bubbleinfo.com

It was in April that the REOs started coming my way, one of which was this 4 br/3 ba, 2,963sf house on Serene in Oceanside.

It had been purchased in March, 2007 for $700,000, and financed 100%.  But the buyers were in the flooring business, and well, you, can guess what happened.  Business dropped, payments were heavy, and a year later it was unbearable.

On May 22nd I submitted my broker price opinion (BPO) at $529,000.  The same model across the street with a pool was in escrow, listed at $660,000, and ours is the former model home so it looks decent inside.  There were two other REOs listed nearby around $500,000 that were 10% smaller but had lots that were more rectangular in shape, resulting in bigger backyards.

The bank listed for $549,900 on June 12th.

Because there were no showings and no calls, when they asked during the first week for a BPO update, I told them $499,000.  Every other REO listing I had was getting multiple offers, so it’s easy to figure out – the price is too high.  But they didn’t listen.

This is the pricing history:

$549,900  6/12

$541,900  7/9

$533,900  8/8

$524,900  9/8

Three months later and now we’re about where I wanted to start, price-wise.  Though methodical in reducing the price the same time every month, dropping it only 1-2% at a time isn’t making a difference.  If you’re going to lower the price, you have to get down to the next level.  These days a price reduction should be a minimum of 5%, and if you are serious about selling and want to get it done, drop 10% after 2-3 weeks to help create some urgency.

They aren’t taking my advice due to a private mortgage insurance company calling the shots behind the scenes.  As a result, I’m sitting on an OPT (over-priced turkey).

We’ve had three offers, two at $450,000 and one at $502,000, which was submitted when we were listed for $533,900 and the bank countered at $530,000 which ran the guy off.

Three months later, now what?

They are going to send it to auction instead. 

I didn’t take it personal, I had been telling them $499,000 since mid-June, and backing it up with compelling evidence every time.

The funniest part is the message that came over:

Please be advised that Countrywide has selected to place the above property in an upcoming Real Estate Disposition Corporation (REDC) REO auction (www.USHomeAuction.com).  Due to REDC’s extensive marketing and advertising campaign on television, radio, and print, they are able to draw large crowds of interested bidders to our auctions translating to the sale of an overwhelming majority of the properties that are taken to auction.

Do you think that the “extensive marketing and advertising campaign” will be enough to cause this to sell for $500,000 or higher? 

We’ll follow up in a few months to see how they did.  I do get a 2% commission out of the deal, but they wanted me to attend an on-line seminar that was conducted before I received the email, and hold three open houses on October 18, 25 and 26, before the auction in November.

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Speaking of how banks did on their own…..

Remember this short sale I had listed in Escondido in August of last year?  I had it listed for $419,000 and had a buyer willing to pay it - but WFB wouldn’t move fast enough, and the buyer gave up.  A scenario which repeated itself each time we reduced the price.

Instead of finding a way to handle short sales efficiently, they foreclosed in April, 2008, and sold it last month for $359,000.

Let’s hope that the folks running the government’s ‘Hanky’ make better decisions when selling your assets.

Posted on Thursday, September 25th, 2008 at 7:22 AM in Foreclosures/REOs | 4 Comments » |  Print You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.