Today, reality and perception are going in two different directions.  Let’s take a look at two
different scenarios that are commonplace in the marketplace:

REO’s

No question, most sales on the market are REO’s.  This market has these influences:

* Lenders instruct the listing agent to hold on to offers, group them together and submit
them to the lender and it is routine for the lenders to then come back with their agent
soliciting all the offers that since they have multiple offers to go back and come back with
their best offer.  Many times one or more of the offers meets or exceeds the terms offered in
the exclusive right to sell listing.

* Lenders insist that the escrow and title insurance must be done at one of their approved
title carriers or they will not accept the offer.

* Lenders insist that the borrower must qualify with them or their lender first before
acceptance of the offer.

* Lenders take weeks to approve offers.

* Lenders want the sales to be “as is” and are not required to provide a TDS.

* Investors have come into the marketplace and are buying many of the low-end REO’s for
cash.

* REO sellers have a shadow inventory they are holding back to try and keep control on the
market.

Short Sales

In the resale market, many consumers are so underwater that for them to sell requires the
lender to take less than is owed them and approve the sale. This market has these
influences:

* These offers require the lender to review the offer.  This can take months to get approved.

* After waiting months, many buyers and sellers get disappointed by the lender not
approving the sale or setting terms that are impossible to meet.

* Junior lienholders can hold these transactions hostage even though they are 100%
underwater.

* The paperwork for the lender can be daunting.

* Real estate agents can really get hosed at the end as the lender can and will leave
crumbs on the table in commissions for the agent after they did all the work or they will not
approve the sale.

* The credit hit to the seller is not that much different than a foreclosure.  Point hit different
is usually about a 10% difference.

This composes of most of today’s market.  From the above you have frustrated buyers,
frustrated consumer sellers and frustrated real estate agents.  While the lenders (really
Wall Street) have lost a lot of money, they are pushing and shoving their ways on everyone.  
YOU WILL DO IT THEIR WAY!  I have to give them credit, it is working.

While I do not believe for a minute that I have all of the answers but I do know this, it is a
buyer’s market and the sooner we all start acting like it, the better off we will all be,
including consumer sellers.

Again, I do not believe I have all of the answers but I think we need to do something
different and I would like to propose a plan.

GORRILLA WARFARE FOR CONSUMERS!

Presenting offers has to take a different tact.  Whenever possible, when working with
buyers, agents need to sell them on submitting no less than 5 offers on properties at a
time and try very hard to keep your buyers from committing suicide by saying they have to
get a particular home.  Once they become attached, they are pretty much captive to
whatever the REO or short sale lender dictate.  Straighten them out.

When presenting the offers, include an addendum that has several conditions.  Here are
some samples but you need to get them approved and or modified by your own legal
counsel:

1.       This offer is presented in conjunction with several simultaneous offers to different
sellers.  This offer is void upon the acceptance any of the other offers before
communication of acceptance of this offer.

2.       Time is of the essence, this offer must be accepted by ______________________.

3.       If the sale is subject to approval by a lender in a short sale, written lender approval
must be obtained within 15 days of acceptance.

4.       If the sale is subject to approval by a lender in a short sale, until written lender
approval is obtained, buyer has the right to submit offers on other properties and upon
acceptance by a seller on another property, buyer is notify seller of said acceptance and
must secure lender approval of the short sale within 48 hours or the contract for sale is
void.  [Note:  Other contracts being submitted must contain provisions for this feature.]

5.       If the seller is a lender, any attempt at a counter offer that requires buyer approval with
their lender or requires financial information beyond what is normal and customary for a
seller of real estate under normal market conditions shall be deemed a rejection.

With these types of conditions, you will get immense resistance.  It’s about numbers.  You
only need one approval.  Stick to your guns, when you get the phone calls from the other
agents they will:

·  Suggest you contact the lender who handles their REO’s to secure a waiver.  

o   Tell them no.  

·  Present a counter offer that violates your terms.

o   Ignore it and let the time period expire.

o   Alternative, counter with their terms with an additional 20% reduction in price.

Yep, you may think I am crazy but the real craziness comes next.  How much are you going
to offer for these properties?

We are not at bottom.  Real estate agents have an obligation to step into the shoes of their
client and do what is best for your client using your knowledge and experience.  You should
explain to your clients that property values are continuing to decline – tell them the truth.  
Tell them that you are unsure of how much they will decline but it appears the market has
another 20% to decline and as such you recommend that all offers be presented at a 20%
discount from current market.

Will you have a lot of rejections?  Of course.  However,  if you were a buyer, would you want
an agent like this representing you?  As more agents adopt these principles, it will bring
the lenders to their knees on dealing with consumers with their sales.

There can be variations of this type of approach but I believe in today’s market this is the
winning approach.
Its a Buyers Market? You Would Not Know It!
By David A. Pereira (February 2009)
Law Office of Kimberlee A. Rode
- Mortgage Litigation Consultants -