Posts Tagged ‘Wilmoth’

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Tips For Writing Bank Owned Offers

Tuesday, September 7th, 2010

Lee Williams offers this list of 20 tips for putting together an offer on a bank owned property.  Written from an experienced buyers agent perspective, I think certain points are right on but others come from bad experiences.   Here are a few additional comments from the Wilmoth Group perspective.  I have written about many of these before.

Communication: We will communicate with you whenever there is news or an update.  It is hard to handle every inquiry that asks “do we know anything yet?”  We prefer email because it allows us a way to work as a team effectively.  We do not get paid unless we sell and close a bank owned property so we want communication just as bad as the buyer and buyers agents.

Writing Your Offer: We suggest you write highest and best offers on the first offer because we can’t promise there will be a counter offer.  There are not a lot of counter offers from banks so all we are suggesting is take your best shot (and maybe leave just a little room if given the opportunity).

Contingency Time Periods: I would not follow William’s advise here.  In a competitive market like we have now, I am seeing deals with lengthy contingency periods not get a response.  If you need an inspection (I recommend it) make your time frame reasonable.  Banks are looking at 7-10 days and you should have an inspector who can respond promptly.

Inspections: I am not in agreement with this logic.  Either you want the ability to inspect and cancel the contract, or you are willing to complete the sale as-is.  If you want an inspection..be sure and ask for the contingency.

Offer confirmations:  We will confirm receipt and we will do it within one business day.  We will confirm in the same manner as the offer was received..fax=fax, email=email.  Yes, we prefer email.  If you do not receive a confirmation, please do follow up via email to offers@wilmothgroup.com and inquire.

Again, we do not get paid unless we sell something.  There is some great information in this post but a few points may be fact for William’s but will not be your experience with the Wilmoth Group.  In all fairness, William’s wrote this post in May 2009 so maybe his experience has changed now also.

I see the banks doing a lot to try and address these problems today.  In most cases the banks really care about the impression on cooperating buyers agents.

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Posted in Buyers, Buyers Agents, Good Offers, Offers | No Comments »

Reality REO 101

Monday, August 30th, 2010

Just a few random thoughts to share with anybody considering making an offer on, or working with a buyer who wants to purchase, a bank foreclosed (REO) property.

The bank has at least two different opinions of value.  They will sell the property for very close to those values or if it has not sold after 60 days, they will order more opinions of value.  No matter what you see on late night TV, the bank is not going to give these properties away for 50% of value, just so you or your buyer can make that extra 50% on a flip!

Banks are closed from 5pm Friday until 8AM Monday.  Don’t submit an offer at 4pm Friday with a deadline to respond of 4pm Saturday.  Won’t happen.

I read somebody giving advise on buying bank REO suggested including a buyer biography.  Interesting idea but not sure it would ever be seen.  Many systems for offers have no way to include this information.  Really, unless your buyer is a not for profit that wants to use the property for some better society objective, I would not spend a lot of time telling the bank about your buyer.

I would get the very strongest, clearest, accurate proof of funds or financing that is possible.  If you want to tell the bank about your buyer, do it through your proof that they can actually close on their proposed offer.

Have an inspection contingency in your offer and be prepared that if the inspection findings are troublesome, the buyer should be prepared to walk.  You can ask the bank to make repairs but a credit is going to be your most likely response.  Lately though I do not see the bank changing their net so they operate with the idea that if given a $3k credit for repairs, buyer will pay $3k more for the property.  This is why a lot of REO deals never close.  Buyers need to have some cash in the bank to make repairs.  It is OK to ask though.

Bank offers that are accepted are accepted verbally and usually subject to corporate approval.  A buyer needs to be prepared to wait for a bank written addendum to the actual purchase agreement.  This document is not negotiable.  When presented it needs to be executed.  If the buyer does not like certain terms, it is cold and harsh, but the bank will just cancel the accepted offer and sell to somebody who will sign their addendum.  Bank’s lawyers write these addendums, and nobody in the REO department is authorized, or will even invest a minute, in negotiating them.

So, these are just a few random thoughts on issues that seem to always trip up transactions.  Don’t get me wrong.   There is an advantage to buying a REO property and it is often based on a discount to market.  It is just not the size of discount that seems to be expected from some buyers today!

