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Not all bank owned properties are created equal….


During 2010 and 2011  most of my work was as a buyers agent for REO’s or bank owned properties…..  One would think they are all the same but they are not…..I know HUD does not like to be considered REO or bank owned by for the purposes of this comparison I will include them in the description.   Bank owned property is property that the bank foreclosed on or took in leiu of foreclosure.   The bank  owns the property and wants it off the books… They often sell at a discount.  More importantly not all bank owned properties are created equal…..

So what types of properties are there?  The are HUD, Fannie Mae, Freddie Mac, OCWEN, Wells Fargo, Bank of America, IFHA,  Chase…… You get the picture….. Every different bank or entity has a different procedure…Perhaps different areas are different.  I work in the Treasure Valley of Idaho and I serve Ada, Canyon and Boise counties….

It used to be that bank owned properties were typically trashed.  No one would bother to go clean them up.  There would be trash, dog pee, weeds, etc.  This is rarer (except for HUD listings).  Many bank are willing to put money into the listing to sell them quickly and at a higher price.  This is nice for us because we have better homes to show are clients….

First we will start with the government and quasi- government foreclosures…. These include HUD, Fannie Mae, Freddie Mac and some OCWEN (VA)…. It probably also included rural development but I haven’t worked with those so I wont discuss them.  The really cool thing about HUD, Fannie Mae and Freddie Mac is they have a owner occupied period for bids.  That means that if you are looking for someone planning to live in the home they have the opportunity to bid and be considered before anyone else.   This is very important because investors often have cash and look better on paper.  It allows people to own the American dream for less… In my area most of these homes that are nice sell before the owner occupied period is up.  Not all bank owned properties are created equal

HUD is part of the federal government…. They make the rules for everyone else but they do not play by those rules… What you see is what you get.  HUD homes are never fixed (at least in my area)…. They wont even fix the property enough to test the systems… Not only that you are not allowed to fix anything either.   This can be very inconvenient.  The homes are listed on the multiple listing service and www.hudhomestore.com.  Your HUD qualified  agent (ME) enters bid.  You have no idea what the others have bid are.  There is no contract (until your bid is accepted).  That is the easy part.  If you are successful with your bid the fun starts.  Your agent writes the contract and has to get their broker and the lender to sign it.   Then the agent has to express mail it and beat the time deadlines.  Any mistakes and HUD threatens and sometimes do cancel the deal.   Most of these homes can have FHA loans because the government did the inspection and appraisal.  If you bid for more then the appraisal you have to pay the difference in cash.  It is usually possible to get 203K loans on these too. They are often a good value but do not  show very well since the government is not willing to make them nice.  It doesn’t matter what the lender requires.  The inspection is either a go or no go….You the buyer have to turn on all the utilities at your expense and then re-winterize the home… Not very fair..We real estate agent used to get an extra 2 % in the Treasure Valley but no more….  It sort of made it worth the hassle.  These homes sales are ulcer producing…. That said I have closed every HUD home that I put under contract.  If anything ever makes me into a Republican it will be dealing with HUD foreclosures… I have gone to my Republican Congressman twice on HUD problems….  This is the same Congressman I ran against in 2008. By the way I am not allowed to use the words distressed, bank owned, REO, foreclosed when describing a HUD property…. HUD thinks these words have a negative connotation.  Not all bank owned properties are created equal

Now we will take a detour and talk about the bidding process on most of the rest of the bank owned properties.  The real estate agent writes the offer on the normal real estate form… I find I can almost always get 3% closing costs but I cant always get price reductions on REO property.   You must have either proof of funds or pre-approval.  The earnest money often has to be a cashiers check (usually for at least $1000).  I often bid with a personal check that will get converted into a cashiers check when I know the title company.  The seller always chooses the title company and often the earnest money is held by the title company or the listing broker.  That is not typical in the Treasure Valley.  If there are multiple offers you asked to submit your highest and best… Your buyer also has to sign a form acknowledging that they are in a multiple offer situation.   If your bid is accepted the bank will send a huge addendum which basically negates the original purchase and sale agreement.  It is a form written in favor of the bank but if you don’t sign it you don’t get the home.  The bank will tell you they wont fix things but they will often do so if the lender requires the fix.   I have even gotten the banks to concede on price for cash deals if the inspection is bad.  You must have an agent that is very confident when dealing with the banks.  These deals require around 2 extra weeks because the the time it takes to get the seller signatures and a the time at the end for the REO bank to approve the HUD-1.  The other thing about these deals is that the buyer signs everything before the seller signs anything.  This means that you can’t have the home inspection until you have seller signatures on the addendum and the sales contract.  If there is a hang up and there are lender required repairs that will also slow down the sale since it has to go to a higher level of management for approval.  Mostly these sales will progress like a normal non-distressed sale.  Not all bank owned properties are created equal

Fannie Mae and Freddie Mac are quasi-government agencies.  They are backed by the federal government.  Lately Fannie and Freddie are willing to fix a house up in order to sell them.  They sometimes paint, carpet and fix things so the buyer will bid.  There is usually a 15 day first look program for the owner occupied buyers.  They are usually well priced and show better then their HUD counterparts.  Because of the owner occupied first look program they are ideal candidates for owner occupied buyers…. Fannie Mae has a Homepath financing avenue.  This is a 3% owner occupied and 10% investor down rate.  There are fees that are high but there is no private mortgage insurance.  There is also no need for appraisal… Make sure your agent does a market analysis and listen carefully to your inspector.   Freddie Mac’s gimmick is that they give a free 2 year home warranty for owner occupied dwellings.  These will proceed like a normal sale once it is started. My favorite REO’s might be Fannie and Freddie’s.   Not all bank owned properties are created equal.

