I’ve sold a ton of REOs (Real Estate Owned homes – foreclosures) to first-time homebuyers – many of whom I’ve met through HomeGain.com. Before we start looking at homes, I take time to meet with them and explain the entire process in as much detail as necessary. I hate surprises, and I’ve discovered buyers don’t like them either. I want my clients to fully understand the process so they know what to expect once we hit the streets.

In the process, I’ve discovered a sad truth. No amount of discussion or explanation ahead of time can adequately prepare prospective buyers for the process of trying to buy an REO in the current market.

I recently came across a video that so perfectly sums up the process of buying an REO – I decided I have to share it with you. As I watched it for the first time, I discovered I was unsure how to respond … should I laugh … or cry …

You decide.

For additional musings on REOs, also read:

1. Top 10 Things I HATE About REOs: AND 3 Startling Consequences
2. How To Buy An REO – Top 17 Questions Answered
3. Bank Tactics Causing Repeat Of Crash Conditions in San Francisco Bay Area

Thanks to San Diego Castle Realty and Kris Berg for producing the video!

Watch the video on YouTube

I am continually amazed by how little some people know about the real estate business.

Most people generally have a good idea about how the industry works but every now and then I run into someone who is pretty naïve about the home buying process. Even doctors, lawyers, CEO’s and other professionals may not know how our business works.

Here are 10 things you should know about working with a Realtor®.

1)  Realtors® work on commission

There may be a few exceptions here and there but most Realtors work on 100% commission. That means no salary, no draw, no bonuses, no nothing. If there is not a successful closing the Realtor does not get paid. No only do they not make any money they actually lose money. Agents are essentially small businesses with various expenses like advertising, websites, business cards, stationary, direct mailers, gas, time and energy. If they don’t generate revenue they lose money.

Realtors are not public servants. Don’t ask them to work for you if you don’t think they will get compensated with a commission from a successful transaction.

2)  Hire a Realtor®

First figure out if you want to work with or without a Realtor. Some people want to work directly with the listing agent because they think that they will get a better deal on the property. If you do want to work directly with the listing agent keep in mind that they had a prior relationship with the seller before meeting you. The Realtor might look out for the seller’s interests instead of yours. It might be best to hire a Realtor that represents you in the transaction. Continue reading this post

It’s no common secret that the real estate market over the past year has continued to dramatically change towards a market concentrated in short sales, foreclosures and REO’s.  

For those of you that don’t know what REO means — it means Real Estate Owned.  It’s a term used to identify a property is owned by a bank.  Banks actually consider REO’s a liability instead of an asset because they are in the MONEY business not real estate business. 

As a Top Selling Team in Tampa and St Pete, we have modified our business to help service these “niche” markets.  In the first quarter of 2009, nearly half of our business was selling (either listings or homebuyers) distressed properties.  We have learned through much education, courses, certifications, and trial and error the best ways to represent buyers and sellers in these specific situations.

If you are a Realtor and haven’t started working these markets — WAKE UP!  If you are in a market that has not been hit as hard with foreclosures, don’t worry its coming.  It’s time to prepare now.  

If you are a new real estate agent, read up!  I had a new agent join our team this week and just like I’d send this information to a prospective home buyer, I wanted to review it and tailor it to him so he understands the urgency needed to work buyers on bank owned houses.

Below are tips for Realtors representing buyers on bank owned homes. Continue reading this post

If a client asks you to list their house but tells you it was the scene of a gruesome murder or a suicide, or the house is haunted, are you required to disclose this information to prospective buyers? The short answer is maybe.

Material Facts

Most states have disclosure laws pertaining to property condition and latent defects. The legal standard requires a seller to disclose “material facts” known to the seller that may influence a buyer’s decision. Common examples are a history of termite infestation or major damage from natural events (floods). But when it comes to property that may have been the scene of a murder, suicide or even an AIDS related death, states are divided on the issue of disclosure. Courts have given no clear guidance either.

These psychologically impacted properties, defined as “stigmatized” by the National Association of Realtors, are harder to sell, if the particular fact or suspicion is disclosed, according to James E. Larsen, Ph.D. and Joseph W. Coleman, business professors at Wright State University.

Stigmatized Effect on House Sales

Larsen and Coleman did a study of more than 100 psychologically impacted houses. They found that they take 45 percent longer than comparable homes to sell, and price at an average of about 3 percent less. It is not surprising that many buyers will not buy a house where a gruesome crime or suicide has been committed.

At least 21 states have enacted laws, known as stigma disclosure statutes, concerning the (non)disclosure of psychological facts. In those states that have not enacted these statutes, there are no hard and fast rules about disclosing property stigmas. Continue reading this post

Many property owners that would like to sell now find they have to hold and manage. If you own far from where you live or you simply aren’t interested in managing a second business, you should consider a professional property management.

Does One Size Fit All?

No. Property Management companies come in all sizes, some manage 20,000 units and others 500. Many property management companies are a small or family business’s. A large management company should have more resources available, but service may not be personal and it’s easy to get lost there unless you have a large portfolio. That’s the first point to consider; which size management company will give you personal service.

Interview smaller companies that would bend over backwards for your business. You may get better service and price leverage.  If you choose this route, try to assess whether the company can absorb new business quickly, it’s a litigious business and they must be responsive day one.

If you have a single family home or a smaller rental property it’s just not that attractive to many companies. Not much income and although a larger company may welcome you, they may not give you much service. You may find that suddenly, you have many more little maintenance items than ever before as they maximize income within house maintenance and repairs.

How Do You Find Them?

Word of mouth is best. If you don’t have a personal resource then: Continue reading this post

Surrounded by plummeting prices, bankrupting banks, fickle financiers, sagging stocks, cantankerous consumers … It’s time for some frivolity.

If you, like I, show a decent number of properties and, in the process, read the displayed MLS remarks, you’ll quickly discover that the art of good fiction writing is alive and well. With the current onslaught of foreclosures and distressed properties, listing agents have become, by necessity, “creative” with their carefully crafted comments. As I read their information, designed to convey the important aspects of the home, I’d swear some of them are gunning for a Pulitzer.

And then you visit the property, read the comments again and ask, “How did we get there from here?”

As an example, a property I recently visited had remarks stating, “Needs cosmetic work.”

Translation? “Throw in a stick of dynamite and start over!” The carpets were decimated, strips of wallpaper hung peeling from the walls, all the baseboards were missing and there was SUBSTANTIAL water damage to an upstairs bathroom floor and the ceiling underneath. Read, “gaping hole.” And that was just the beginning.

A REALTOR’S job is to sell property, and what they pen is designed to get you and your homebuyer to visit.

Continue reading this post