Foreclosures

With all the news about the foreclosure crisis, you are probably thinking it may be time to pick up a quick property or two.

When you think of a lender and all the advertising that you see, you would believe them to be very professional and detailed. If you have been through the loan application and approval process, that would be confirmed to you by their actions. After all, their business is lending money and they have been successful at that. You would think they would have a very detailed plan as to how to liquidate a property that would come back to them. They don’t.

Over the years, we have purchased many bank repos. It has never been an easy process, in fact it seems to be getting more difficult. Banks are not the cooperative sellers that you would expect them to be. If fact, in some cases, the are not even very respectful or courteous.

You can spot the foreclosure property from quite a distance. They are the ones that need the lawn cut. Your eyes will be drawn to the warning sign in the front door or the window. They can be filled with trash and sometimes smell quite bad.

The price on the property was probably determined by someone in an office halfway across the country who has never seen the property, knows nothing about it or the area in which it is located. The bank typically hires a real estate salesperson from the area to do a B.P.O. (Broker Price Opinion) on the property. Generally, this is a broker or salesperson riding by the property, not touring the property, and then giving their opinion as to what the property would sell for on the open market.

Making an offer on the property is an experience in itself. The lender typically requires their own set of forms to be used, forms prepared by a corporate attorney and slanting the favor to the bank. Proof of funds or a loan approval is often required by the lender.

Upon making the offer, the lender may not respond quickly as you would like. It could take weeks before you have any idea if they will accept, counter or ignore your offer. They may claim to be short staffed or over worked. They do need more help.

I have seen buyers become very frustrated with the lender and walk away prior to receiving an answer to their offer. Many times, I have seen lenders reject an offer on property only to later sell the property for far less to someone else. It makes no sense. In my opinion, banks should enroll in a course on “How to Market Real Estate”

More coming later on foreclosures.