Bank owned properties/REO's....What is it going to take for them to accept "Market Value" Pricing????

Submitted by David Saks on July 10, 2008 - 6:03pm.

There's an over-supplied, over-priced product at hand with more limited financing options. The banks play roulette with the house during the offers and wait until the last contractural minute to begin negotiating, while at the same time staring at market curves. They're looking for opportunities to stretch the shinplaster at the expense of the buyer. Pricing a property excessively high, perpetrated by the trust or bank, is, perhaps, indicative of recession and the shape of things to come because of the influence of a tragically unhealthy national economy. Of course, we can't brush off the possibility of a lousy BPO or appraisal.
David Saks
Real Estate Broker

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Submitted by Bill Lublin on July 11, 2008 - 12:29am.

Bill Lublin CRB,CRS,GRI
CEO CENTURY 21 Advantage Gold
Visit me at MovePhilly and REreflections Or Click Here to
Find Homes in PA & NJ
David;
Having been an REO Broker for the past 20 years, what you percieve as overpricing by the bank is an issue that results from the lender's reliance on a valuation of a property that they cannot physically inspect , and the large volume of property that is on each asset manager's desk.

To assume some plan on the part of the seller to delay the sale of the property by pricing it inappropriately is unreasonable on the face of it. Most asset manager's incomes are tied to the performance of the assets they manage in some manner.

The influx of agents into the REO market without experience in that market is a more likeyl cause of such a problem. Recessions are larger national events. Improperly priced properties are a much more local phenomenon

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Submitted by David Saks on July 11, 2008 - 5:28am.

First, I'd like to thank Mr and Ms. Darney for the opportunity to engage in this dialogue.

Mr. Lublin:

You said: "The influx of agents into the REO market without experience in that market is a more likely cause of such a problem."

I disagree.

I do believe, however, that such a comment, which is a baseless reproach, albeit a mild rebuke and criticism for misdeed ascribed to an amateurish and raw level of skill, will be perceived by those "unexperienced agents", your competitors and colleagues, as characteristic of someone having an inflated or rather hyperbolic idea of their own importance when it comes to engaging in a discussion intended to produce a satisfactory agreement with any bank.

You begin with "...been an REO broker for 20 years" and end with inexperienced agents are responsible for the problem. I don't have any trouble with your attempt to sell your experience, just the blame portion of your comment. I saw it coming like a bad movie script with a predictable ending. We can't all be Jedi Masters in the REO arena, but I don't believe agents are uniquely responsible, either.

Additionally, I don't think you understand what I said. What I said is that banks can hold up the sale while waiting for market correction. Overpricing is part of the psychology behind that action. Recession is generally considered to be the state of the economy declining, and a widespread decline in the GDP, employment and trade lasting from six months to a year. The declines have been well over a year now, inflation is rampant, and the government continues to deny the fact that the country is in a recession.

Additionally, as you well know from your twenty years of service, Broker Price Opinions (BPOs) are used by brokers/salesmen as a service to their clients or potential clients to determine a competitive listing price on a property. Banks and other lenders have been seeking brokers to provide BPO’s on Real Estate Owned (REO) properties for some time now.

Real estate agents are advised to insert this or similar language into the BPO:

"This is a suggested listing price done in anticipation of getting the listing."

Also, we're cautioned not to use the word "value". The appraisal division of any real estate commission may consider any information using the word "value" as an appraisal, which a real estate agent is not allowed to perform.

I'm not a certified fraud examiner, but I also believe that anytime something is intended to deceive a customer or client by deliberate trickery intended to gain an advantage, perpetrated by a bank or groups of banks or lenders who make deceitful pretense regarding value, and that intentional deception results in an injury to a client or customer, that bank, commercial, residential or industrial activity will suffer because that banks reputation is now perceived as counterfeit, worthless and void of integrity by consumers.

I view seriously the Darney's concerns that banks are not pricing properties fairly. There are always benefits to be derived from ethical behavior in business. When a customer or client believes that you have worked in a professional and honest manner in their behalf, and have protected their interests, they'll refer others to you.

When you point a finger at any group it's a good idea to have the evidence in hand to back up your accusation.

