Frustrated and Confused in So. CA

**Jezebel** · 03-18-2009, 11:34 PM

We've all been hearing reports on this BAD BAD economy which is approaching depression level status. Home values in So. California have fallen drastically and are predicted to continue at least until later this year. However, what we've been witnessing as homebuyers is completely the OPPOSITE! We've been bidding $10,000 over asking price on bank owned properties and losing out. I've bought and sold properties at the height of the housing boom and never witnessed this before.
This past Monday a bank owned property went on the market for $374,900 at noon and by 2pm I had my agent fax over an offer for $377,500. (I would have offered more but this was a brand new listing with no other offers-yet...the other listing had 4 offers). Still haven't heard back from the bank. I visited the property (without my real estate agent) and another agent let me in. Without him knowing I made an offer, he said the property would likely sell for around $425,000. Now mind you...this is NOT a short sale..its a bank owned property in need of repairs. On top of that he said even if you did offer $425000 for the house with an FHA loan, the bank probably wouldn't consider it.
First of all, if a property is priced at $374,900 and NOT a short sale, how will the buyers know what the last bid is to bid it up to $425k unless the listing agent gives information out on what the highest offer is? Isn't this unethical/illegal for agents to do this? I just have a hard time understanding how a property could sell for $50k over asking price in this economy without there being some guidance as to how much they should offer from listing agents. Should we give up our quest for buying a bank owned property in So. CA seeing that we are using FHA financing?

**Jezebel** · 03-19-2009, 09:48 PM

Update...7 offers were placed on this property after one day on the market...so much for our RECESSION/DEPRESSION lol. Now this house isnt located in LA or Orange county. This is an area of Southern CA where prices have always been lower than surrounding areas.

Even though I placed an offer on the property within two hours of it going on the market, now I have to complete with 6 other bidders. Bank is saying to submit a best and final offer. The listing price is $374,900. The same size and model home sold 9/08 for $430K. This one needs some repair work..I'd say about 10-20K, so considering that the market has dropped and the repair work..somewhere around 400k seems reasonable? Is a FHA loan hopeless in this situation?

What the HECK is going on?!!!! I keep hearing doom and gloom reports..but the activity I'm seeing is far more than I witnessed in buying and selling 4 homes at the height of the real estate boom!! This makes absolutely no sense to me....

**Auburnrose** · 03-22-2009, 01:13 PM

In Maryland, we experienced the same "crush" of investors/homeowners trying to buy REO homes once they're listed. We've found the secret to getting deals on REO homes is getting them before they're listed. They are a number of ways to do this:

One, connect with some local/regional banks (yes, there are still some of them out there). You ll want to talk with their loss mitigation depts. You'll need to know how to talk to them and be able to present to them why they should bother sending REO's your way. The good news is, banks are much more likely to entertain this now than, say, three years ago.

Two, connect with REO brokers/agents and see if you can get you any "pocket listings". These are deals that are about to hit the MLS but have not yet. Again, you ll need to show why they should.

Hope this helps!

Mark Rosenfeld
Auburn Rose Property Services
mjrhope@live.com

**Auburnrose** · 03-22-2009, 01:16 PM

Also, it's not hopeless to go FHA on REO properties. If you have a letter from a bank, you may be able to show that to the local banks or REO agents/brokers.

Mark Rosenfeld
Auburn Rose Property Services
mjrhope@live.com

**Jezebel** · 03-25-2009, 01:10 AM

Update..this really is BEYOND BELIEF!!

I found out today that the house that was listed for $374,900 is going to go into escrow for somewhere around $460,000 with 17 offers within a few days on the market. Once again, this same model with a 3 instead of 2 car garage, and not trashed sold for $430000 9/08. I did see this property before it was listed and an offer was placed within 2 hours of it going on the market.

We decided smartly not to hold our hopes on this property so we went out looking again this weekend and made 2 more offers on other properties. One was over asking price and the other was comping out low so we made an offer higher than comps but a little lower than asking price. That one had 4 other offers this weekend and the other one had 2. We have not yet heard back on the full priced offer, but someone came in with 50% down on the low comp property and near asking price. I've lost all hope here.

Don't believe all the doom and gloom reports and the falling prices. What's happening now in Southern California is unprecedented IMO. I have FULL loan approval and haven't been even able to get a counteroffer back on any of the properties I've made offers on.

I can't imagine that this will continue, unless of course the prices rise 200% per year...but nothing would surprise me at this point.

**VancouverWa** · 03-25-2009, 11:41 AM

Keep trying. I've been successful with FHA buyers on Bank properties. Thats not the issue, unless a stronger buyer with a similair offer is competing against you.
I'm seeing the same thing in the Portland/Metro market. Multiple offers on Bank properties and short sales.

Every bank is different in how they handle offers. Some sit on offers others respond to offers as they come in. Speed and a complete offer package and a nice sympathy letter usually gets me and my client to the front of the line. However, a bank is focused on the bottom line. Which of these offers is going to net me the most and successfully close.

Best of Luck