Dear REO Agent,

Dear REO Agent,

Why must everything be your way? Do you have the only foreclosure on the market? Surely you remember what it was like before the Boom/Bust? You were showing homes as a buyer's agent, or you were peddling the mom and pop listings to the emotional owner occupants. Whenever you came across the lowly foreclosure listing, you turned your nose up at it, just like the rest of us. But now you have a few REO listings. Maybe you have 20, or maybe you have 100. Nevertheless, you have 1 client. Or one type of client. The type of non sustainable client. The kind of client that doesn't refer you to their friends and family. The kind of client that doesn't treat you with respect, or think you deserve their business. The kind of client that will never be able to give you on-going repeat business. Because when the market turns, the banks will not need as many REO agents. They will go back to having one… for the entire state. And if you are lucky enough to still be peddling those REO listings when the market is back to balance and normalcy, you will now have the one lowly listing that is impossible to sell, because it's gross and non financeable, and that's no longer the status quo.

We all know you had to do it to make a living. Some of you are making a killing for the time being. Awesome. But do you have to be arrogant? Do you have to be insulting? Really? Seriously? I mean, you are actually pushing some of the worst houses on the market that most of us wouldn't sell to our own mother. And your client, the bank, is so jacked up on stimulus money and tax payer support, that you are one step away from being a public servant or government employee. So, at least have some humility, because you are working for the people, by the people.

I am shocked at the lengths you will take to make buyer's agents do your job. Here's a synopsis that is all too common:

"Hey, Buyer's Agent, follow these instructions to get your offer looked at: Fill out all of the details about yourself and your buyer on MY transaction sheet. Then upload your offer along with 10 more specialty addenda, to MY website, that goes directly to MY seller. And then don't call me, because I won't return your call. You can email me, but I will shoot you a canned response that says, I won't respond for 3 or 4 days."

And another thing… Last time I checked the terms for purchasing any house were negotiable. But every time someone wants to write an offer, the bank sends back an addendum that erases everything and puts the terms back that they want. That's actually fine with me. That's part of the negotiations. But when the buyer wants to come back one more time and counter any terms of the banks addendum, that is when the brick wall starts getting put up. We hear things like, non negotiable. Or no alterations allowed. Funny, we agreed upon price, but now, because of a few small items, we are going to kill the deal before it gets started. And whose fault was this? Is it the sellers? Asset Manager? The listing agent? Or their assistant who is just following their orders? I just have to wonder, why sometimes common sense can't prevail. Has this new market, that is so dominated with REOs, become flooded with listing agents that are just order takers? Or perhaps we have several cocky REO agents that get on a power trip, just to control the buyer's agents? Not realizing, that they themselves are a buyer's agent too sometimes. Or could it be they are too afraid to negotiate with their own Asset Manager, because that might be construed as disobedience, and they may not earn the next round of foreclosure listings?

I want to be a little fair, and try to show 2 sides to the coin. I know the REO agent does not have it all that easy. They start out with the BPO (freelisting appraisal). Then sometimes they have to give out "cash for keys", to get the previous occupant out. Then they have to coordinate cleaning up the property, and then prepare all the normal marketing, and deal with the extra paperwork for the bank, and do it all for a discounted commission, usually.

And now you are going to treat the buyer's agent like an idiot?

I think not! Lest I remind you, I just saw you giving the crack head $500 bucks for his keys, right before you started mowing the yard and putting up the for sale sign for your cut rate commission.

Having Appraisal Issues?

Why do we bother to pick a price to sell a home anymore, when the appraiser has the final say in value?

This doesn't seem all that illogical, though. You should only be selling your home for what it's worth, right? But who gets to decide the value anymore? The tax assessor? The listing agent? The seller? The licensed appraiser? In my book, none of these should ultimately decide the value. It is always the buyer that decides the value. Hasn't it been a long time economic fact that supply and demand, determine value? And as long as the consumer sets down the dollar amount for that commodity, haven't they just set the value? Let's only talk about non necessity items here, and true competitive capitalism. Because when the buyer doesn't have any choice on whether he/she needs an item, or have any choices for such items, then they truly don't have much to say when determining value. But in any normal marketplace, buyers have their freedom to choose. And when they find the right color, size, flavor, shape… for the right price… they buy it. And if they can negotiate, they will. And if it's not priced within reason, they also have the freedom to walk away.

But I am speaking specifically about houses now. In a lot of larger ticket priced items, like real estate, there is financing involved. Adding a partner to the transaction. This partner is actually the larger share holder, and thus requiring this 3^rd party appraiser. Not the one, who has shopped in the competitive marketplace. Not the one, who has to live in the house, or drive to work from this house. Not the one who picked it to be near a certain school, or live closer to their family. A non biased, and non personal, cursory overview of the recently sold homes for the area. And if there are no recently sold homes for that area, then it becomes the appraiser's subjective opinion.

But, then again, this is the bank, that is the one shelling out usually more than three quarters of all the money for this home. Surely, they must have hired someone really great to protect their investment in this asset? Actually, that is not the case anymore. Helped by some new government guidelines, banks now feel that the ambiguity of the appraiser is a better way to choose the one determining value. Not based on local experience or tenure, or any other quality. Just pick someone, that doesn't know someone in the transaction and is licensed. And to be fair, and non biased, make it more like picking a name out of a hat. The appraisal industry used to run like normal capitalism. Banks would choose an appraisal company usually based on the following : competitive pricing, availability, speed in turnaround, and size of support staff. Now, it is random selection. The larger experienced appraisers, seem to get no more business than the newer or less entrepreneurial appraisers. Those that made a good living, now are changing industries to continue making a good living. Those that struggled before, are finding themselves getting randomly selected more often, because being in a rotation is better than fierce competition.
Too many deals are falling apart based on this new system. When a buyer makes an offer, usually, they have seen 20 to 50 houses before making a decision. They, themselves are a pretty good judge of value by now. It's pretty obvious to spot the one overpriced house. So, why does the appraisal trend today, find a large percentage of homes are overpriced?

I think it is the new system. The appraiser has no allegience but to the rotation. In the past, they were part of the deal. Using relationships and knowledge to put together common sense to create value. But today, it is like the DMV. Get in line, wheres my ticket, get back in line. I understand where the corruption was, and agree with regulation (that is an entirely different blogpost). But is this trend coming from the new system healthy to the market? No way. It's adding more downward pressure on the housing prices, and it is also killing deals. And that is causing homes to stay on the market longer, looking for another buyer with a different appraiser, in the rotation, perhaps with a different opinion.

If this is the new era of real estate, then perhaps we should cut to the appraisal first.