When the Bank is the Seller

LightsIt is no secret but some of the homes on the market are owned by banks and the number is rising, and will continue to rise.

It is going to take some time to sell the bank owned properties.  It is worse than it looks because banks do a lousy job selling the real estate they own.  They are in the business of lending money in exchange for a lien on the property and you would think they would have a system for liquidating property when they end up owning it.

They often hire Realtors, but banks make lousy clients.   Buyers make offers but the person at the bank that needs to approve, or accept the offer is slow to respond, got fired last week or is on vacation or an extended lunch break that lasts for days.  The buyer gives up and moves on.  Buyers are hard to find these days, and have plenty of homes to choose from, why would they wait?

Buyers need to understand that when making an offer in a bank owned property it can take weeks to get the offer presented and then accepted, or rejected.  They don’t seem to negotiate offers like other sellers do, they just accept, or reject and wait for a better offer.

Recently while dealing with a bank on a short sale I could not reach the employee in charge of the file.  I was told that he was the only one that I could talk to about the particular property.  His voice mail box would not accept  messages, because it was full.   He was on vacation, but I had no way of knowing that.

I asked to talk to his supervisor but was told that the employee has 48 hours to respond to a voice mail message or a fax, bank policy.  I explained that I could not leave a voice message because his box was full and that the fax numbers I had been given had also stopped working.   Honestly I have three fax numbers, and it often takes 6  hours to send a fax.  My machine tries each number and keeps dialing until one goes through.

They also told me that they are short staffed.  Go figure.  Some in the mortgage industry are being laid off.  There are always people who need jobs.  Sorry you don’t get my sympathy on that one, real estate is not for wimps.   In the real estate industry we just accept the way banks sell property even though each of our real estate contracts say "time is of the essence".  The bank I recently dealt with did a few things that are outside of our laws as they pertain to real estate transactions.  They seem to think that Minnesota laws do not apply to them, but they do.

There really isn’t any way that the banks are going to be able to sell the property they now own.  I think they should come up with another plan. 

Photo – Smith Avenue High Bridge.

25 Replies to “When the Bank is the Seller”

  1. Hi, Thanks for the great info about homes and bank!

  2. We put in an offer on a bank owned property. We found out that there were three other offers waiting too. after two weeks of waiting the bank decided to counter offer our offer and another offer. It was a terrible experience and we didn’t end up getting that house but the other people that were counter offered ended up paying 10k over list, and the house wasn’t quite worth it to us.

    That’s my story.

    -Josh

  3. oh so true – and in our market, the short sales are often priced right in with everyone else — no deals there! Why on EARTH would anyone want to go through THAT? AND the bank can (and frequently does) change their mind mid-way through the process and override terms they had previously agreed to! AND oh by the way, who cares that the settlement date has come and gone! AND oh by the way, don’t bother asking for repairs or walk-through items to be taken care of…. NOT.
    Sorry for hogging your space – just a sensitive issue here these days!
    Happy Wednesday

  4. Josh – I have heard your story before. Not a very good experience for a home buyer.

    Jennifer – I think I was overly kind in my criticism of how banks handle the properties they own, your contribution is appreciated.

  5. Ugggh. I too feel your pain. I’ve had a couple of clients that want to buy REO’s and it’s such a pain. The worst part is as stated above, is that they never are “deals.” The bank would rather sit on the property than get it off the books.

    Cool blog Teresa. I’m actually headed from Arizona to Hastings for Thanksgiving. I love Minnesota in the Fall.

  6. Ugggh. I too feel your pain. I’ve had a couple of clients that want to buy REO’s and it’s such a pain. The worst part is as stated above, is that they never are “deals.” The bank would rather sit on the property than get it off the books.

    Cool blog Teresa. I’m actually headed from Arizona to Hastings for Thanksgiving. I love Minnesota in the Fall.

  7. Ugggh. I too feel your pain. I’ve had a couple of clients that want to buy REO’s and it’s such a pain. The worst part is as stated above, is that they never are “deals.” The bank would rather sit on the property than get it off the books.

    Cool blog Teresa. I’m actually headed from Arizona to Hastings for Thanksgiving. I love Minnesota in the Fall.

  8. Ugggh. I too feel your pain. I’ve had a couple of clients that want to buy REO’s and it’s such a pain. The worst part is as stated above, is that they never are “deals.” The bank would rather sit on the property than get it off the books.

    Cool blog Teresa. I’m actually headed from Arizona to Hastings for Thanksgiving. I love Minnesota in the Fall.

  9. I tried to purchase 3 different bank owned homes last year and all 3 fell thru because the bank would take forever to except or decline the offer. One actually asked for my patience, said they wanted to do business with me and made me wait a month and then counter offered 10,000 more than my offer. I ended up buying a different house. That house is still for sale a year and half later and the list price is 30,000 under what I offered. Bankers are idiots.

