In a couple of weeks there will be a hearing at city hall about foreclosures. I have written several posts about how banks can’t sell real estate and what the consequences are to our city. I will be one of the people testifying at that meeting.
Maybe we will be able to come up with some kind of a plan. At least we will have a conversation and that is a great place to start.
I learned today that there is still no answer from the bank on an offer I wrote for my clients a month ago. It seems that the man on the West coast has more than 300 offers on properties around the country and it will take weeks before he gets to the file that represents what is soon going to be another vacant house in St. Paul. The buyers might not be able to wait for the answer. There are plenty of other homes for them to buy. I don’t think they will write an offer on another property where a corporation is the decision maker.
The man on the west coast may be part of the reason for a couple hundred vacant homes nation wide. The home in question will become less desirable to buyers as it sits on the market for months, and ultimately the bank will get less for it than my clients offered. Local action will not be enough to help with a problem of this magnitude. It may take national legislation.
Banks are well on their way to owning more property in the US than any other non-governmental entity. Their policies will have an impact on the entire county, our neighborhoods and the national economy. They have already had an impact but
Eventually consumers will learn how it all works and that th late night infomercials about getting rich buying foreclosures and the shows on HGTV are mostly make believe. There are already Realtors who do not want to write offers on foreclosures and some that don’t want to work with short sales. We work for free until something is sold. Banks are very slow, and no matter how hard we work the deals fall through and we don’t get paid. No one seems to want to do the work for free.
There is a section on MLS listings for agent remarks. I am seeing "This is not a foreclosure, or short sale" in the agents remarks to tip off other agents that they can write an offer and that they have a reasonable chance for success. I may put the same wording in the agent remarks on my own listings. I will say "Easy to buy, not bank owned, write and offer, and get an answer the same day". Buyers always get an answer the same day when they make an offer on one of the properties I have listed.
What are the banks going to do with all that real estate? Are they coming out ahead by foreclosing on so many people at once? Is there a better way?
Picture was taken at the Minnesota History Center, looking toward the State Capitol building
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Teresa,
It occurred to me some time ago that one of major lobbying points for the banking industry is for them to request and be allowed to buy and sell real estate based on the case that that they have one of the biggest “listing” portfolios of all. As their inventories continue to build through foreclosures the case for a rules change is strengthened. It would not surprise me at all if some change in banking services would include for banks to market their own properties through their own foreclosed property “specialists”.
Fred – I don’t think they are helping their cause. They can’t sell real estate
Lead the way Teresa! It is SO frustrating to have a willing and able buyer for a home and they make a legitimate offer on a property (sure there are those that offer pennies on the dollar in hopes of deal but I’m talking about REAL, Motivated buyers) and they never get an answer. OR you market a property and get a legitimate offer and then lose the offer because there is a 2 or 3 month wait on an answer and the buyer wants to close in 30 days!
If you figure the answer on this one, please let the rest of us real estate professionals know!
But ignoring the bank owned properties doesn’t help either. These properties won’t get pulled off the market, the prices will just continue a steady march downward. The lower the prices get, the more pressure it will apply to the existing owners and sellers. Looking at the foreclosure rate, the number of bank owned properties is only going to increase.
You can see a lot of this has already happened in the condo market. Specific bank owned properties have come down 40-50% in price, causing massive problems for other sellers, and making it incredibly hard to obtain financing. The result hasn’t been pretty.
Good Luck Teresa. I’m a new reader but have heard great things about your blog. First time commenting but love this topic. So important for people to realize how hard us REALTORS are working for their benefit. We all should and most do have their best interest at heart. This market is not fun for any of us, banks included.
I wonder if some agency could offer to do this work for the banks and get a lot of control over the process. For example, if the bank were to authorize someone local to sell a property for no less than XXX, someone would then have the authority to accept an offer and move everything through.
The banks may actually want this, as it would help them move inventory. It’s good for the city as well. It would take a leap of faith, but I don’t see the backlog being cleared any other way.
Saint Paul may be too small to start this on its own, but perhaps the Feds could come up with a way that cities across the nation could designate someone with the authority to do the disposal in each city / county / whatever.
