The bank-owned property sale is fairly commonplace these days. The amount of foreclosures in the Carson Valley is unprecedented, and has resulted in a niche real estate market with unique business practices. When a bank owns a property the sale process is different than when dealing with a private party.
The first difference comes when they value the property. They begin before the foreclosure sale by getting a Broker Price Opinion, BPO. After they obtain title to the property via the foreclosure sale they usually order two BPO's to determine value. After that they select an agent to list the property with and ask that the agent prepare yet another BPO. During this process the property value usually plummets due to the post-foreclosure condition of the property. With one of the first lender actions subsequent to obtaining title being to turn off all utilities causing the value to continue to drop as the landscaping dies.
Most lenders hire an Asset Manager, AM, to handle the sale for them. The Asset Manager orders the BPO's, prepares the property for sale, hires the listing agent, negotiates the contracts, and sees the escrow through to close. The BPO Listing Agent communicates with only with the Asset Manager, and primarily via computer.
When an offer is presented it isn't emailed or faxed to the Asset Manager, rather there is a computer menu that the agent completes by checking and filling in the appropriate boxes to reflect the terms and conditions of the offer. There is also an area for notes so the agent can make comments to the AM to provide some perspective about the offer circumstances. Counter Offers are also made via computer. We have actually received an AM Counter Offer at 6:00 p.m. on a Saturday. That is refreshing as it is in keeping with conventional real estate to keep the negotiations flowing. Historically, bank owned property transactions were a M-F/8:00-5:00 operation.
Once accepted the offer and related documents are sent to the AM via email. They are signed and returned with the AM's special Disclaimer documents (a must-sign, non-negotiable package) for execution by the Buyer, and the escrow is opened. From there it is pretty much business as usual.
Our Advice: The REO sale process has been streamlined since we last wrote about it. The AM's are more responsive, act quicker, and are willing to engage in "Ping Pong" negotiations until a transaction is put together or it is accepted that it cannot be put together. The AM Seller has no emotion in the transaction - they are just dealing with numbers and circumstances - which can be a benefit to a Buyer making a reasonable offer. The Seller isn't concerned about their next purchase, their perceived "loss" since the market dropped, or the memories incurred during the course of ownership. Make a good clean offer that highlights your strengths and you can be making the proverbial "scream'n deal" in no time.
REO's offer a realistic means to make a good deal today. Their historical burdensome processes are now themselves history. Don't fear the REO - consider the brown lawn a welcome mat to a green return on your investment.