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Why You Should Consider Buying A Bank Owned Foreclosure

Friday, August 20th, 2010

Everything I open today seems to be a mouthpiece for complaints about the entire process involved in buying a bank owned home. Granted, the process has its quirks, and the proliferation of really bad information from people calling themselves experts is hurting the cause. Yet, there are some benefits to not ruling out a bank owned foreclosure when you are shopping for a home or property.

Emotions

If you are the type of person that really prefers buying a car and not dickering or playing games with a sales manager, buying a bank owned (REO) property is pretty similar. Despite all the information that provides secret negotiating tips for these homes, let me give you a big tip. Make a really good offer up front and at best make one counter offer. It is a straight forward process making an offer. If you start super low you will get the response your offer deserves. If you make your offer really complicated, it too will be received with a thud. Banks have this selling process figured out. You are not going to out-think them. The KISS principle has never been more relevant.

Piece of Mind

If you are an investor and are thinking buying pre-foreclosure or short sales is the way to go, I know you take a lot of steps to make sure there are no hidden liens…right? A property that has cleared foreclosure and is marketed by a bank with title insurance is going to allow you to sleep at night and avoid those unexpected expensive surprises.

More Piece of Mind

Is that possible?  Yes, because unlike dealing with a home bought at the actual sheriff sale, you can place an inspection contingency in your offer and make sure whatever defects are discovered are ones that you are willing to accept.   Even experienced investors are well served utilizing a skilled inspector.  Also, a little known point about bank properties is that a home needing a lot of repairs has been valued based on not just the broker’s opinion of value.  There has also been an appraiser on site and between both parties there is a pretty good value given to the bank that considers many of these issues.

Paying Too Much

Every time a buyer questions our list price for a bank owned property I run this statistic by them.  In the last 12 months (and for the last several years) the Wilmoth Group’s average sale price to list price ratio has been 98%.  That means almost all of our listings sell very close to the list price.  I am not bragging, this is just an indication that the appraiser and broker are getting it right, and the bank is not gouging on the list price.

Compared to buying any other type of real estate, the process for acquiring a bank owned property is very straight forward.  True, in today’s market there are preference periods for owner occupants.  The primary issue is financing and a lot of these properties clear the preference period and become available to investors or second home buyers. 

Don’t let somebody else give you a bad story on buying bank owned REO until you try it yourself!

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Posted in Buyers, Buyers Agents, Investors, Offers, Selling Process | No Comments »

How To Show A Bank Owned Home

Monday, August 16th, 2010

I am motivated to write these few suggestions after having an agent spend time with a buyer recently, completing a non-authorized pre-offer inspection, and then asking if it was alright to make their offer contingent on the sale of the buyer’s home.  I wanted to say “You have read nothing the Wilmoth Group offers about selling a bank owned home…have you?”  Instead I politely explained that a bank is not going to consider an offer with such a contingency. In the back of my mind I thought about how much time had been wasted by all parties!

If you have decided to show a bank owned home, lets start with the hundreds of requests we still receive daily for the filter known as “do you have any offers“?  Do you ask traditional sellers for this information?  I still wonder..why does it matter unless the Agent really does not want to do their job and provide advise to a buyer on a home because they want to have no competition!  Last time I looked, almost 80% of our listings receive more than one offer.  Many of those offers will never make it past first base.  Yet, agents want to NOT show a home if there is another offer.  If there are multiple offers, the bank almost always lets the good competitive offers know.  Stop making this a criteria for showing a home.  Worry about old fashion ideas like what is the home worth in today’s market and does your buyer want to make an offer based on this value?  A fair offer will stand a great chance!

While most banks are no longer making it a mandatory item, I would not show a bank owned home to a buyer without a pre-approval letter or proof of funds.  How you confirm the buyer has the ability to provide this is up to you.   Submit an offer for a buyer without one and you have dropped to the very dungeon of offers…where to even have a chance the bank is going to come back and ask you to provide one for your buyer. 

I see Agents spend more time worrying about if there are any offers and little to know time verifying the buyer’s ability to actually support an offer with some type of proof of funds.   Put your energy in the item that really counts first.

Don’t show a bank owned home and walk through it telling the buyer that the seller will HAVE or NEED to fix or repair anything. ”Sold as-is means sold as-is!”.  Buyers need to make offers assuming there will be no repairs.  If a buyer has a inspection, and something not visible in a normal showing comes up..it is OK to ask the bank to repair.   How the bank will respond is any body’s guess. 

