In greater Phoenix, it seems that investors and first-time home buyers are looking to buy only homes listed as short sales or REO (bank owned real estate).
I am working with numerous first-time home buyers who are looking to purchase real estate in Scottsdale, Fountain Hills, Peoria, Tempe and other towns around Phoenix.
However, Realtors and home buyers are running across a new challenge.
I have started to notice short sale and REO listings on the MLS in which the bank/lender is asking for the following language added to the remarks:
- No Government Products allowed
- Offers must be Conventional Financing or Cash purchase only!!
In fact, even if banks are accepting FHA or Government assisted financing , I am hearing that lenders are accepting significantly lower offers than other offers by qualified buyers who are using these programs.
I am aware of a buyer's rejected offer on a property for 10% less cash price offer as the bank said, they "do not want to deal with FHA" financing.
I am concerned with this trend of banks looking at discouraging qualified buyers.
- First-time home buyers are what built our real estate economy.
- First time home buyers create the foundation of liquidity in the housing market.
- These buyers are the owners who sell to the next generation of first time home buyers.
- They are the buyers of the next higher tier of housing that allows those to sell and move upward.
I understand that banks want to sell their REO property as quickly as possible and further want to make sure that contracts do close escrow.
However, I think this may be a dangerous tactic of turning away the buyers that make real estate a liquid market and ultimately the main method of banks earning money. Lending!!
Related Posts
- Phoenix Short Sale Solution Center
- Short Sale Nightmare - Phoenix Renter's Beware
- Short Sale Nightmare Part III
____________________________________________________
Copyright © James Wexler *No FHA, Conventional Finance and Cash Buyers Only!!*
Contact James Wexler (480) 221-8080 for your Phoenix | Scottsdale Real Estate needs
james - I have a lot experience with REO listings that have competing offers.
The banks will almost certainly look at offers with higher down payments if prices is within 5%
Barbara - I had a similar experience recently.
A buyer of mine was rejected for a lower priced cash offer.
Now I am hearing of buyers writing cash to get their offers accepted and then going conventional financing. frustrating.
Jim, can it be because of possible repair issues with the properties? I know the banks want the least amount of complications possible - may not be fair to buyers, but the banks don't seem to care. That attitude may change when their inventories continue to grow.
James - I have seen it both ways. As a lender it is frustrating to see a truly pre-approved borrower's FHA offer get rejected due to the bank's concerns with the loan actually closing. It has also been rewarding to have the listing agent push our client's offer with a glowing recommendation as our track record proves we can close loans. I think as soon as the mortgage community takes responsibility to truly pre-approve borrowers, we will continue to meet resistance. I am workign with some REO agents to review LSRs. I am still shocked that there are still lenders sending out LSR's for non-approved borrowers.
Great post. I'm seeing a lot of the same in our area. It's amazing that the seller / bank would care in the slightest. The bank needs to move it off their books. Who cares how it gets done so long as its legal and ethical.
Jim - the repairs were not an issue in this case.
However, that may be the case with certian financing that may require repairs for the appraisal. Good Point!
Todd - you bring up something very important that I expect to be growing trend. you mention that you are working with some REO agents to review LSRs.
I have heard that some banks are requireing apporved LSR providers to give them a better degree of comfort
wexler - I know someone who works as an asset manager for REO in michigan.
He has told me that banks simply want the deal to close and though price is important, it is second to the likelihood and time frame of closing to get the home out of bank inventory
Larry Bettag - you said it. The bank needs to move it off their books as quickly as possible.
If there are similar priced deals and one is cash vs. FHA, the cash seems to always win out