News From the Foreclosure front-lines: Something Smells

by Alex Stenback on May 6, 2009

The foreclsoure mess is causing all sorts of market distortions – this we know.

To that point, Ross Kaplan, real estate agent (and prolific blogger) over at City Lakes Real Estate Blog, gives a fascinating account of what it is like working in a market with many foreclosures, and how insane and frustrating the process can be for a buyer and real estate agent

I excerpt one tidbit, but read all – lots of good stuff:

A small but growing number of foreclosed homes appear to be intentionally priced dramatically below market…The result, as you might expect, is a feeding frenzy: I’ve now seen — and participated in — several deals where there were more than 15 offers on a single home.

{ 3 comments… read them below or add one }

Aaron Dickinson - Edina Realty May 7, 2009 at 6:29 am

I’ve been seeing it and hearing it too. It’s a terrible way to do business and very frustrating for my clients and I. Plus, I have an overall ethical objection to how some of these REO brokers are representing (or not representing) their clients.

About a month ago my clients submitted an offer on a REO that was in multiple offers. Their offer was well above asking price but another offer was selected. Now the house has come back on the MLS… apparently the prior PA did not get to closing. My client found the house back on the computer when they were searching… it has been multiple days since it came back up and the listing agent has made no effort to contact me to see if my buyer is still interested. I’m not surprised though as this broker almost never responds to my phone calls or emails.

The buyer was so frustrated with this broker (we’ve tried to buy several of their listings) that they’ve now decided they no longer want to consider any of that broker’s listings and/or foreclosures in general! Nice job REO broker.

Ray Klotz-Edina Realty May 19, 2009 at 5:53 am

When you start looking at the short sale side of the housing market, I am finding listing agents accepting multiple offers on a particular property and not telling its showing desk that an offer has been accepted. What this means is that when I were to call for a showing and ask if an offer has been accepted, invarialbly the answer is no, I show the property, write an offer on the property and find out on submission of the offer, there has been multiple offers already and one or more are at the bank for approval. I recently had someone drive down from Grand Rapids, MN to see a property only to find out there were multilple offers even though I had asked the question of offers when I made the appointment. I have now taken the stance that I turn these agents into the MLS because , if the seller signs the purchase agreement, a valid purchase agreement has been executed. Just because the PA is contingent on the bank signing off on the loss, is no different than the PA being contingent on a inspection or financing or buyer seeing and approving of HOA documents, etc,etc,etc.

Richard Stabile Bergen County Real Estate May 21, 2009 at 7:01 pm

I am completely convinced that the banks put less thought into getting rid of the asset at the best price, than when they gave the money away in the first place. I have seen banks list with out of the area brokers, who do not service the property ,nor do they assist in getting it sold. If they would hire a good agent and price it corectly they would get a better price and not distress the market with all these people dreaming with unreal expectation.

If they would put a higher level group together to work the sales, I am sure it would be worth their wild.

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