Red tape, rehab standards only some of the reasons for discrepancy
O'Toole uses the example of cash-for-keys (tenants who are victims of foreclosure receive cash in exchange for surrendering the keys to the house and vacating). "When I was doing foreclosures back in 2003 through 2005, we rarely paid a homeowner more than $500 after a foreclosure," O'Toole said. "Now, it is not unusual for investors to pay $5,000 for the tenant to move out quickly. Investors are flexible and look at the individual situation rather than put in place blanket rules that are executed by junior managers and dictated to Realtors without giving the Realtors the same flexibility that investors have."
Perhaps the biggest problem the banks are having is deciding when to rehab a foreclosed home and when not to.
"Some banks have a policy of 'We don't renovate any of our properties,'" Geisen said. "Other banks have policies where they renovate all their properties even in areas where it doesn't make sense, as renovation costs are far too great. Bank policies need to be flexible, and they just are not."
In the last housing bust, back in the early 1990s, contractors were sent in to clean up homes, install new carpet and repaint. Investors still do these things, which many will say is a key reason why these homes sell faster. Banks, O'Toole said, "rarely do more than (take the) trash out, (and) rarely do much in the way of repairs, repainting or recarpeting."
"Our California customers buy somewhere between a half billion and a billion dollars worth of property every month and are hungry for more," O'Toole said. "The primary issue here is, the banks are not reliable as to how they put this product out through the trustee sale mechanism. They could do a better job."
Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "Growing Up Levittown: In a Time of Conformity, Controversy and Cultural Crisis," is now available for sale on Amazon.com.
|Contact Steve Bergsman:|
|Letter to the Editor|
What's Your Home Worth?
NAR to host webinar on Obamacare