Don’t let your Buyer believe they can come in and make repairs or renovations prior to closing.  I see this one a lot.  Hey its a vacant house..so who cares?  The bank cares so much I have seen them have the local Sheriff come chase buyers under contract off the property as Trespassers and then cancel the contract.   The answer to this question is NO due to  LIABILITY. 

These are just a few basics.  Did I mention, don’t waste buyers time if they have a home to sell?  The market might be tough enough that traditional sellers are now pulling their homes off the market to allow these buyers the time to sell their homes, but there has never been a bank in 20 years that I have seen even consider such a proposal.

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Posted in Buyers, Buyers Agents, Selling Process, Showing, Viewing Property | No Comments »

Pace of Foreclosures Accelerates

Thursday, August 12th, 2010

I am hearing all kinds of rumors that banks are going to soon complete foreclosures, or release for sale, significant chunks of what many have called for the last year the “shadow inventory” of foreclosed properties.  If these rumors are true there is two ways to look at the change.  One..if you have a home to sell in an area that has a higher than average rate of default, thisfall and winter may not be the best time to do so.  If foreclosure activity picks up, it will likely put pressure on values for non-foreclosed homes  as buyers compare traditional non-distressed housing to the values offered on a foreclosed property.  The second affect, and something I have advocated for two years now, is an acceleration of the recovery of the housing market will occur.  My reason for stating this is that a lot of uncertainty today in housing is stemming from concerns regarding values.  When appraisers hear about shadow inventories of foreclosures, combined with ongoing government efforts to prop up the housing market by trying to keep people in their homes who can’t pay to maintain them, values are pushed down.  This uncertainty creates problems on the finance side of the equation as mortgage lenders hesitate to loan funds to anybody who does not have a healthy down payment. 

So, my ongoing theory is if we let the market take care of the default situation, ultimately housing will recover faster.  Unfortunately, this theory sounds pretty cold to the family who is in a mortgage over their head, so it has to be counter-weighed with the social implications.  Over the last two years, the social implications have won out. 

It might be safe to say the social implications havc started to lose out.  Last week Lender Processing Services (LPS) released their Current Mortgage Performance Observations based on data as of June 30, 2010.  The interesting news from this report is that the government owned and sponsored enterprises (GSE’s) Fannie Mae and Freddie Mac have accelerated their pace of foreclosures.  Considering these are two of the three largest lenders in the country, this is fairly significant news as it relates to the housing market.

Here are a few main points from the report:

Foreclosure starts by Fannie and Freddie have been accelerating and are currently at all-time highs.  From May to June 2010 foreclosures initiated by Fannie and Freddie increased 21%.

GSE foreclosure starts are accelerating along with Home Affordable Modification Program (HAMP) cancellations.  Most of the increase is concentrated in the 6+ month delinquent category.

And on the uncertainty factor affecting financing…”originations remain very low, with stricter underwriting driving relatively low first payment defaults.”

It is a painful process.  The sooner we let the market clean up what the market created, the sooner it will be easier to sell your home.

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Posted in Modifications, News and Statistics, Shadow Inventory, Underwriting | No Comments »

Indianapolis Foreclosure Rate Worsens

Thursday, July 29th, 2010

From the Indy Star

The rate of foreclosures among outstanding mortgage loans in the metro area jumped to 3.21 percent in June, compared with a revised rate of 3.16 percent in May and 2.78 percent in June 2009, said CoreLogic, a Santa Ana, Calif.ornia company that tracks foreclosures. Nationally, the foreclosure rate was 3.06 percent in June. 

The delinquency rate — loans 90 days or more behind in payments — fell to 7.1 percent in the metro area in June from 7.28 percent in May. But that’s up from 6.42 percent a year ago. (Star report)

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Posted in Indiana, Indianapolis, News and Statistics | No Comments »

Cape Coral/Ft. Myers and Orlando Top Foreclosure List

Thursday, July 29th, 2010

RealtyTrac released a little more than just their monthly tracking yesterday.  Also included were year to date statistics.  If you read my posts you know I do not spend a lot of time on the monthly data results as I find them to be for too narrow of a window.  When provided with six months of data,  I think some conclusions can be reached.

