"Hey, Curtis, let me know if you hear of any bank repos coming up, I'm hoping to pick up a smokin' deal."
Some Closure on Foreclosures
I'd always heard that foreclosures, or bank repos, were a great way to pick up a cheap house. Maybe you heard the same thing.
In fact, the instant I framed my first real estate license in 2009, I was on the hunt for one of these deals. I checked, I waited, and I checked again. No repos.
None came. Three years, five years. Where were they? I'll answer that at the end for you.
In 2023, however, we see lots of foreclosures. But the banks aren't just giving them away. That would be bad business, wouldn't it.
The misconception that a lowball offer might work is still out there, so I'll blow it up for you.
Here's What Happens at The Bank After They've Taken Title Back
A bank official, most likely in Toronto or Vancouver, will be in charge of the file, and I doubt this person could point to Regina on their first try.
They've never heard of NOD, don't know how to pronounce Wascana, and couldn't pick Scott Moe out of a police lineup.
They don't care, and it's not a concern to them anyway. They just want to know what the home is worth.
To find out what it's worth, they contact a local Realtor. And they do it in a generic-sounding email: "Hello Mr. Curtis M. Bonar, we are contacting you in the request of your evaluation for the property known as..."
Me and that guy won't be going for a beer if I'm ever in Toronto, fo sho.
Sometimes they hire an appraiser to value the property. Sometimes they rely on the Realtor.
Trusting they have an accurate opinion of value, they request listing documents, and away we go, using that price.
For the first 30 days, they have a discretionary window of 5-10k that they will accept or counter an offer up to.
For example, if the home is listed for 200k, they will accept an offer in the 190s, usually with a straight signature, or if the offer is less than 190k, they will send a counter.
Every 30 days, the listing agent submits a "marketing update" detailing the number of showings, feedback from potential buyers, recent comparable sales in the area, and a pricing recommendation.
If the house hasn't sold, of course, we recommend a price reduction—because that's what Realtors do 😉
The lender will usually agree.
A price reduction follows, and the 30-day window starts again. So, if the new price is 190k and they will accept anything in the 180s.
And they keep doing this until the house sells.
The Person In Charge of The File Does This For A Living
Nobody's freelancing—they follow a set of established guidelines. It's not the first time they've done this, and you aren't going to sneak one past them.
There's no emotional attachment to the property, and they aren't looking for advice from me on how to sell a home. They trust they've hired a professional, and we've got this end of it for them. Realtors don't even speak on the phone with the lender—just business-friendly emails. They aren't looking for a 45-minute phone call with a guy named Curtis on the amenities in Whitmore Park.
As far as they are concerned, they did their due diligence when they asked me to send them a home evaluation. That's why they asked for it. The price has been set, and now they follow their corporate guidelines.
Ah, C'mon, They Just Want to Get it Off Their Hands...
Nope. Bank guy's computer is off at 3:59, and he's heading for the Go-Train.
Nobody lost any sleep about this last night, and tonight will be no different. Tomorrow is a new day, and a new address will appear in their inbox to deal with.
If file #REG80635221 sells in March, April, May, or June, it's all the same.
It all seems kind of cold, and it is. That's how it works.
You Can Get a Nice Deal Though...
Finally, Mr. Negative has some good news for me, haha.
Most properties that end up in foreclosure are distressed. And by distressed, I mean run down. I could have just said run down, but distressed sounds more professional, am I right!
Owners who can't pay the bills don't service the furnace, upgrade the flooring, or build a deck. And this is reflected in the list price recommended by the Realtor.
So if you know which end of a hammer to swing and don't mind getting your hands dirty, you might just scoop a nice deal on something and make it your own.
CB
PS:
In the early 2010s, when I started in real estate, Regina was booming, and prices were shooting up. If a homeowner was in financial hot water, they could quickly sell their home for more than they bought it for and were out.
When prices backed up, starting around 2016, many homeowners had a mortgage balance higher than what they could sell their house for. They were "underwater" and had no choice but to let it go into foreclosure.
I'm guessing the recent hike in interest rates will trigger a new round of defaults. When their mortgage terms come up for renewal, nice people will see their rate shoot up from 2.25% to 6.25%. I'm afraid it might tip more than a few people
over.
PSS:
I didn't really frame my first real estate license. I'm proud to be a Realtor, but that's not the kind of thing I do 😎
PSSS:
You may have noticed I always use a capital R with Realtor, and it's not a proper noun. It's because CREA, who owns the trademark to the word Realtor, makes me. It's a pain.
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