Saturday, April 16, 2011

Banks Hit Bottom. Keep Digging.


Part of the fun of being a Realtor is that you are required to attend 24 hours of continuing education in every two year period. The categories covered include legal matters, fair housing and ethics among various others. Some of the presenters on these topics can be quite dry (not always their fault) while others can make almost any subject entertaining. No mean feat when each class is 3 hours long, by law.
Therefore, like many other Realtors I am sure, I have a small group of "favored" instructors whose classes I am happy to take. One such class occurred just last week. As a Realtor, it is sometimes interesting to get together with other agents to share stories, both good and bad, about the real estate market in general. That day was no exception.
It began with a pet peeve of mine, and one about which I have posted previously, which is being forced to pre-qualify with "preferred" lenders on REO properties. This led to a general diatribe against the inefficiencies of most banks dealing with both short sales and their own inventory.
We heard of banks foreclosing on properties on the day before a scheduled short sale that had been approved by their mitigation dept. with full knowledge of that fact. We heard of some banks in that situation that then re-listed the property at a price that was lower than the approved short sale price. Shareholders, are you listening?
The best tale was a doosy! The buyer was negotiating an REO purchase with a bank. The buyer kept submitting ever lower counter-offers to the bank until they finally accepted the lowest price. Apparently, they thought the market was crashing around their ears. Too funny!
Remember, these banks are desperate to take over the real estate business, particularly the listing side. Yet, many seem to struggle with just their core business of managing loans.
I say be careful what you wish for. If banks continue to dump homes (thereby lowering prices across the board) they may indeed end up owning the whole real estate market, inventory included. Of course, at that time it will all be worthless, so they will be welcome to it.
What say you?