  10. …two freeking days to respond to a fax or voicemail? w0w – i get a weekend ever other day, or third day…I think after all of that, you could use a treat:

    http://obeoman.blogspot.com/2007/09/donuts-on-stick-deinfed-from-inman-wiki.html

  11. Thanks for the donut dude. šŸ™‚ can we say “freeking” on a real estate blog? Who makes the rules? Go ask someone Obeoman

  12. I have been there on both ends of the story. I dabble in selling some REO properties and while it’s nice to have a bank as a client because it’s about the numbers and not the emotion, it can be sooo freeking (freakin'(?)) frustrating to not hear back on full price offers for three and a half months.
    Of course when the bank needs something from me, they need it yesterday. Someone, somewhere, some day soon, will invent a way for these corporate institutions to solve this problem because there seems to be just too much money thrown away. International outsourcing call centers?

  13. Joe – you hit the nail on the head . . they are throwing money away. They don’t know how to sell real estate. We have vacant houses all over the city. I am tired of it and so are my neighbors. It would be in everyone’s best interest to get these properties sold. It would be best if potential buyers did not have to go through the kind of heart break I am seeing in these comments.

  14. My more-than-well-qualified buyer put in an offer that was 11% ABOVE asking price on a bank owned property and got tired of waiting for a response (ANY response) after 7 weeks – ended up buying another property. The banks obviously don’t know how to sell real estate and are losing out on good deals themselves. Oh, wait!… These are the same banks that just a few years ago wanted to provide real estate brokerage and property management services… the same banks that NAR thought would have an unfair competitive advantage! -ROFLMAO-

  15. Leanne – I was thinking the same thing. Banks really can’t sell real estate so I guess they would not be much of a threat to us. On the other hand they really are slowing us down. Again vacant houses on the market . . .

  16. This should disabuse anyone from making the claim that the private sector is always more efficient than the public sector! All bureaucracies, public AND private, can be inefficient, and often are.

  17. I short sold my home earlier this year. It’s definitly not an easy process by any means.
    Even once I had a offer on the house, it still took nearly 3 months to finally close
    the deal. I was lucky and had a real estate agent with alot of short sale experience
    so that helped a ton.

    I think doing the short sale was a good move though, but I started the process early
    and had good support. Good luck to anyone in a short sale!

    DK

  18. Daniel Surian says:

    Just lost a deal . . listed for $310,000 my buyer offered $300,000 with 5% down, by the time the bank accepted the offer 3 and a halh months later, my buyer was laid-off . . and could not qualified any longer.
    (Mine was the ONLY offer on the house )107 days to make a decision . . a lot can happen in just month not to mention in almost 4 . – Banks Suck.
    Daniel in Boston

  19. Banks do suck. I here the sound . . .

  20. Beyond belief. In a dropping market, if it takes more than ONE WEEK to respond to an offer, the response is worthless. Every week there’s more and more price drops, and some of them aren’t shorts/REO’s.

    The vast majority of shorts are not going to get sold for a long time, and at massive losses. Yes, the banks are not equipped for this. Sell your bank stocks now! (duh) They’ve already taken big losses, but the losses in ’08 are going to be HUGE.

  21. Does anyone know a way to get the bank to respond quicker? I have put an offer on a short sale and am totally annoyed at the bank.

    here are the steps they took for me:
    1) they take 2 weeks to look at the offer and “run some reports”
    2) the reports sit on someone’s desk for 1 week. – He says they look good.
    3) sent to “management” for approval – another week
    4) counter 10K above our offer – we counter back 5K (some times I wish I countered back 1K) – we receive verbal approval – this only took 2 days amazingly.
    5) goes back to person’s desk for 1 week for final approval (where he asks the real estate agents to reduce their commissions)
    6) needs to go to management for final approval – 1+ week.

    I wish I had put a contingency of price drops 1K per week after the first 2 weeks. It might have gotten the bank to speed up their processing.

  22. Teresa Boardman says:

    One of the great mysteries of our time. Banks use homes as collateral to back mortgages but they don’t know how to sell them.

  23. angry at banks says:

    This article was written almost two years ago, and its still just as accurate now as it was then.

    There are 1939 homes on City of Saint Paul Vacant Building list, and easily another 200 on MLS that should be.

    I’m trying to sell my house due to a divorce and twice buyers walked away because no one at bank would respond.

    With all the political administration and public money, can’t the banks do anything yet? They complain about toxic debt on their books, but they don’t proactively sell the property they own. What is the real problem there?

  24. teresa boardman says:

    Yup. this has been going on for years. Now it is finally come to the attention of the local and national media. Banks can’t sell real estate.

  25. Just found this article. Good one. Over the past two or three years we’ve really learned that banks have no idea when it comes to selling real estate. They also have troubles with foreclosure record keeping.

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