In my state, bankers have said that the relative health of the Tennessee economy had protected them to some degree from more serious problems experienced in states such as Florida and California. But even so, most regional and local banks have been slammed by their share of unpaid or past-due real estate loans. I don't subscribe to local theory. The world is more connected than it was twenty years ago.

David Saks
Real Estate Broker

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Submitted by Bill Lublin on July 11, 2008 - 6:29am.

Bill Lublin CRB,CRS,GRI
CEO CENTURY 21 Advantage Gold
Visit me at MovePhilly and REreflections Or Click Here to
Find Homes in PA & NJ

David;

I appreciate your response.

In response to my comment about inexperienced agents possibly being the cause of some inaccurate valuations, you said, " I do believe, however, that such a comment, which is a baseless reproach, albeit a mild rebuke and criticism for misdeed ascribed to an amateurish and raw level of skill, will be perceived by those "unexperienced agents", your competitors and colleagues, as characteristic of someone having an inflated or rather hyperbolic idea of their own importance when it comes to engaging in a discussion intended to produce a satisfactory agreement with any bank"

My statement is not a baseless reproach, nor in fact am I reproaching anyone. It is, in fact based upon my experience and observations as the REO market has changed during the time I have engaged in that specialty.

I did not state my experience was because I have an inflated sense of self importance, but merely to establish the base of experience that led me to make the statement that I made. And though I do not claim to be a Jedi Master, I do believe that being successful in a niche is indicative of some knowledge which may be specific to that niche.

You later say, "Additionally, I don't think you understand what I said. What I said is that banks can hold up the sale while waiting for market correction. Overpricing is part of the psychology behind that action"

I did understand what you said. However, again based upon my experience with a large number of national lenders and Asset Managers, I would suggest that your statement contradicts what I know about the desire of lenders to dispose of the asset in an orderly manner, as rapidly as possible , without wasting the asset. As I mentioned in my earlier comment most of the people and departments involved in the asset disposition process are graded by the amount of time the asset is held in inventory so they're actually motivated to sell the properties in the most reasonable amount of time, for the best price possible. If a bank didn't want to sell any asset, they are not forced to market it.

You also say "Broker Price Opinions (BPOs) are used by brokers/salesmen as a service to their clients or potential clients to determine a competitive listing price on a property. "

In fact, in any number of markets nationally, providing BPOs for a fee, rather then in anticipation of the listing is also a large part of the REO business. Many states (such as mine) do require some form of appraisal license to provide that service (I would tell you that I have been licensed as an appraiser for a number of years but I fear that you would somehow percieve that to be hyperbolic), but many states do not. In any case, going back to my original point, in an effort to obtain valuations without the expense of a formal appraisal, salespeople are sought out to provide these services,and in many cases, are told by trainers that they need to start in the REO business by performing BPOs.

In many instances, these agents think that the highest number wins, and they provide overly optimistic opinions of value. In other instances, the BPO provided is an exterior BPO. And if an agent has limited experience in the field, without substantial knowledge about potential interior issues, the valuations may also be skewed.

You then make 2 statements which seem to be contradictory.
You say, "I'm not a certified fraud examiner, but I also believe that anytime something is intended to deceive a customer or client by deliberate trickery intended to gain an advantage, perpetrated by a bank or groups of banks or lenders who make deceitful pretense regarding value, and that intentional deception results in an injury to a client or customer, that bank, commercial, residential or industrial activity will suffer because that banks reputation is now perceived as counterfeit, worthless and void of integrity by consumers.

And then you state later, "When you point a finger at any group it's a good idea to have the evidence in hand to back up your accusation."

In the first paragraph you seem to be making some accusation that the lending institutions are conspiring with some malicious intent, though you offer no proof of that. In the second paragraph, you state appropriately that you shouldn't do that.

As far as good ethics go - I'm a big supporter.

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Submitted by David Saks on July 11, 2008 - 9:23am.

Mr. Lublin:

Respectfully, you've clearly demonstrated a deficiency in the skills necessary to differentiate definition and favorably disposed advice, not antagonistic or hostile, from accusation, as you've suggested by claiming that I have presented you with a contradiction. Your observation is a prevarication of my intent.

