Big Bear Real Estate Blog

Buyers flock to Big Bear Bank Owned Property

By Joe Pecoraro

 

 

This past weekend I did an Open House on a newly listed bank owned property located in a very desirable neighborhood. The cabin was built in 2001 so both of those features alone would place it high on any buyers list. Not to mention the fact that it is was very aggressively priced...

 

So I set up my signs, opened the door and got ready to show the home. Not more than ten minutes later, the first car showed up.

 

With flyer in hand I went to greet the potential buyers and then realized they had a local agent with them. I told the agent to go ahead and show the house and I would stay out of her way.

 

Walking out the front door I noticed another car pulling up.  This time I recognized the car right away, it was another local agent. He was bringing another interested party to look at this cabin that had literally been on the market less than 24 hours.

 

Naturally we decided to give the first agent and her clients time to complete their tour before sending in the next group.

 

Thinking that this had to be a fluke, two agents showing up at the same time to show the same house, I got ready for the next visitors.  I had placed my signs in great locations and I knew that it wouldn't be long before they attracted a well qualified buyer that would love this home and make a full price offer.  While standing at the street in front of the house, daydreaming about my "new clients" (that were no doubt less than a block away), I saw another car I recognized slowly approaching me.  You guessed it, another agent with clients. 

 

At this point it looked like the original agent was wrapping up her viewing, and the second agent was making his way into the home.

 

 I met up with the latest agent and explained the situation.  The agent basically talked to his clients, and got in line.  Sometime while I was talking to this last agent, another car (that I didn't recognize) pulled up to the property.  I waited anxiously for the driver to open the door, so i could give him a flyer and figure out how I was going to take cuts in line to conduct MY "Open House". 

 

While I was waiting another familiar car was coming down the street.  I could clearly see the agent was driving by himself as he parked and began to get out of his car.  The minute he did the driver I had been waiting for, slowly opened his door and began to get out.  I didn't even have to ask, I knew he was there to meet this fourth agent that had just pulled up. WHEW!

 

I could go on and on about how this continued for the next couple hours but I think you get the point. 

 

Buyers were flocking to this new listing like it was built on a mound of gold and all the potential buyers seemed interested

 

Since I had so much time to think about this situation, I put myself into the shoes of the agents showing the home.  I had a few thoughts I wanted to share with you. 

 

First and foremost is the fact that if this property was not priced so aggressively, there would never be this level of activity on it and I knew then it would was going to sell for at least the full asking price....maybe more.

 

Secondly, I thought about how if I was representing one of these clients, I would advise writing the offer at nothing less than full price.  Maybe even a little over.  I would also let them know to expect a multiple party counter that would be a "best and final" offer.  This is the most common counter on a bank owned property when it has multiple offers.  It kills any chance of slowly negotiating the lowest price and terms for the purchase.  If this is the type of buyer you are, which there is nothing wrong with, focus on other properties that aren't as aggressively priced or even look at short sales (if you have the time and patience).

 

And finally, I got excited about our Big Bear real estate market.  Prices may be down but interested buyers are definitely out there. This is usually a slow time of year for us and here we have SEVEN potential buyers.  For two straight weeks I have had buyers write offers on aggressively priced Bank Owned properties like this one.

 

Both buyers wrote strong offers the first day the properties were on the market, and both of my buyers got beat out by other buyers.

 

This may be a buyers market but if you are looking for a great house at a great price, don't be surprised to find you are competing with other buyers.

 

REO Timelines

 

-Israel Barden

Originally Posted At www.bigbearilluminated.com

Buying a bank owned (REO) property is a much different process than a traditional listing and it is imperative that your Realtor know the difference. If your Realtor is not aware of the differences, they could not only cause you to lose the property, but also cost you money in the process. Let me explain.

Banks hold all the cards in a bank owned transaction. They don't have disclosure requirements and set all the rules. They usually make the buyer sign an addendum that basically takes away most of the buyers protections and puts the ball squarely in the banks court. They set out a timeline you, as a buyer, have to meet or face the consequences. While they don't have to deliver anything until they feel like it.

For instance, I have a bank owned property in escrow right now that I got approval on almost a month ago. Guess what? The bank didn't open escrow until three weeks into the 30 day time period. We didn't get a copy of the signed contract or bank addendum until three weeks into the deal. Of course, the bank addendum we signed at the beginning of the transaction had us agree to pay a $100.00 per day per Diem for every day we went over the 30 days agreed upon in the contract. Then they did nothing on time to make it possible for us to make the deadline.

This is where my experience came into play. I have had this happen to me numerous times on bank owned purchases and I have learned that my buyer just needs to forget about the bank and make sure he does everything he needs to do to stay on track. As long as we can show the delay is not of our making, we can get out of paying the per Diem. I made sure our inspections were all done within 10 days and I made sure the listing agent had the termite inspection done also. Since my buyer is paying cash, the appraisal was not an issue. On a property where the buyer is getting a loan, you need to be on the phone with the lender every step of the way to get the appraisal done before the contingency period is up. You don't want anything going wrong at the last minute if you can help it.

You can't always get everything to go the way you would like, but if you do everything you can do, things tend to turn out OK. I always have to remind my clients that most banks don't really have any idea of what is going on at any given time. They seem to just flounder around in the hopes something will eventually happen. In the last couple of years I have seen numerous instances of banks doing things that make absolutely no sense. It is actually kind of rare to have a bank owned transaction that goes perfectly smoothly. If you hire a good, knowledgeable Realtor and do everything you need to do on time, you will come out ahead in the end.

