This spring I had a short sale listing. I had not one, but a total of four offers on the property ranging in price from $130,000 all the way to $155,000. The $ 155,000 was a cash offer with absolutely NO contingencies, positioned to close in two weeks. In spite of my best efforts - I was calling and e-mailing several times per day, supplying the same paperwork to the loss mitigation department over and over again - the property went to foreclosure. It was bought back by the bank and re-listed with one of their inept REO agents.
That was in the spring. I just checked the status of the property. It has lingered on the market since then. It was withdrawn a few days ago, after several price slashes. The latest asking price: $119,900! The property had no electric and the last time I was there it had a severe mold problem, which I'm guessing only worsened during the hot summer months with no ventilation or air conditioning.
You do the math: I had a $155,000 cash offer on the table. The inept REO agent couldn't even sell it for $119,900. The property is probably a liability now, due to its severe mold problem. The bank can not even GIVE IT AWAY at this juncture.
Whose fault is it? The favoritism played by these banks with some of these inept REO Agents is unbelievable! The same horrible agents market the preponderance of REO properties. The bank would not give me the listing, even though I had produced the four offers prior to them taking over.
These banks are playing a very expensive game here. How can we start changing this system? When will the banks start hiring Agents based on performance and not favoritism or inclusion on some magic list?
24 comments • Myrtle Beach Real Estate by Mirela Monte • September 25 2008 01:13AM
I would love to hear from you on this!
Have you had a similar experience? Are the banks throwing these listings to agents who are entirely inept?
How can a Real Producer garner and SELL these listings, by actually doing the job, instead of just taking the listing and letting it linger on the market, affecting the rest of our market AND worsening an already deplorable situation?
Mirela: I am afraid that many banks have worked with the same agents for such a long time, and have established a relationship with that agent... that after a while it just becomes easier, or so they think, to continue to work with that same agent. I would suggest that you make whatever contact you can with the banks you are aiming at... and try and develop a new, and even more professional relationship with that bank. Tough to do... I know. PS... Love that top picture. :)
By the way... I like the way you made the first comment... yourself... to kind of encourage comments and set the tone for what you would like to discuss. Good move !
Thank you Karen! I call it "priming the pipe". Try it; it works!
I have been standing on my head to get the business, but the only ones I've been successful with are the small, local banks. Because they are well run, they don't have a lot of REO's...
The big boys all golf and play together and feed each other... I can't even get the crumbs!
Mirela, I do not understand how could the Loss Mitigation Department Justify to their superiors such a miscarriage of feduciary responsibilities. I discourage my buyers to write on short sales due to simmilar experiences. Hence i wait until it becomes an REO listing. To answer your question I think change will come now because of all the attention on the Financial Issues i.e.: 700B worth of attention
Mirela, well you know they are going to hire the agents that are slashing their commissions. So the old adage you get what you pay for. To bad the clients (banks) generally don't know what the left hand is doing to the right.
I hope Endre is right and the $700B worth of attention just might shake out some changes. I have had the same kind of experiences you have, with ready, willing and able buyers - and ended up banging my head against the wall in frustration. I think I recognize that guy in your illustration!
Mirela
The problem with the "Loss Mitigation" departments primarily rests on the fact that the "experts" are not commission based. As salaried employees, they are not truly accountable for the bad decisions they have made. A "pass the buck" game which has not escalated into the trillion dollar loss catagory.
Anyone who has been in Real Estate before the boom/bust has probably encountered one of this individuals. As your top photo suggests...it is not the speaker phones causing the "echo" it is where they are speaking from that does!
Same thing is going on in the midlands as well. Most of the ROEs I wouldn't even want to list but at least find a competent agent!
Allison: I was in line at the grocery store this morning when I burst out laughing reading your comments on my blackberry!
Anyone who has been in Real Estate before the boom/bust has probably encountered one of this individuals. As your top photo suggests...it is not the speaker phones causing the "echo" it is where they are speaking from that does!
Thank you for the early morning laughter!