There’s probably no more pressing issue when it comes to getting past this without a major housing price deflation.
As mentioned, this is a problem all over the country. No we do not need the banks to become realtors, nor do we need the government, who know nothing of how real estate works coming and developing new rules to live by. The banks will eventually realize their problem and either partner with local realtors as many do that handle corporate transfers have done. Hopefully they will get it done before we all end up with another book of regulations to live by.
As mentioned, this is a problem all over the country. No we do not need the banks to become realtors, nor do we need the government, who know nothing of how real estate works coming and developing new rules to live by. The banks will eventually realize their problem and either partner with local realtors as many do that handle corporate transfers have done. Hopefully they will get it done before we all end up with another book of regulations to live by.
Teresa,
I submitted an offer for a Phoneix Area “short sale” property this past Sunday and was pleasantly surprised to hear the listing agent say “we will get you an answer within 1-2 weeks.” Isn’t it sad that we have been conditioned to expect a long wait for a short sale and are happy to hear “1-2 weeks.” Of course that answer, while optismistic, did not stop my buyers from continuing the search.
Also, I just had my 1-month birthday as a blogger and hoped you might find this post interesting. It concerns something we haven’t seen in awhile: a bidding was for a property:
http://www.foreclosureexpert.info/2008/01/bidding-war-for.html
thanks for the discussion, interestingly I have been busy today with a couple of foreclosures.
they inspire blog posts but they take so much of my time I don’t have time to read the comments. 
I think that if clearing the inventory was actually the banks’ highest priority that they would be doing so.
There is a lot more to the story, and as referenced in my post on the related thread, calculatedrisk does a good job of explaining the delay.
Expedited short sales would definitely bring an opportunity for fraud. Anytime the process for anything is sped up, you have a risk of mistakes.
Does a few extra weeks of waiting really have the economic impact that everyone thinks? Or is it more of a frustration for those involved in the process. The imposed hurry-up-and-wait probably is unpleasant, but it would take more analysis to understand the actual impact.
I think that’s a worthwhile question.
PB
PB – I don’t think you understand. I am not talking about speeding up the process of reviewing offers and making hasty decisions, i am talking about the fact that it takes weeks before they even look at the offer. They don’t answer phone calls either. When someone make an offer on one of my listings it is evaluated immediately and a decision is made in 24 hours or less. Offers are very easy to evaluate. It is a simple contract, mostly boiler plate. Yes this is already having an impact and it will grow. in 3 months the media will be talking about it incessantly.
Ron – don’t hold your breath.
Teresa – gee, it might take all of 30 minutes to decide whether it’s worth it for the bank to take 75 cents on the dollar or end up having to own the house. That’s just so much to ask!
As I tell my buyers, the banks don’t care until they own the place. Then they care. Almost like they’re determined to take the seller down with them.
Ron, that agent just doesn’t know (yet) I am sure he was being very optimistic.
T, good luck this post is the voice of what is happening everywhere. I heard a prediction today that 50% of homes on the market next year will be foreclosures. Maybe that means sellers will be pulling their homes off the market and only leave foreclosures on. I think not. This is truly impacting the rest of the homes that are in great shape and willing to sell.
Bob Carney-
Ask, and ye shall receive:
http://tinyurl.com/ysjho2
Teresa-
I see what you mean. Sooner or later they’ll catch on, I suppose. Do some banks have a beter ‘corporate culture’ that is easier to work with?
Teresa,
When is your hearing @ St. Paul?
Aaron – It is on the 27th at 2:00 PM.
Teresa, I had a buyer last summer who fell in love with a short sale townhouse. When she heard there were other offers, she didn’t hesitate to put in an offer of many thousands $$$ more than the asking price since, even then, it was a bargain AND above what the seller originally paid for it four years prior. We were initially told 2-3 weeks. When that time passed, we were told it would be another 2-4 weeks. Well, by week 6 she’d grown weary, let the offer expire and ended up buying a FSBO home from a seller who got top dollar and was more than happy to accommodate her schedule, not his. Banks have NO clue how to sell real estate.