According to RealtyTrac, year to date, Cape Coral-Ft. Myers is the number two foreclosure market in the country.  Making its debut in the top ten, Orlando has now   in at number 8.  The Miami area has actually dropped a few notches to come in at #10.

Foreclosure activity in the Cape Coral-Fort Myers, Fla., metro area decreased nearly 22 percent from the previous six months and was down nearly 30 percent from the first half of 2009, but the metro area still documented the nation’s second highest metro foreclosure rate — 4.98 percent of its housing units (one in 20) received a foreclosure filing during the six-month period.

Other Florida cities in the top 10 foreclosure rates  were Orlando-Kissimmee at No. 8 (4.15 percent of housing units) and Miami-Fort Lauderdale-Pompano Beach at No. 10 (3.89 percent).

It is also interesting to distinguish these foreclosure rates (% of total housing stock) versus actual foreclosure totals.  When foreclosure totals are considered large metropolitan areas take over the rankings.  For instance, the Miami-Ft. Lauderdale-Pompano Beach metropolitan area is 10th year to date in foreclosure rates, but actually leads the nation in total foreclosures with 94,466 properties receiving a notice during the first six months of 2010.   This total rate beats out the Los Angeles metropolitan area in second place with 93,263 filings.

The big picture from this news is foreclosure filings are back on the upswing with 154 of the 206 metropoliatan markets in the USA, with populations in excess of 200,000, posting year over year increases in activity.  These widespread increases occurred while activity actually decreased in nine of the 10 areas with the highest rates. 

“While we’re seeing early signs that foreclosure activity may have peaked in some of the hardest-hit markets, foreclosures continued to rise in three-quarters of the nation’s metropolitan areas in the first half of the year,” said James J. Saccacio, chief executive officer of RealtyTrac. “The fragile stability achieved in many local housing markets hinges on improvements in the underlying economy, specifically job growth. If unemployment remains persistently high and foreclosure prevention efforts only delay the inevitable, then we could continue to see increased foreclosure activity and a corresponding weakness in home prices in many metro areas.”

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Posted in Cape Coral, Default, Lee County, News and Statistics, Orlando, RealtyTrac, Statistics | No Comments »

19 Million USA Homes Vacant In Second Quarter

Wednesday, July 28th, 2010

Bloomberg is reporting that, despite so many options for homeowners to avoid foreclosure, the market is correcting itself and the results are not pretty.  According to the US Census Bureau, vacant homes are increasing and the rate of ownership is decreasing.  In fact the rate of ownership now stands at 66.9%, the lowest level since 1999.  Vacant homes stand at 19 million.  There is an estimated 128 million homes  in the USA so almost 15% today stand vacant.

I will confirm that the Census Bureau is actively attempting to get their arms around the status of vacant homes.  Hardly a day has gone by since April where we do not field at least one call from a Census worker wanting to know about a bank foreclosure we have listed.  They confirm if it is a foreclosure and if we know if it was vacant on April 1.  I suspect this census information will ultimately be the best insight available as to the total devastation in the housing market and more specifically, where the markets are in the worst shape.

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Posted in REO, Vacant Homes | No Comments »

Make Your Offer The One That Is Accepted And Closed!

Tuesday, July 27th, 2010

I follow many different periodicals, blogs and forums..both in print and on line..related to the topic of foreclosure.  There is some really bad advise out there for people as to how easy it is to buy foreclosed properties.   Today I am going to focus on a few simple facts that likely go against what many of these self-proclaimed knowledgeable people state. 

You Should Make Your Offer At 50-60% Under List Price

Only if you wish to waste every body’s time.  Most foreclosures are priced today where they receive multiple offers.  The list price is where the discount to market exists.  Sometimes the bank gets it right, sometimes they need to move the property.  Just know that our average sale to list price ratio on bank owned homes over the last 12 months stood at 98%  That is for almost 600 properties in four different markets!  HINT: There are properties for sale, often by third party servicers or investors, where they do not seem to want to accept the market realities and over-price.  These properties will be on the market for 90 or more days.  Sometimes a more aggressive offer might fly.

