Archive for the ‘REO’ Category

In my analysis of the market as a real estate expert witness experience,  the answer would be a loud NO.   This is an incredible time to buy but with all the negatives in this market,  I think too many agents are unwilling to be honest with the buyers that it takes a strong stomach to play the game right now.

I think that buyers need to be taught about the down-sides of the market before they take them out to look at house.  Buyers are programed to want to look at distressed properties but really don’t understand, especially if they are first time buyers.  So,  make it your policy that you counsel with them upfront.  Here are some of the issues that they need to buy into:

• Except for the high end,  most properties sell with multiple offers and many times over list price.  Are they ready for this?
• Are they aware that they will be competing competing with cash investors, especially if they are 3.5 % down FHA buyers
• Distressed properties are not always good deal.  Too often buyers think they are going to steal a property 20% below market.  Run SOLDS in your market place and show the buyer what the typical LIST PRICE TO SOLD PRICE ratio normally is.  Even in this market it is about 3-5%.
• To often,  inexperienced buyers think the answer is BANK OWNED property. I guess it is if they understand the risk they are taking.  You normally write the offer using a CAR purchase contract which includes great language to protect your buyer.  But,  when the REO bank counters back with their famous ADDENDUM,  the buyer give us almost every right they got in the CAR form.  And,  too many agents do not take the time to explain the terms of the ADDENDUM,  which is even more dangerous.  I hope I never have to testify as a Expert Witness against the agent who failed to explain this to their clients.
• What about REO inspections:  How often does a buyer go into contract, only to find out the property is a dog and the lender won’t fix anything?  How do you explain the $1000 in inspection fees the buyer has wasted?
• Then there is short sales.   I don’t know how often I see an offer from a buyer’s agent who ask that it be closed within 60 days or their offer asks for the Seller or the Bank to pay for something that we know upfront tha the lender won’t pay for.  And,  how many buyers are really willing to wait 5+ months,  only to find out the lender wants them to pay more than their offer

Look the reality is that this is a distressed property market.  All I am saying is,   make sure the buyer understands.

More next time……..