Wells Fargo and Bank of America both have the annoying feature that you must prequalify with their bank to submit a bid unless you are a cash buyer.  It adds a day to the process and they will offer some incentives for going with their bank but be forewarned these are big banks and they tend to delay closings….  The asset managers do not seem to talk to the mortgage department so being with the same bank doesn’t get the loan closed any quicker.  I also wonder about a conflict of interest.  I had a case where closing was delayed by more than a week because B of A mortgage department wouldn’t put out the closing docs with less then 3 days before closing and the assest manager didn’t want to extend the contract…. My buyer almost pulled out.  These banks are good to take your investor too.  There is no owner occupied period.   Not all bank owned properties are created equal

The other banks will have different quirks.  Small banks work faster at getting the deal done.  IFHA in Idaho is particularly good to work with.  These homes sell and they sell fairly easily.  The buyer usually gets a good price for their new property.

So I hope this helps with understanding some of the differences with different bank owned properties.   If you happen to be in the Treasure Valley of Idaho and want to buy a bank owned property contact Debbie Holmes.  I will get you the best possible deal and I have a lot of experience dealing with different banks.  Because you now know just like me …. Not all bank owned properties are created equal!

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Today I am exhausted


Maybe it is the new diet with the new year…. Maybe it is because I ran around all day…. Maybe it is because I dealt with lots of paperwork and had great news….But I am beat….I am blogging because I realized I haven’t for 2 days…. So the good things that happened.

1) A house with title problems now has insurable title and the inspection is scheduled for Friday….. See Tax Sale Horror.

2)  My Wells Fargo deall closed late but it closed…. See I hate dealing with big banks

3) Dad signed the papers on the refinance.

4) I might have a new client that I showed a home to.

5) I met my parents for lunch.

So I sit in bed….I realize I should blog….But I am tired.  Tomorrow I am meeting my former clients for lunch, cleaning my car (in case new clients want to get in it) and paying my bills…. So today I am exhausted and I am going back to Netflix or maybe I will just go to sleep…

  Debbie Holmes

Gold Key Real Estate     Company logo

(208)761-2551 Email: d5holmes@msn.com

To search Boise Homes visit my website

I hate dealing with big banks!


I hate dealing with big banks.  It started a couple of months ago. I had new clients that came with their own loan officer.  They wanted to deal with their “own” bank.  The bank is Wells Fargo. The loan officer seemed competent and had been recommended by their previous real estate agent.  They asked what my opinion was….My opinion is that my loan officer can get a loan done in about 2 weeks and that big banks have lots of hiccups where one department does not deal well with the other departments…. Somehow this always makes the loan take 2 or 3 weeks longer with a lot of hand wringing at the end.   I told them this and gave them the name of my favorite loan officer….

They chose the big bank…..  OK I can deal with this….I never have had a loan close easily with a big bank and I still haven’t….  That includes US Bank, Wells Fargo and Bank of America….I have heard bad things about Chase but since I haven’t closed a deal with them I can’t include them on the list.  I was surprised when Sandy told me it would take 5 weeks to close the VA loan….  So I put December 29, 2011 in my contract (Sandy picked the date).  We bid the day before Thanksgiving….The inspection came back on November 30…. On December 2 I was told the appraisal was ordered….By December 15 the appraisal still wasn’t done.  The appraisal finally came back on December 19….  The latch on the slider needed to be fixed…  We knew about the latch from the inspection but we figured we would fix it after closing…  The loan officer told me that the deal was going to final underwriting… By 12/22 the file was still being worked on.  On 12/23/2012 at 10 AM  (the last working day until Christmas) the underwriter asked for the previous employers verification….These people had been through final underwriting with the same bank in late October on a different deal and had made it through….I have always coached my buyers to give the underwriter whatever they wanted no matter how silly it seemed…  I convince my buyers to try to make the phone call to corporate headquarters and by some miracle the HR person sends the docs 2 business days before they usually do.  Meanwhile I had my handyman fix the latch and a couple of other things….  I called the bank to tell them that all was ready… It took them until Tuesday to get the appraiser back out…  Final underwriting also completed Tuesday or Wed.  All the time the loan officer kept saying we would close by the contract date of 12/30 I was always reminding her that the date was 12/29 and we needed an extra day for FEDEX…..She told me that couldn’t happen but we could get it done by 12/30….  So now we get to 12/28 and that is where the fun really began….I hate dealing with big banks…. 