Laura: With 25% of our market being distressed property related, one can no longer afford not to work with these... I've already put systems in place for an asset preservation department within my company's property management branch. We have systems in place for both sides now - the sales and the preservation departments in dealing with these. I just need some REO's to sell! For REO's you definitely need systems in place, otherwise they'll end up exactly like the unit I talked about...
Janna and Endre: 700B worth of attention... Apparently, the way it will be handled resembles the way a spoiled child is handled by his irresponsible parents... by rescuing him out of every entanglement he manages to get himself into, thus he will learn NOTHING!!!
Good Morning Mirela!
There are a few issues with the short sale factor. The biggest one these days is the second and sometimes third lien holder. It is not just the first lien holder that has to approve a short sale, but the second one as well, and the second lien holder is probably not getting any money. I have seen scenarios where the first lien holder will throw $1,000 to the Second lien holder just so they can get a deal done and #2 would approve the deal.
the other factor is the "hot potato" factor. I have had some where no one really knows who's loan it is and it is tossed back and forth like a hot potato. this happened on one of my deals that had a contract with Fannie Mae as the seller. Fannie had sent the deed to another lender and it took months for it to get fixed. In the world of Mortgage backed securities there are pools of loans that are bought and sold. when there is a bad one in the pool they are often tossed back to the original lender and this holds things up as well. No one wants to foreclose, and they will look to get rid of the bad asset as quickly as possible.
And in the scenario you decribe above... the bank as the seller was just behind the curve of dropping property values, much like any seller in the past year who price based on comps that are 6 months old (which used to work) and they end up with no activity because they are priced too high. historically it is the first offer that is the best, isn't it?
You would think that part of something is better than all of nothing and letting the property continue to decline....geez I wounder about the quality of the intelligence of the individuals connected to these deals.
Thanks
Bo
Bo: We all do!
I have witnessed that myself, where, inadequate marketing or property management will cost the banks tens of thousands of dollars, I hope for their sake that they can learn to better manage their REO agents,
Mirela- in my area we don't have a flooded market of Shorts or REO's. But I have to be honest the few shorts I've seen worked here have taught me to stear clear! And the REO's.....I wish I could get my hands on a few more of those! That is what is selling quick. But as for your dilema....I have heard around the Rain that this is a trend and I feel bad for everyone involved. Don't be too quick to blame the agents, anytime you have a bank involved especially as a 3rd. party it isn't a pretty picture! Although when someone doesn't answer their phone or return a message, that's deplorable! My pet peeve!!
Robert: I read your comment on my blackberry while working today. Wow! That's incredible! Just how bad is the situation? It is amazing!
Thank you for sharing a view from a different vantage point. None of us knew something like that could even be an issue.
...As contorted as the picture I used on this blog...
Lori: the REO's are a fixture and will be for quite some time...
I participate in the Horry Co. Foreclosure sale every month and it's growing steadily every month...
What Bank was this ? It is probably the ones wanting rid of their bad loans. I wonder If I can short them?
It's not always a "bad REO agent". My team of Virtual Assistants supports REO Brokers nationwide and I see what the REO agents face. Sometimes, the sellers (banks/asset mgmt companies) give them crazy intstructions and ask the agent to "jump through hoops" only to have a hefty portion of their commission taken back as a referral fee.
Cathryn, a good reminder that there are alwys two sides to every story. Always good to see things from a different perspective.
Cathryn: I understand completely and thank you for that perspective! Some short sales made me look bad too.
If the agent is too busy to return phone calls though, maybe his assistants could.
I know it's hard to make these loss mitigation people perform, thus it makes those of us who deal with these look bad. Communication is key though, even when the news is not good....
Biggest culprits are Fannie and Freddie. They use the same two or three agents for the entire state. Once again, real estate is local so when you are selling a property outside of their area, they underprice and you take a huge loss. Pretty simple. Guess this is why Fannie and Freddie are in trouble. They have no clue how to operate as a business. Too much government way of thinking.
When I complained about exactly every thing you have said, Especially the inept agents. The right hand doesn't know what the left is doing. I was told they are all overwhelmed. "Pigs Get Fed" "Hogs get slaughtered"