Bank Owned VS Short Sales

-Israel Barden

Originally Posted At www.bigbearilluminated.com

A question I seem to get quite a bit these days from my clients is " What is the difference between short sales and REO's?" I then , usually, go into a whole explanation of the pro's and con's of each, and end up telling them that REO's are superior in every way. I have a couple of dealings over the past couple of months that really bring this point home.

The first case involves a really neat family I have been dealing with for over a year. They are from North Hollywood and have wanted to buy a place up here for a long time. When we initially looked, we couldn't find anything that really fitted their needs. They decided to wait a year and then take a look when the prices had really dropped. So, I took them out a couple of months ago and found a cabin that was perfect for them. The cabin is super clean and situated on a great lot with a ton of beautiful oak trees. Even at the $149,900 price tag, it was a great deal. The one big problem with it was it being a short sale listing. I warned them of the major hassles that usually accompany buying a short sale, but they liked the house enough to risk it.

As many of you know, the majority of short sales do not close successfully. This is usually due to the listing agent not knowing how to do them, but taking the listing anyways. If the listing agent doesn't put in all the work ahead of time, a short sale is a nightmare. In this case, the listing agent assured me that he had done all the footwork and the bank was ready to move. With this information, we decided to offer $120,000 cash for the cabin, knowing it would probably be refused and we would have to come up to make the purchase.

A month into the process  we still hadn't heard back from the bank. At this point I was fairly certain the listing agent was full of it and hadn't really done what he needed to do to get a short sale done. I told my clients that all we could really do was wait and see what the bank would do. After a month and a half, the listing agent called me to say that the bank had just taken the listing away from him and never gave us an answer. I knew sooner than later, I would be seeing the home again as a bank owned listing. I told my clients to hang tight and that I would check the MLS everyday until it appeared.

Sure enough, a week and a half later it came on The MLS for $130,000 as a bank owned property. I called my clients the minute I saw it and we wrote an offer for $115,000 cash. The bank came back the next day at $117,000 cash and we snatched it up. Not only that, but the bank repaired some broken pipes under the house that the original owner most likely would not have been able to afford to do. Basically, the bank took a month and a half and did nothing when it was a short sale. Once it was a bank owned, we bought it in two days for less money and had repairs thrown in as a bonus. Bank owned One, Short sales Zero.

The second situation is very similar. My clients put in an offer of $340,000 on a short sale listed at $389,000. Again, we waited patiently for almost two months while the bank had the home reappraised and numerous BPO's done. In the end, after two months, they rejected our offer and let the home go into foreclosure. Like the last time, I watched the MLS and saw the home come up as a bank owned property for $390,000. My clients and I both felt the home was overpriced and we should wait and watch it to see if it would reduce. After two weeks, it hadn't sold and we decided to make our move. We came in at $333,000, and waited for a response from the bank. This time it took one day to get their answer, which was no. After a week of wrangling, we put the home into escrow for $339,000. So, we got a lower price in only a week when it was bank owned. Bank Owned Two, Short Sales Zero.

Five Bank Owned Properties in Big Bear

by Joe Pecoraro

Bank Owned properties continue to come on the market at very affordable prices.  These properties also are coming on the market in all areas of the valley.  The majority are still concentrated in the eastern side of the valley (Big Bear City, Sugarloaf, Erwin and Baldwin Lake).  However, if you are looking in Big Bear Lake or Moonridge you still have options.  The following are five of the better newly listed Bank owned properties in the Big Bear Valley.

• 904 Peter-  In the Peter Pan area of Big Bear City this property is priced extremely well.  At this price it won't last long.  The property needs some upgrading but is in pretty good shape for a bank owned.  The 5000 sq. ft. lot gives you plenty of room and the property has a great setting.  With a little work this would make a great cabin.
  List Price $135,000
• 465 Georgia- Charming older cabin near Big Bear Lake and Meadow Park.  Large 8195 sq. ft. lot allows room to add on.  Cabin was built in 1938 but was upgraded somewhere along the line.  Property is walking distance to the lake and less than five minutes to the ski resorts.
  List Price $189,000 
• 41545 Brownie- Older cabin on nice size lot.  Some upgrades have been done, including newer windows and extensive decking.  Centrally located in Big Bear Lake, cabin is a couple minutes from Snow Summit and the lake.  Nice size lot, there might be enough room to add a garage.   Nice setting in the backyard with lots of trees.
  List Price $259,000
• 658 Moreno- Newer cabin in Sugarloaf.  Previous owners were a little hard on it.  You would need to replace the carpet and paint the inside but that's about it.  Similar cabins are selling in the area for much higher prices.  Newer construction means better energy efficiency and  more comfort.  Affordable cabin less than ten minutes to ski resort and lake.
  List Price $138,900
• 225 Imperial- Brand new log style "Dutch Gambrel".  Has a carport and lots of decking.  High ceilings and woodsy interior.  Similar cabin went into escrow in less than a week a couple streets over without the carport.  Cabin appears to be complete and is very nice construction.  Potential buyers should definitely do their homework regarding the Notice of Occupancy on this property.  If you need to be pointed in the right direction to ge that info, please let me know.
  List Price $239,000