Why many REOs aren't selling
Mood of the Market
By Tara-Nicholle Nelson, Monday, May 11, 2009.
Flickr photo by bradleygee.I'm a real estate broker and attorney. I put myself through grad school, in part, as a probation officer. So, guess which career made me start carrying a vat of hand sanitizer in my car? It sure wasn't working with criminals!
As the number of REOs on the market has steadily increased, so has the amount of sheer filth my clients and I encounter on a daily basis. In fact, most of my clients have developed a bizarre (but sensible) Pavlovian response: When my thumb presses the little doors that slide open the middle console in my car, they hold up their open palms to receive their ration of alcohol gel.
And it's not just our hands that get contaminated. The other day I had to phone home to my husband to ask if he was aware of any way one could scrub lingering foul odors out of one's lungs. (He wasn't.)
Showing bank-owned properties (aka REOs, for "real estate owned" by the bank) reminds me of that reality show, "Clean House." The host is an ebullient, Southern-accented comedienne by the name of Niecy Nash. The premise of the show is that Niecy and her team travel the country visiting homes that are experiencing, how shall we say, a breakdown in basic housekeeping and organization, help the homeowners throw out/sell/donate as much of their junk as possible, and organize and decorate what remains.
The show's signature scene is a moment that is somehow endlessly entertaining, no matter whether it takes place in Cleveland or Connecticut; Niecy walks in to the house, takes one gander at the family's 20-year collection of gilt faux Rococo dancing lady lamps stacked floor to ceiling and hollers, in utter dismay and mortification, something to the effect of "What kind of madness and mayhem?!?!"
Homebuyers across the country are joining Niecy in spirit, wondering to themselves (and their Realtors) -- what kind of mayhem is going on in these REOs? I'm not talking about fingerprints on the walls and the fabled missing fixtures and plumbing -- I'm talking about grime, filth, and animal and human waste, smeared on the walls, ground into the carpets and spurted (cue here for that quizzical, "How did they even do that?" look) onto the ceilings.
And this is not only the stuff of an angry homeowner trashing a home in a flash of anger; a lot of what we're seeing reflects layers and layers of years and years of really hard living in a home. Like a connoisseur of fine wines, I can now take one sniff and rattle off the vintage: oh, that's a 1999 dirt, with undertones of sin and topnotes of bacteria. ...CONTINUED
All rights reserved. This article may not be used or reproduced in any manner whatsoever, in part or in whole, without written permission of Inman News. Use of this article without permission is a violation of federal copyright law.
You must login or register to post a comment.
Submitted by J Philip Faranda on May 11, 2009 - 12:55pm.
"Undertones of sin." Awesome. Thanks for making such a needed point with such well-written humor. I needed that today!
www.jphilip.com
www.WestchesterRealEstateBlog.NET
www.NYShortSaleBlog.com
www.NYPhotoBlog.NET
Submitted by Chris Whittaker on May 11, 2009 - 12:58pm.
Funny commentary on the market Tara. I wonder though, is it just the REO's? I went on a listing appointment last week and it's been tenant occupied for 6 years, free and clear. There were layers of filth and neglect. I'm not a snobby guy, but come on, there's kids living here. It's disgusting. I also list REO's (only one bank unfortunately). During a cash for keys I met the past homeowner to do the exchange and they had a 6 year old daughter. They were very upset and I admittedly felt bad for them. After walking through the house to check on its condition, I changed my mind. There were roaches in all the rooms and they were eating just fine. Some people should never have been homeowners to begin with. They should make it mandatory that if you want to buy a home, you have to take a few classes (just like driving a car, or having a baby). I know that doesn't solve our current mess, but it might prevent any future outbreak. Good luck out there.
Chris Whittaker
chriswhittaker@kw.com
www.BuyLasVegasOnline.com
Submitted by Mike Cleaver on May 11, 2009 - 1:06pm.
I'm not looking forward to the hot summer. Last year I was showing REO's and came upon one that was a real stinker. I unlocked the front door and as I pushed it open the stench hit me and I almost lost my lunch. I closed the door and needless to say we didn't view it.
I have seen homes that have piles of rotting garbage and other organic matter which would be fine for a compost heap.
There is a problem with the super REO agents who NEVER see the properties they list, relying on service companies to manage the properties.These are the agents who never answer the phone, who leave a long list of options on the VM msgs telling us what to do and what not to expect.
REO's are not for the faint hearted.
Mike Cleaver
651 894 4755
Skype:lonestar89
Submitted by Emmanuel Scanlan on May 11, 2009 - 1:07pm.
Very good and humorous look at the situation! I've inspected my share of these homes and am never surprised at what I find! The sad part is many were in relatively nice neighborhoods and would have potentially sold for more, and quicker, if the REO Agency did have a basic cleaning performed.
Emmanuel J. Scanlan
PS Inspection & Property Services LLC
www.psinspection.com
214-418-4366 (cell)
TREC License # 7593
International Code Council, Residential Combination Inspector #5247015-R5 (Electrical, Mechanical, Plumbing and Building)
Certified Infrared Thermographer (ASNT-TC1A Standards)
Texas Residential Construction Commission, Third Party Warranty Inspector #1593
Texas Residential Construction Commission, Inspector, County Inspection Program
Texas Department Of Insurance, VIP Inspector # 08507061016
Hayman Residential Engineering Services, Field Technician
CMC Energy - Certified Energy Auditor
Knowledge is power, but sharing knowledge brings peace!!
Submitted by Christine Donovan - Costa Mesa Real Estate on May 11, 2009 - 1:14pm.
You give an amusing twist to a serious situation. Many times both my clients and I are very uncomfortable walking into an REO and eager to get out of it.