The hud comes out at 6 PM on 12/28… It looks sort of OK….Fast forward to 9:49 AM the next morning….Email says docs will be out in a few minutes….I talk to title….The lender left money on the table from the 3% closing costs….That is annoying….I submit the receipt for the inspection…  I talk to the processor, the loan officer, the escrow officer..  The processor and the loan officer keep telling me I will have docs out any minute … I get lunch…I make more phone calls and Emails… I meet a repairman at a rental…I am now spending full time trying to make the docs come out….I am fielding calls from the listing agent… He is furious….He blames the whole problem on me…. He also got the same email stating docs will be out in a few minutes…. The escrow officer calls and asks me to intervene…I hate dealing with big banks… I get a phone number for a person higher up the food chain….She talks to me and tells me docs will be out soon…..  Finally 5 PM comes and all goes quiet…. Defeat… I put out the addendum for closing on January 3…  Of course I need to talk to the listing agent and the buyer…. Not much to do….I try to relax with NETFLIX….The other agent starts emailing me…..They get harder and harder to deal with….He starts with blaming Wells Fargo and the loan officer…No problem with that I am pretty annoyed with them… Then he states that his 90 year old clients have a loss for the home (which was bought for a sick daughter that died) and that they would have to wait until the 2012 tax cycle to claim their tax loss….  I feel awful but I can’t make it happen short of going to California to get the signed papers… 

Finally I remind him about the serenity prayer….I have worked for days to make it happen on time….I can’t make it happen on time…  I am going to try to relax so I can tackle it in the morning…..He doesn’t respond after that….

Today its 10:49 AM  I have been yelled at and hung up on by the person further up on the food chain… I didn’t yell I just asked about the docs…(the one preparing the docs)… I have spoken to title, the loan officer (twice), the processor (three times)….I still don’t have docs….I have talked to my clients…. I have not talked to the listing agent yet.  I have nothing to say…I am out of contract…  I assume we will close… Right now I want to scream I HATE DEALING WITH BIG BANKS!…  We have penalties for not preforming perhaps banks should too….

What can I do about this situation?  Not much except:

1) Blog about it…

2) Discourage my clients from using big banks…

3) Push my loan officer on my buyers because I know she will get the job done….

4) I am planning to take my rental accounts out of Wells Fargo (after the mortgages are paid in January) and go to a smaller bank…. I will write  a letter to the management so they know why I am changing banks…

5) Do you think I could put it in my political blog?  Big banks are getting a lot of bad press lately…

Now I sit and wait for loan docs to come in…..I want to take my loan and go elsewhere but that will take another 2 weeks….  For the final time I hate dealing with big banks…

Grr….Why do some agents try to bully other agents?


Just like in real life there are real estate bullies…. Most of the agents I work with are hard working professionals who are trying to look out for their client and get the job done…. I respect that…..There are a few that are threatening when things aren’t going perfect….. For example….

I am the buyers agent for a couple in Meridian Idaho…We went pending on 11/28 and had the inspection on 11/30…. Not bad timing….The loan officer supposibly ordered the appraisal on 12/7… It is a big bank (Wells Fargo) and we all know they usually take a little longer….On Monday I called up and asked about the appraisal….I then called the listing agent on some other matter and he started accusing me of not doing my job….I informed him that  I just spoke to the loan officer and it was ordered….On Tuesday he calls me and starts trying me to bully me….Like its my fault that the appraisal hasn’t been done….  I call the loan officer again and get a little gibberish about an unreadable document so she had it  resubmitted.  She thinks it will be done this week….Thursday I email the other agent and ask if any appraisor has contacted him or been in the listing?  He gets back to me and starts threatening my client with $100/day penality fee if we are late on closing…. I point out that we aren’t that close to the deadline and that seems excessive and I am not sure people would pay it… He tells me that it happens all the times in REO’s…I tell him to date none of my clients have paid that fee (which is $50 day)….  I have both emailed and spoke to the loan officer about the appraisal (now about 2 times a day) she doesn’t have answers either.. I told her the listing agent is breathing fire and I wanted to give him some good news….She still hasn’t come back with anything definiative….. I wish the buyers had let me pick their loan officers…..  I know good ones who would have had the deal closed  by now….  I have until 12/29 to get the deal closed….

Why does he have to take out his frustration on me?  Threatening me is not going get the appraisal in faster…  I am and have been on the loan officers case…. I am asking the appropriate questions and am demanding the appropriate answers….I don’t feel the need to threaten the loan officer.  If I feel this is going past Monday I will take more action.  Does it do any good for him to be rude and threaten my clients….I am shielding them so far but on Monday I will need to talk to them if the appraisal isn’t done. 

Agents should treat other agents with respect…..There is no reason to be rude when the work is done….I still have 11 days to close the deal.  The golden rule applies….Do onto others and you would have them do onto you.

  Debbie Holmes

Gold Key Real Estate     Company logo

(208)761-2551 Email: d5holmes@msn.com

To search Boise Homes visit my website