If you are thinking about buying an REO or tackling a short sale then this video is for you!
The video may be a bit over the top but it does reflect the frustrations of many buyers who are trying to work with banks on short sales and REO's. I have a client who submitted an offer on an REO almost 6 weeks ago. His first offer was over the listed price and was not accepted. He resubmitted a new offer that is higher then his previous offer. In the meantime the price has been lowered but the listing agent says that the bank hasn't made a decision about accepting any offers even though his offer is now 10% above the current asking price. Needless to say he is very frustrated.
At least the listing agent on the above property will communicate with me. In many instances listing agents will not give out any information and only put a fax number on the listing. They will not answer questions or speak with other agents about the status of offers. It is not unusual for a lender to take 60 days before giving a reply on an REO and even longer on a short sale. Often by the time the lender finally responds the initial buyer has found another property and is no longer interested.
Last week a home sold as a short sale in the Tree section of Manhattan Beach at a price that was the same as the price on an offer my clients made over 9 months ago. Had the lender accepted the offer from my clients back in February they would have closed escrow in 40 days and been done by April 2009. Instead they horsed around and ultimately wound up losing an even larger chunk of cash by waiting another 6 months to take the same offer they could have received in the Spring.
And just to make things more interesting on properties with conforming loans backed by Fannie Mae and Freddie Mac some new rules are about to be implemented across the country under the Making Homes Affordable Program. As of September 23, 2009 over 60 lenders have signed on to be part of the program. Basically it means if you can't make the payments or sell your home for more then you owe, you can't just decide to offer your home as a short sale. You must talk with the bank about modifying the loan first and if that doesn't work then the bank will make the decision about offering the home as a short sale to the general public not the owner. We live in interesting times...
****A big thanks to Laurie Manny at Long Beach Real Estate for finding this gem!