Use A Superstar Agent Who Leads The Market In Their Sales Production

What..because everybody will cow-tow to their super stardom?  This one cracks me up.  It is a myth put forward by the large franchise real estate players in support of their top producers who are not funding as much overhead in today’s markets.   Actually what you want is to find an agent who will follow the bank’s very specific instructions for how to submit an offer!  If they are the superstar agent, then fine.   In my experience, they often are not.    For some reason, after years of foreclosures being a major part of the market, there still seem to be agents who think the banks will do business THEIR way and act like they can control the seller.  If you choose one of these agents because of the confidence they seem to exude, you will likely not end up with an accepted offer.  Buying bank owned foreclosures is a rather black and white program.  Your agent needs to be somebody who excels at following instructions and details step by step.  Find out how many bank owned homes they have sold or if you insist on using your cousin, make them share every shred of paper that comes to ensure that things are being done correctly.

The Process Drags Out So Don’t Expect Things To Happen Fast

Again, quite the opposite is true.  Be Available!  Whether by electronic communication, in person, or proxy, now is NOT the time to take that international vacation.  Nobody from the listing agent to the bank really cares if the proposed buyer has to leave the country and will not be available to review the bank addendum contract until next Tuesday when it is due on Monday.  Your accepted offer will be cancelled.  Remember black and white.

The Bank Will Accommodate The Buyer’s Need For Repairs Discovered After A Inspection

Negotiation for repairs kills more accepted deals than anything else.   Yes, I will admit the banks seem to have more tolerance for making a home habitable for owner occupant purchasers than ever before.  Start with considering the type of buyer you are when you feel it necessary to request that the leaking kitchen plumbing be repaired.  If you are investor, please refer back to some of my as-is means as-is posts.  If you are going to live in the property, this request is a wild card.  I do not know how the bank will respond.  The first question I often am asked is “could the buyer have seen this need for repair on their own prior to making the offer?”  If the answer is yes, chances are not good that the bank will front the repair.  TIP-If you really want the property, do not haggle with the bank’s response.  They usually make one response and if you do not accept it they cancel the deal. 

A commonly heard order from Asset Managers is “BOM”.  Back On The Market.  Nobody is ever happy when this happens.  Avoid these pitfalls in order to improve your chance for success in your foreclosure purchase.

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Posted in Buyers, Buyers Agents, Foreclosure, Offers, Selling Process | No Comments »

Time To Move On

Monday, July 26th, 2010

The following is written to other Realtors.  Not to upset but to emphasize a point.

When you are contacted by an agent informing you that the home you have listed has been foreclosed, don’t ask or expect to receive a listing cancellation.  The fact your listing is executed by a party no longer in ownership cancels your listing.

If you really do not believe the bank’s listing agent, check with your client or the public records.  Don’t waste a lot of time hanging on because somebody has an offer in to your seller.   Your seller has no authority to accept it and the bank is going to want to complete their own valuation before looking at any offers.

Assuming the home is vacant, the bank will likely hire a company quickly to change the locks.  It should not happen but often those fancy electronic lock boxes, are left hanging on the old removed handset.  So, don’t waste any time if you are informed of a change in title.  Not if you want to get your lock box back easily.

Speaking of lock boxes, we have over and over again worked in a spirit of cooperation to remove a lock box for the former listing agent and leave it somewhere that they can pick it up.   When we do this we are not accepting responsibility for what happen to the lock box…so don’t wait a week to come pick it up.

Same can be said for your signs.  We work with the former listing agent, but do not take responsibility and don’t have room in our vehicles to throw them in.

It is common for the banks to have a  property preservation company that changes the locks, mows the lawns, and removes interior debris and furnishings left behind.  A certain estimated value of between $300 and $500 is going to result in a personal property posting notice.  Some Realtors have been known to add a few hand towels, kitchen and bath bric-a-brac, and fake flowers in the mode of staging.  Chances are these are not going to cross the threshold of being saved as personal property.  I have no idea what happens to these items, but please, when you are told the home is foreclosed, just come get your stuff and then confirm.  I have seen this become a big issue in several cases where the agent did not want to stop showings because they were convinced that a sale was about to occur.   

Last but not least, unless you really want to make some type of point that will cause you to have a bad name with the bank seller and have a complaint filed with your local MLS, go ahead and withdrawl your listing from the MLS when informed of the foreclosure.  I realize this is the last line of defense.  I have never seen a bank choose to keep the existing listing agent at this point so there is nothing but bad things to occur by taking this path.

I know it is hard to do, and I do have empathy, but the truth that needs to be accepted is that it is “time to move on”.

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Posted in Management, REO | No Comments »

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