The banks started the “highest and best” scenario. This happened during the past foreclosure market as short pays were modified to be called short sales.
The sub prime bank – New Century, fell back in early 2007. That is something that we all remember, and was as painful of the bank fall early in the 1990’s.
After this, other banks joined in and it was like a house of cards, the real estate market came tumbling down.
During our venturing into the Bank Owned and Real Estate owned markets, we came upon a lot of great training and intel related to how the banks operate when it comes to preparing them for sale.
We were the “Real Article”, actual real estate agents who had a verifiable Foreclosure/REO account. Ours was with Citigroup. They did a lot of loaning during the build up to the fall of the last real estate cycle and they had a lot of Foreclosures to sell.
BTW – the Asset managers with Citigroup were all awesome to deal with – as an aside!!!
During the “hours and hours” of online and other types of training I received, there was part which spoke about the pricing method that Citi uses in selling it’s REO, real estate owned, inventory.
Depending on where the market was currently would depend on where the price of the home would be set – everything based on a 3 month in the future estimate of value.
NO round filing any offers!
When offers were received, all had to be submitted to the bank, ALL OF THEM! The reason why I’m stressing on the “all of them” part of my last sentence is because some REO Agents did not practice this. In fact, lots of games were played which I was having no part of. I played my REO agent business as I did when I was a cop – straight and strong. No games, no hidden mirrors and no ripping off the bank or the consumer.
The bank would look at all offers and most of the asset managers with Citi would appreciate our “thoughts” on each one. Letting them know which, in our humble opinion, were better than the others and why.
Highest and Best offers regarding Foreclosures
The bottom line was financing balanced with amount willing to pay.
It wasn’t long after the fall, when we started getting REO assignments and soon after that the bank wanted us to respond to all offers. However, only the best offers were countered with a Highest and Best counter offer.
The bank’s view Highest as the “most money” net from the total sale proceeds.
The bank’s view Best as the “most appropriate” financing the buyer is bringing to the table.
Part of the game that buyers agents played in the beginning was “out bidding” and “out offering” to an extreme amount on the Bank’s REO listing.
That worked for a while, then when the appraisal came back at much lower than the bank “thought” they were going to make net – the banks started to adjust accordingly.
The “Highest” offers were scrutinized and if they exceeded what the property may appraise for, a clause – “Buyer to pay difference between the offering price and appraised value…”
Santa Clarita Foreclosure Update
16 Santa Clarita listings are Foreclosure/REO in status. 5 real estate listings are in pending status- which means in escrow. Two real estate listings are in the backup status which are Foreclosure in nature.
BTW – there are 512 Total Bank Owned, Foreclosure and Short Sale listings currently active and for sale in Southern California! – See the current REO – Short Sale and Foreclosure Listings.