Perhaps I should have elaborated that homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing. The recent rapid escalation of home values, particularly in urban areas, resulted in significant increases in home equities, which are usually the greatest asset held by homeowners. During the period of time between the commencement of the foreclosure proceedings and the scheduled foreclosure sale date, homeowners in financial distress, especially the poor, elderly and financially unsophisticated, have been vulnerable to the importunities of industry professionals who induce homeowners to sell their homes for a small fraction of their fair market value through the use of schemes which often involve oral and written misrepresentation, deceit, intimidation and other unreasonable commercial practices.

If you must have proof, proof it is for your perusal, sir, and I would refer the following for your further investigation which may serve as a healthy indicator of that which orients you generally as to the character of my statement, of which you implied to be contradictory in nature, of which I also disagree.

http://www.MortgageFraudBlog.Com

http://www.mortgagefraud.org

http://www.museumofhoaxes.com

http://www.mortgagebankers.org/FBIMortgageFraudWarning.htm

http://www.fraudblogger.com

http://mbafightsfraud.mortgagebankers.org/fraudupdates/industryupdates.a...

http://mbafightsfraud.mortgagebankers.org

http://www.topblogarea.com/sitedetails_3441.htm

http://www.usdoj.gov/criminal/fraud.html

Good day, sir.

David Saks
Real Estate Broker

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Submitted by Bill Lublin on July 11, 2008 - 1:29pm.

Bill Lublin CRB,CRS,GRI
CEO CENTURY 21 Advantage Gold
Visit me at MovePhilly & REreflections Click Here to
Find Homes in PA & NJ
David;
I agree with your clarified statement, though you should understand that a large number of foreclosures are due to death,drugs,alcohol,divorce, and gambling. That core of the REO buisness aside, your last post makes a much clearer statement.

What I thought was contradictory, was your comment about fraud which was written in a manner which indicated to me that you were speaking about the banks who were selling their REO properties - who were, after all the people we were talking about.

I guess I just missed your segue from the REO departments and asset managers to the mortgage operations which originated the loans (who are often different companies) - Your re-statement is much clearer in your last post. Though the manner in which you wrote was a little difficult to understand.

Even in response to your statement there, I would suggest that you may be unfairly blaming lenders for the connivances of the people who originated the loans, some of whom worked for those companies, but many of whom were mortgage brokers, or bankers who were obtaining wholesale funds from the insititutions actually making the loans, and who are now stuck with the problem of disposing of these properties, and pricing them to get sold (which takes us back to the original thread of the article). Of course some of the lenders themselves may have culpability, but unless that's demonstrated, I'm not sure they shouldn't be given the benefit of the doubt. That is, of course, a purely personal decision.

Not to be critical, but perhaps simplifying your response would avoid the obfuscation that lead me to believe you had contradicted yourself. While I appreciate the links, and am sure that they will be found useful by the readers of the thread, your explanation this last time was more then sufficient. However disseminating that kind of good infomration is always a benefit to the community.

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Submitted by David Saks on July 12, 2008 - 3:21am.

Mr. Lublin:

I've reduced my response to it's lowest common denominator for you.

I've made no specific reference and used the term "industry professionals" in my last entry. I've also committed to generalization without smearing pie in anyones face. I did suggest a possible scenario with the banks and the appraisals, including BPO's, in my first entry that seems to stalk me now.

I've additionally not used the terms "mortgage broker" or "mortgage banker" in the same sentence with the term "lender" which should vindicate me of your accusation of "...unfairly blaming lenders", of which, however, you seem to have charged full circle by taking it upon yourself to cast blame where blame is due with "....for the connivances of the people who originated the loans, some of whom worked for those companies, but many of whom were mortgage brokers, or bankers who were obtaining wholesale funds ...", to wit"...some of the lenders themselves may have culpability, but unless that's demonstrated, I'm not sure they shouldn't be given the benefit of the doubt".

You're clearly vocal about who may or may not be at fault, Mr.Lublin.

Perhaps a poll should be taken which could put the issue at rest as to who is to blame.

Without compromising the string, if I've suggested anything, it's that some lenders could share the blame.

David Saks
Real Estate Broker

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