--> -->

If you need assistance, please call 678-894-9744

Are REO Properties Getting Tougher To Buy?

Monday, October 10, 2011   /   by Ira Miskin

Are REO Properties Getting Tougher To Buy?

As more and more foreclosed properties make their way onto the Atlanta Metro Area market, it seems they are not just more abundant, but harder to buy. Although many properties are listed for sale as "Bank Owned Foreclosures," the Bank is either acting as the Asset Manager for the property which is actually owned by an "Investor," or has allocated management of the sale of the property to a 3rd Party Asset Management firm that is the negotiating intermediary for the Bank/Investor. If the property is a VA or Freddie Mac or Fannie Mae property there is yet another layer of approvals to the sale. Confused yet? This is where an experienced Buyers Realtor and Team becomes a valuable partner in your quest to find a great home at a below market price. Here is an example of how Banks, Investors and the quasi-private/government mortgage purchasers (Freddie Mac and Fannie Mae) and government loan guarantors or insurers (VA or FHA/HUD) are changing the way in which negotiations between Buyer and Seller sometimes take shape. Remember, the Buyer wants the property for the lowest price and best terms. The Seller is seeking the highest price and least costly terms. One of our Teams Realtors is representing a Buyer in the purchase of a bank owned foreclosed property. The Investor for whom the Asset Manager is managing the sale is Fannie Mae. This property in the Brookstone sub division in Acworth was somewhat overpriced when first listed by the REO Realtor charged with finding a Buyer for the property. Although REO Realtors complete a market analysis called a BPO (Brokers Price Opinion) it is the Asset Manager who dictates price and terms. There was relatively little showing activity even though the sub division is a well maintained community and the home is in relatively good condition for a foreclosed property. After a few weeks on the market with few showings, the Asset Manager instructed the REO Realtor to drop the price. At this point our Team's Realtor put in an offer on behalf of her Client. She completed a thorough market analysis, checked with the REO Realtor to be sure there were no other offers, and deftly questioned the REO Realtor to see what information about the property and the Asset Managers readiness to negotiate a sale was available. Since the property was priced considerably below market value, and the original sale price of the property was considerably higher than the current listing price, an offer consisting of a purchase price very close to the current list price, a request for Seller paid concessions on behalf of the Buyer and other necessary terms was submitted. By all accounts a strong and appealing offer. However, within 48 hours of submitting the offer there were other offers submitted and a request for the Buyer's "highest and best" offer and terms was received. The Realtor and Buyer fashioned an offer that was 101% of the listing price with Seller concessions and terms. Still a great deal for the Buyer. The offer was "verbally accepted" by the Seller. Heres where the game has changed. In the past, because of the "back-office issues" with Asset Managers work volume, verbal acceptance triggered Due Diligence and the offer was considered Bound. It also changed market status of the property's listing from "Active" to "Pending." But guess what... the REO Realtor informed our Team's Realtor the property would remain Active until the Asset Manager signed the Agreement and Seller Addendum documents. And it would take a week to get the documents to be signed. Until then the Seller would continue to accept other offers even though the Buyer's offer and terms had been "verbally accepted!" Two days later came an email calling again for the Buyer's "highest and best" offer as new offers had been received. Needless to say, the Buyer is understandably upset. "When," they asked, "is a deal a deal?" The answer: "We are not sure." This process can potentially play itself out several times until either all the Buyers simply stop making offers and walk away from the property, or someone overpays for the home, caught up in an "auction-like" buying frenzy. Here is where the negotiating experience of a Buyer's Realtor and Team becomes a Buyer's most valued asset in the purchasing process. When is it time to walk away? How can the Buyer's offer be tweaked to make it attractive enough for the Seller to accept it and sign off on the transaction? Should the Buyer stand pat and make their current offer their highest and best offer? REO properties are getting tougher to buy. Sellers are seeking ways to wring every dollar they can out of the sale. Buying a foreclosed property is no longer a game of checkers... it has become a game of chess! Remember, selling or buying a home is a process and a journey, not an event, you will want to subscribe to our free video e-mail series for home sellers and buyers. For access to the complete series of free video and informational emails that can provide you with many of the important strategies and information you will need to make the best home selling or buying decisions you can email us at info@TMTRealtyGroup.net and ask for the SPECIAL E-MAIL SERIES REPORTS, the free no obligation series of email reports to be sent to you regularly over the next few weeks. Just put FREE VIDEO EMAIL SERIES in the subject line and let us know if want the home seller or home buyer series. Or contact us directly for free, no obligation information at info@TMTRealtyGroup.net