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WHY DO THE BANKS DO SUCH A TERRIBLE JOB OF SELLING FORECLOSURES??


                                                 * * * *  HARD CORE REAL ESTATE TALK  * * * *

FAX THE OFFER TO 222-555-8888.  YOU WILL BE NOTIFIED OF ANY DECISIONS IN 2-8 WEEKS.

Over the past year, we've read many posts by real estate agents and brokers detailing their frustration trying to SELL foreclosure or short sale listings.

LET'S SET THE STAGE.

  • Buyer is fully approved for more than the list price.
  • Buyer is non-contingent and ready to take possession.
  • House has been on the market for more than 6 months.
  • House has been reduced in price from $379,900 to $299,000.


Buyer's Agent has a few questions about the existence of other offers and tries to contact the listing agent.  Buyer's Agent gets Listing Agent's voice mail with the instruction:  "Fax offers to 222-555-8888.  You will be notified in 2-8 weeks of any decisions.

BUYER'S AGENT WRITES AN OFFER FOR THE BUYER AND FAXES IT TO THE LISTING AGENT FOLLOWING THE INSTRUCTIONS IN THE MLS LISTING. 

  • Buyer waits 3 days and calls his agent. 
  • Buyer:  "Have you heard anything?" 
  • Agent:  "No, the agent says it may take weeks to get an answer."
  • Buyer:  "Call the listing agent and tell them that if we don't hear something in 24 hours, we'll buy something else."
  • Agent:  "I'll do that and get back to you."


AGENT CALLS LISTING AGENT AND LEAVES THE MESSAGE THAT THE BUYER IS WAITING 24 HOURS FOR A RESPONSE OR THEY WILL BUY SOMETHING ELSE. 

No response from listing agent in 5 days after leaving many telephone messages.  Buyer instructs his agent to withdraw the offer and show him other properties, IF the buyer's agent is lucky.  Often, a buyer will hold his agent responsible and move to another buyer's agent.  This is one of the reasons so many experienced buyer's agent decline to work with buyers who include foreclosures in their search for a home to buy.

The above is a "worst case" scenario.  But, the result is the same in that the property has been listed for months, has lost significant value and there is a viable buyer and offer on the table that goes nowhere.

WHY DIDN'T THE LISTING AGENT RESPOND TO THE BUYER'S AGENT'S CONTACTS?  Because the listing agent:

The listing agents has no authority to negotiate for the bank.

The listing agents has no management authority to do anything other than transmit the buyers contract offer.

The listing agent has many listings from the same mortgage company and would be bogged down all day on the phone if they took a personal contact approach.

The listing agent has given the foreclosure listings low priority because the mortgage company listings pay far less than consumer listings.

WHY DOESN'T THE MORTGAGE COMPANY THAT FORECLOSED ON THE PROPERTY ACT IN WAYS THAT WOULD MAKE THESE PROPERTIES MOVE FASTER??

BECAUSE THEY DO NOT KNOW WHAT THEY ARE DOING!!

The mortgage company employee that is in control of the portfolio of foreclosures,

  • is NOT a real estate agent, real estate broker,
  • has never sold real estate,
  • has no understand of the real estate market,
  • does not have any experience negotiating real estate sales,
  • is a salaried employee and will receive a pay check no matter when the properties in their portfolio sell or for how much.
  • final decisions for price, terms and conditions for ratified contracts is not in the authority of the loss mitigation clerk communicating with the listing agent.
  • final decisions on contract approvals are often scheduled weekly or bi-weekly by committee. 


The primary reason these transactions are so difficult for the buyers agents, buyers and listing agents is because the neither the mortgage company nor their representatives communicating with the listing agents have no experience selling real estate.

Real estate agents and brokers sell a lot of real estate.  We know how to manage a real estate transaction.  We also know that the bank or mortgage company property owners have no experience or knowledge about selling real estate and getting the contract to the settlement table. 

  • They have never been to real estate school.
  • They do not have a real estate license.
  • They have never showed a home to buyers.
  • They have never written an offer for a buyer.
  • They do not understand the industry standards for real estate brokerage.
  • They do not understand that "time is of the essense" when selling homes.
  • They have never presented a contract to a seller.
  • They have no understanding of the real estate market.
  • They do not understand the limitations of the "as is" clause.
  • They have no knowledge of real estate brokerage.
  • They have no knowledge of condition or inspections.
  • They have no understanding of disclosure.
  • They have no understanding of presenting offers, counters timely.
  • They get paid whether or not the contract closes.


The skill sets required for employees of the mortgage companies for loss mitigation representatives are not transferable to real estate sales or real estate brokerage. 

FACT:   BANKS AND MORTGAGE COMPANIES DO NOT KNOW HOW TO SELL REAL ESTATE.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Lenn's Blog

Comment balloon 1 commentTim Maitski • September 16 2008 09:08PM

Comments

Having intimate knowledge of two bank, I have to disagree with that post.

The #1 problem is lack of staff. When foreclosures started rising, meaning income started dropping, staff was let go. As the problem increases, more staff was let go. Then when people started buying those foreclosures there was not enough staff to handle the demand in what you and I would consider a reasonable time frame.

Some banks, with the increase in demand for real estate that they wanted off their books, hired more staff, and response times improved.

Check the unemployment figures for the banking industry. It parallels the foreclosure rate with about a 15-30 day lag.

Posted by Not a real person over 10 years ago

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