Nelya Calev

Recently I have seen a large upsurge in the number of buyers approaching me about purchasing REO properties. Until recently, I preferred to not work with buyers. Most of my sales come from listing REO homes for banks and that keeps me quite busy. However, I came to realize that with my specialized knowledge I could help buyers navigate this tricky market as well.

What many buyers do not realize though is that not every buyer is ideal for an REO property. If you match any of the following criteria, REO properties are probably not for you.

1) You are not exactly sure of what you want. Given a nice home, you are not sure whether it is your ideal home or not. You want to see a great number of homes before making your decision. You figure that when you find the right house, it will stay on the market for awhile so you can see a lot of other houses. After seeing those houses, you may go back to this house to make an offer.

2) You are not financially and mentally prepared to buy now.

3) You are not prepared to do some work on the home - for instance install appliances that are missing.

4) You are afraid that the bank does not disclose any defects about the home (because it does not know about them) and therefore you may buy a home that has problems.

There are two types of REO properties - overpriced ones and well priced ones. Most people tend to shy away from the overpriced ones. Well priced REO properties, on the other hand, do not stick around for long. They often receive many offers and buyers need to be prepared to move quickly on them.

If you are not prepared to jump when the right property comes up, then my recommendation is to clear your mind of getting a great deal of an REO property. By the time you make your decision to purchase it, the property will already have closed.

Recently I had a conversation with a buyer who contacted me about buying a house that went like this?

Buyer: What are you seeing in the market right now?

Me: I am seeing a lot more buyers in the market. I see prices staying the same right now but there are a lot more buyers out there. There seems to be a new found buyer confidence in the market and the realization that now is the right time to buy.

Buyer: My confidence is not up!

Me: Then why are you talking to me about buying a home?

This is a general trend I see right now. Many buyers are very interested in what other buyers as a whole are doing right now. While I do see health returning to the real estate market, I also see a lot of anxiety on behalf of buyers.

It reminds me somewhat of millions of tiny crabs on a beach waiting to see if the coast is clear at night. "Hmmm... I hear other crabs moving, but how can I be sure? Let me take a peak... Hmmm... I don't see a crab there... Is that a crab over there?"

A lot of people are peaking out of their shells right now hoping that the coast is clear. While I do see a lot of cautious crabs moving around on the beach right now, there are still a lot of pessimistic crabs slowly crawling onto the beach, worried that they have made the wrong call.

I absolutely love the IPhone. I surf the web on it, check my e-mails, talk with friends and clients, chat with relatives in other countries for pennies thanks to Skype, and take some of my favorite shots of my kids with it. It is a great device, with one huge flaw.

The flaw is the AT&T network. On some days every single call is dropped. Some days I do not receive any calls at all until the evening when they all come as voice mails. I have missed numerous important phone calls thanks to their network and it is embarrassing to have to call back other agents several times during the course of a conversation.

The issue is not the phone - which Apple has already replaced. I have spent hours with tech support - who advised me to continuously reset my network settings. "Why didn't I have to do this with Verizon", I asked. Their response - "because Verizon has a better network."

My husband is prodding me to give up my IPhone and move to Verizon so that I can continue to communicate again. The problem is I am addicted - I love my IPhone. It is rather like an abusive relationship. "I promise I won't drop your calls again", it seems to say over and over again. I want to get rid of it, but I simply abhor the Blackberry Storm and other garbage phones Verizon is pushing at us.

That is why I need your help Microsoft. It seems obvious that you have something up your sleeve. T-Mobile has the Google phone and Sprint has the Palm-Pre. Isn't it rather suspicious that Verizon - who happens to be a big Microsoft partner - doesn't have an IPhone competitor? I have heard news that the Palm Pre will come to Verizon in January, but I also have a feeling that when Microsoft finally does announce their IPhone competitor - Verizon will be their carrier.

So Microsoft, please come out with this phone. Please come out with something that competes with the IPhone enough that I can finally rid myself of the AT&T curse. Please help me leave this abusive relationship. I'm not looking for the perfect phone. I just need something that looks halfway decent and doesn't drop my calls.

Some time ago a house came on the market not far from my own house. I drove by it almost every day as it continued to sit on the market through numerous price decreases. One day I looked the property up on the MLS and noted that it had fallen so far in price that it became a short sale.

The listing stayed active for months, but eventually sold for around $410,000. The original price of the home before price reductions was around $490,000. From my estimates, the home was probably worth somewhere in the middle. This wasn't overly shocking, but what did startle me was what occurred next.

The first peculiar thing was that the sign never went down. The agent works for a small brokerage with flashy signs and has a habit of not removing his signs after the property sold. I didn't think much of it until I noticed that the "sold" sign was removed. Huh? Did the property go back on the market? I thought I remembered looking up the property and seeing that it had closed?

It turns out that the new owners did some minor remodeling and the house is back on the market with the same listing agent as before - but at $495,000!

This strikes me as a bit odd and suspicious. Wouldn't the original sellers - who had their credit histories severely damaged by the short sale - be rather upset at this? Isn't it a conflict of interest for the listing agent to know that the buyers intend to relist the property with him?

What do you think?

Short sales suck. Sometimes they're cheap. Sometimes they're pretty. But almost always they suck. In today's market, there seem to be two types of people - those who run away from short sales and those who run towards them.

Do you know why they suck? They suck because any agent out of the blue can list them. There are no requirements other than a real estate license. It does not matter that the agent has never dealt with a bank before or even that the agent has any idea what a short sale truly is. However, no matter how good the selling agent is, if the listing agent is incompetent the deal will not close.

Bank owned properties are usually much different. They stand a far higher chance of closing and one of the many reasons is the agents who sell them are specialized. Most banks require these agents to undergo special training and many of these agents only deal with REO properties. Therefore, these agents know how the process works and how to get the deal closed.

The other huge reason is that generally banks actually want to sell a bank owned property. When a home is listed for a specific amount for a bank owned property, the bank has agreed to (and often dictated) that price.

For a short sale, on the other hand, just because a home is listed at a given price, there is no guarantee that the bank will accept that price. There is a growing scam where many real estate agents deliberately price short sales ridiculously low for the marketing aspect. The home never sells, but the agent gets a lot of attention and leads. The agent and seller do not need to consult the bank before pricing the home, and often the agent does not care that the bank will accept it.

There do exist short sales that actually close, but they are in the minority and you are more often than not better off by just running away in the first place.