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

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

I recently read an article at the National Bureau of Economic Research (NBER) which attempted to link foreclosures and home values. The statistics cited in the article concluded that foreclosures are not affecting home values very much and that there are only a dozen or so states with enough foreclosures to induce price drops of 6 percent or more.

The article made it seem as if this was an insignificant number. I disagree that a 6 percent drop in prices in a dozen states due to foreclosures is insignificant, but, I do agree with the premise of the article to a degree – I was unable to find any real loss of value on the whole that was directly related to foreclosures.

I’m also always skeptical of “national” studies in which home values are cited because they are almost always off. As an example, I recently read an article in Forbes which ranked the most expensive ZIP codes around the country. I found the ZIP code here in Atlanta that was in the report to be off by about 30% according to my local MLS – I’m sure it’s more accurate than their numbers. With that in mind, I thought it might be worthwhile to look at a local level and see if I could determine if foreclosures are affecting local home values. I was unable to see that there was a discernable price drop, be it direct or indirect, of home values due to foreclosures.

The methodology I used was to take an area of Atlanta and looked at sales data quarter by quarter with and then without the foreclosures as a baseline from Q1 and Q2 of 2007 and 2008. There was no discernable difference in home values, but, there really weren’t enough closed foreclosures to make much of a difference anyway. That said, what I did find, did not support the idea that foreclosures are bringing down the rest of the neighborhood. So, the next thing that I did was

Continue reading this post

This month’s Agent Success Newsletter features Bill Eiseman of Prudential Decker Realty in Virginia.

In our exclusive interview with Bill, he advises other agents on best practices for handling short sales. With the market full of short sales and foreclosures this year, Bill delivers strategies from approaching a short sale with homeowners, to working with banks, to recognizing warning signs and how to end the short sale successfully.

Listen to this great interview with Bill Eiseman:

To hear more HomeGain Radio interviews, plus find real estate articles, survey results and more, visit ourMedia Center!

Continue reading this post

This month’s Agent Success Newsletter features Alisha Wade, Associate Broker at RE/MAX Achievers in Arizona. In our exclusive interview with Alisha, hosted by Peter McCullough, she discusses how foreclosures are affecting her business and gives advice to other agents who may be facing challenges in a market full of foreclosures.

Listen to Alisha’s feature story:

“Arizona is in top 5 cities for foreclosures in the country – 20% or higher of all inventory are foreclosures. It may be awhile before the market turns around, which makes it really important for an agent to know how to do foreclosures and short sales, and not be afraid to learn how to do them.”

“Short sales are priced $10-15k below cost (and more for foreclosures ) but the danger is when the house won’t appraise, even for a home that was in great condition. It’s great for the home buyer if that happens, but not the seller.”

7 Tips from Alisha Wade:

1. Learn bank processes. Foreclosures are actually very easy to do as long as you know the banks processes. Sometimes the addendum can be 14 pages long – and you really have to read them thoroughly!
2. If you are writing a contract

Continue reading this post

ORANGE COUNTY, CALIFORNIA FORECLOSURE UPDATE:

The Orange County real estate market now consists of mostly bank owned properties for sale.

The banks are scrambling to rid themselves of this massive inventory. Listing agents are presently allowed to list at whatever price they want and a lot of them are listing way below market value.

This doesn’t mean the banks will take this low offer. In fact, I can almost guarantee they won’t. Unscrupulous agents are doing this just to get offers in and scoop up buyers (new clients).

I am seeing multiple offers on REO’s to be the norm right now, any where from 90 to 180 days or more for the banks to get back to the offerers.

What does that mean? Continue reading this post