

Mind you these people had me show them the house and talked to me extensively about buying it and then used another agent to write the offer up. So they weren't the straightest shooters to begin with anyways.

Ouch! That sucks.

Sounds like they planned to walk on the old house anyway.

 

[26LAVEY525]

Bank owned properties are pretty cut and dry. My wife and my mother are handling REO's for countrywide in the IE area, and closing quite a few. The ones that they sell in house (listing and selling agent) go down with little or no problem. It's usually the ones that come in with an outside sales agent that have problems because the selling agents at times have no clue and then blame it on the bank.

 

[Sherpa]

Bank owned properties are pretty cut and dry. My wife and my mother are handling REO's for countrywide in the IE area, and closing quite a few. The ones that they sell in house (listing and selling agent) go down with little or no problem. It's usually the ones that come in with an outside sales agent that have problems because the selling agents at times have no clue and then blame it on the bank.

this fully explains the situation on the home we looked at......

out of area listing agent.

bank owned; and short sale.

they STILL insisted we complete an app for countrywide even though we
were cash buyers and wouldn't be financing anyway... weird.

--Sherpa

 

[TOBTEK]

I have two friends who bought REO's. Both transactions took less than a month from beginning to end.

It seems that the short sales have been taking about 2 months to get keys.

More like SIX.

 

[PolarBearKing]

What is a good Web site too look up BORE or REO propertys?

Here's Countrywides. I'm sure you can do a search for the others major lending institutions, but finding the right home is like finding a needle in a haystck.


http://www.countrywide.com/purchase/f_reo.asp

 

[Outnumbered]

this fully explains the situation on the home we looked at......

out of area listing agent.

bank owned; and short sale.

they STILL insisted we complete an app for countrywide even though we
were cash buyers and wouldn't be financing anyway... weird.

--Sherpa

Can't be both bank-owned (REO) and short sale. It has to be one or the other. Once the bank takes it over there can be no short sale. People seem to have a hard time grasping this for some reason.

 

[Halvecto]

REO's shouldnt take a long time to close. We just closed one in Arrowhead and it took a total of four weeks, from offer to close. That includes the bank paying for the termite repairs, shampoing the carpets, and kicking us down 7k to get rid of the wood shingle roof. Paid 185k and it has lake rights. Its the cheapest SFR with lake rights to sell up there in 5 years. Its in fairly decent condition too! (gay dude lived there before, so you know it was kept clean!)

Who did you work with to find this property? Where in Arrowhead is it?

 

[ChumpChange]

Who did you work with to find this property? Where in Arrowhead is it?

I was just in Arrowhead yesterday looking around. :hmm

 

[catman-do]

Who did you work with to find this property? Where in Arrowhead is it?

Sent you back a PM. The realtor's name is Pat and she works at an office in Arrowhead Village next door to the bank. The place we are in is on Thunderbird by the golf course. We have lake rights. Be carefull when you are looking up there with regards to home prices. Some of them are SUPER cheap, but they do not have lake rights. Some areas have relinquished lake rights for water.