Where is the disconnect when buying a bank owned home?
March 21, 2008 by Monika McGillicuddy
Filed under General R.E. Information, Market Reports
Jay and I have shown and sold many NH bank owned properties and most of them have been a nightmare.
We have suffered numerous frustrations when working with bank-owned properties and in many cases their agents. Some of the disconnect is the direct result of listing agents who have too much inventory and not enough office support. I must say not all listing agents are the same, we sold a bank owned home in Salem NH where the listing agent was wonderful, she had a system in place and support staff in place who did their jobs. The fact that she works for our Londonderry office has nothing to do with it. She runs her bank owned listings like a well oiled machine. Other listing agents are sloppy, careless and lack in communication skills. How much time would it take for an agent to clean up the house a little bit? Sweep up broken glass? Get rid of smelly trash. I don’t know but some of what I’ve seen in these homes is simply shocking.
Then if you’re lucky enough to get your offer accepted you have to deal with the ramifications of how the foreclosure was handled. I spoke with Karen Kelley of Brokers Title & Closing who shed some light on the behind the scene drama. The “why” part of why we have some of the issues that we do when trying to get to the closing table.
The banks hire attorneys to handle the foreclosure. These attorneys are responsible for preparing the Foreclosure Deed, getting it signed by the Bank and recording it. In many instances, these deeds are not being reviewed and signed for a very, very long time. The banks are overwhelmed with foreclosures, and the folks responsible for reviewing and getting the Foreclosure Deeds signed and recorded are way-way behind.
To further complicate the situation, the bank/seller then hires another firm to handle the sale of the property. These settlement firms are also overwhelmed with the large numbers of properties under agreement. These settlement firms require a HUD from the buyer’s closing company 48 to 72 hours in advance of closing, they make representations that their paper work will be ready and at the buyer’s closing company in time for the closing and then they don’t often do as they promise. Often times the closings are scheduled and is no seller-side signed HUD or deed for our buyers and they have a general “no care” attitude. Worse yet is sometimes the buyer closes but can not get access to the home they now own until the Hud has been sent back to and officially received by the seller’s settlement company with all original signatures. Sometimes no one from that company attends the closing so you can imagine how very frustrating that can be.
Please understand that if you buy a bank-owned property that closing dates are simply estimates, and you should be prepared that the closing may not happen for some time after that date, in some cases weeks and even months!
Hi Monika,
You’re absolutely right about REO’s being frustrating for Realtors, but I see this as a great opportunity for those agents who want to set themselves apart from the rest of the crowd.
Whether it’s short sales before the auction or REO’s once the hammer has fallen, if agents can arm themselves with effective strategies to deal with the banks and their loss mitigation departments, it will be worth the effort to develop a reputation as someone who can handle these more challenging scenarios.
Real estate agents are faced with dwindling business currently, so it’s time to get busy and figure out where the commissions are; besides short sales and REO’s, there’s also commrecial property or recreational land, both of which fluctuate differently than the residential market.
Here’s to finding fertile ground!
Richard
Chief Deal Weaver
http://www.BlackWidowNetwork.com
I’ve been lucky, the bank owned listing agents I’ve dealt with over last two months have been excellent. Back in the day there were only one or two identifiable agents/teams who you knew would never call you if you needed questions answered. Now of course there are more of us handling these listings. I don’t expect them to be able to speed up the banks process which can be frustrating in and of itself, but it sure helps when they communicate what is or is not going on.
Hi Richard,
Thanks for stopping by. It is an great opportunity for agents and buyers alike.
I know a lot about buying bank owned properties and I know that my knowledge will be beneficial to my buyer clients. There are a few agents who have the listing sides tied up and many of them are not all that good. Which is a great opportunity for me. Hard work…yes it is! But I’m up for the challenge…maybe I’ll be one of those that arm themselves with effective strategies to deal with the banks and their loss mitigation departments. I know my buyer clients will and do benefit from my experience.
Thanks Richard for your comments.
Carole,
I just wish they would do their jobs and communicate with me just a little bit better. It’s frustrating here as there are many agents who simply have too much inventory and not enough support from their office. Thanks for commenting Carole.
Monica – We had a disappointment today with a buyer who flew in to close on a bank owned condo only to learn the bank did NOT have the Certificate of Title and so they could not close – indefinitely since there’s now a court hearing scheduled by someone contesting it – our buyer has spent 1000s in the process and is so frustrated.
Lesson learned – Not certificate of title – buyer beware
Cyndee,
We had one where the Certificate had not been recorded after the foreclosure. Which created a delay but we did finally close. I hope you can get that condo closed. What a mess!