If a buyer can't stay in the house long enough to really evaluate it, the odds of them buying are slim to none.
Christine Donovan
christine@donovanblatt.com
www.livingcostamesa.com
Submitted by Judy Orr on May 11, 2009 - 1:26pm.
In one area I was showing reo's we didn't even need the locbox key or combos. Doors and windows were kicked in. We were afraid of who we might find inside.
I showed a short sale yesterday with around 10 people and 2 dogs occupying it. You could barely see the house with all the furniture, people and junk. We opened the attached garage and quickly realized that this was where the 2 dogs "went."
Also, I can't believe how many reo's I've shown that don't list the fact that there is an in-unit laundry or a garage in a condo and omit many other desirable features. That's OK by me as my buyer clients benefit since they're not up against as many other bidders.
Judy Orr
Orland Park Homes
Classic Realty Group
708-536-8200
Submitted by chis eliopoulos on May 11, 2009 - 1:57pm.
I think you are making a big deal out of nothing.Every buyer that gets turned off by the condition of these houses has no business of viewing them.It is NOT the job of the broker to clean these houses is the job of the owner.Now the reason that some of these houses are not selling, is not that are cosmetically (and some structurally) dilapidated, the reason is that many are overpriced and in undesirable areas (wrong site of the tracks).I SO CAL and especially West Los Angeles any coach roach,flea bag ,falling down property will sell with multiple offers when is priced well.Yet there not that many foreclosures in that area. In conclusion statistically (in CA) foreclosed properties are more in numbers in secondary choice areas to begging with and they do tend to be overpriced.
Submitted by Ted Jernigan on May 11, 2009 - 2:33pm.
Ted Jernigan
Ebby Halliday REALTORS
McKinney, Texas 75071
Jernigan@ebby.com
972-489-6173
We must be extremely lucky here in Collin County Texas. The majority of the REO property we have here is at least clean. Listing agents hire services to do cleaning and even minor rehab. Many houses get a reasonable paint job and new carpet. These properties are selling. Even houses with missing light fixtures and appliances can be clean. Listing agents who don't do these minimal services are doing their clients and the local real estate market a disservice.
Submitted by Robert A. Hulme on May 11, 2009 - 3:55pm.
Working primarily with Buyers, in this market, has given me the opportunity to view many REO's. I have been very lucky though, the value has been there and the condition has been adequate.
I guess it really depends on where you choose to call home and whether animals were allowed to purchase homes there in the past. We are fortunate to have human beings living in our homes here in Utah.
Robert A. Hulme
Realtor, GRI, e-PRO
Prudential Utah Real Estate
Loan Officer
Mortgage Xpress
www.AlpineUtHomes.com
www.AmericanForkHomesForSale.com
Submitted by Jeri Gutner on May 12, 2009 - 7:05am.
Aren't the banks really to blame . . . once again . . . for all of this? Why don't they demand a full inspection by the listing agent and a report on the condition of the property??? Why? Because whatever loss they take they'll write down and just keep grabbing money from the government. We are all enabling the banks to devalue our homes, our neighbors homes and our towns by putting up with short sales that take 2 to 5 months and REO's with human waste in them. Why doens't NAR get someone to do something????
Submitted by Bart Wilson on May 12, 2009 - 8:26am.
Hi Tara,
Interesting take on REOs, but from where I sit, it's the stupid banks that are to blame for slow moving REOs.
Here's what the typical bank does AFTER the home goes into foreclosure.
1.) The bank sends out a contractor to inspect home and make it REALTY Ready. Meaning, they fix the dry wall, paint, steam clean the carpet, etc.
2.) The bank then sends out someone to do what we now call the "Digital Drive by." They lean out the car window, slow down and SNAP a single digital photo of the outside of the home.
3.) The bank then sells their REO list to one of the national listing portals or works with a local REALTOR.
4.) I live in Colorado Springs and I am moving to Denver. I go on line and find this incredible home priced $40,000 under market value.
5.) My excited wife behind me wants to know what the kitchen looks like. I tell her I have no clue as there is just one photo of the home and it's an exterior shot.
6.) We click the browser's BACK button and we go back to searching.
This is WHY REO's for the most part just aren't moving. Banks have no clue how to market or package homes on line.
Smart Banks are now getting this, and they are now getting their own 360 virtual tour cameras and starting to shoot the inside and outside of their homes.
Bart Wilson
Founder & CMO
Voyager International
http://www.Voyager360.com
Submitted by Ryan Elliott on May 12, 2009 - 8:51am.
Excellent story that highlights one of the biggest issues facing many markets. REO's driving values down at an alarming pace. I believe the root of the problem is most REO agents have to many listings. Some of the REO agents have 20-30-40 or more listings. You call for details and you can't even get them on the phone, they are "to busy." If they are to busy to get on the phone and talked to you about a potential buyer, then they have to be to busy to communicate with banks about the reasons these listings are sitting there. They are dirty, trashed, or many just need a coat of paint. I think banks need to put limits on the number of listings they will give to any one agent. Once the listings sell they can give them some more. If an agent has a hand full or listings, they are going to make sure that house is salable. Meanwhile we all watch prices sink because one of these dumps just set a new low.
Ryan Elliott
ryanassist@gmail.com
Submitted by Dennis Hearing, The Hearing Group on May 14, 2009 - 4:54am.
Ahhhhh, I love the smell of a fresh REO in the morning! Smells like money to me!
PS we clean ours at least once!
Demmis Hearing, The-REO-Guy
REO Pro Listing Agent
Ft Laudedale FL USA
DennisHearing@KW.com