As the fallout from ForeclosureGate continues, home buyers are growing increasingly wary of distressed homes. In fact, in October, 14 percent of owner-occupant home buyers and 6 percent of real estate investors refused to even view foreclosed properties[1]. When it came to short sales, concern was even higher, with 30 percent of owner-occupant buyers and 20 percent of real estate investors opting out of even viewing short sale homes, reported Campbell Surveys last week.
Thanks to rumors that some lenders might be pulling all their REO properties off the market and accusations of foreclosure “malpractice” horror stories flooding the media, home buyers remained spooked even after major lenders called an end to their moratoria on foreclosures. To add to the difficulties, servicing issues created disruptions in closings for 24 percent of all October deals, and a full 12 percent were delayed or canceled due to REO title issues.
As a result of this understandable buyer skittishness, prices on distressed homes have dropped even further than they already were, while non-distressed properties’ prices rose. A Florida real estate agent who participated in the survey commented that “Until the fraud mess gets cleared up, most of our clients are second-guessing their interest in REO properties.” Many other agents report discouraging buyers from even considering “wasting their time or mine” with short sales because “short sales are more than likely to fail before closure.” Agents with this mindset believe that buyers are actually missing out on good deals while they are waiting for an answer on short sales.
[1]http://www.dsnews.com/articles/paperwork-problems-steer-homebuyers-from-distressed-properties-report-2010-11-22
“Many other agents report discouraging buyers from even considering “wasting their time or mine” with short sales because “short sales are more than likely to fail before closure.”
I think this is a very telling statement about all too many agents. Instead of learning how to help the short sale process through to a good conclusion, they whine about their time! A good agent will close a good precentage of these if they learn how to work them! Sounds like a good way to spot a lazy, uneducated agent to me.
The rest of the information just confirms what some knew as soon as the problem with paperwork came to light. It will only get worse as busy body AGs work to make more political points hay, at the expense of the housing market and the economy. The good part is more cheap deals for me, so it is not all bad!!
“Sounds like a good way to spot a lazy, uneducated agent to me.”
I’m sorry sir, I disagree. Why? Time is money and the average time to close in Northeast PA on a Short Sale is ten months.
I’m not taking the table crumbs. Never have, never will.
Have a good Thanksgiving.
Hi Brian, Thanks for the update on REO’s. We agents are steering clients away from REO & Shorts because each bank is playing its’ own mystery game of pin the price on the house. They are using listing & buying agents to generate tons of useless paper work that 1) never gets looked at & 2) they can’t be bothered following up on, if it ever gets seen.
It is not uncommon to make a full price offer, never get a straight answer from the listing agent, then the property closes a month later at a lower price. Screw banks. Don’t bother.
Thanks, Scott B. FlaAgent.
Exactly. Full price offer…”Dum, dee dum, dee dum. How many martini’s we havin today Mike?” Fugettaboutit.
I second this opinion, we made cash offer in writing to their listing agent with solid bank proof of fund availability for full amount and can close in 15 days. There was no response after requesting us to extend our offer deadline for another 10 days, which we granted thinking they will even look at the offer.
They instead moved it to foreclosure. This was a BoA short sale.
In my region, that’s all buyers want – stripping someone else’s equity. They are not interested in the house, just the deal. Shameful.
Why is this shameful? Is it your premise that it’s bad to look for a good deal?
REO properties in non-judicial states can be purchased safely with correct purchase & sale agreements. Some investors are using LLC to aquire property and even self direct IRA’s as a way to safe guard their investments. Once closing and recording has occurred with a statutory warranty deed it is a done deal. As a paralegal realtor I have never seen a case where the lenders come back to the properties new owners looking for defieciency monies lost in the foreclosure cleansing process. Once reversion back to bank happens the property has been cleaned of all liens and nasty clouds. This is why I recommend to all my buyer clients to pursue bank owned rather than short sales. Under the right circumstances a short sale can be a winner…unfortunately it is usually a mirage!
I can’t understand how 10% of serious buyers abandoning the process is some kind of massive boycott.