Realtor Says HUD Fails to Maximize Results on REO Sales
Would you list a property for sale but not put a sign in the front yard?
Would you try to sell a house you've taken back in foreclosure without putting a lock box on the front door so realty agents can take potential buyers inside?
Would you turn off the water, electricity and gas so would-be purchasers cannot look around at night, or check to make sure the appliances work properly?
A seasoned real estate-owned specialist might not. But according to Mike Potier of Boardwalk Properties here, the Department of Housing and Urban Development does all these things - and then some.
And that has Mr. Potier so upset that he took it upon himself last month to send out an unauthorized press release under the California Association of Realtor's banner.
That, of course, didn't sit well with CAR's board of directors, which had just approved a resolution directing staffers to work with the National Association of Realtors to pursue improvements in HUD's real estate-owned sales process.
"Our members have a variety of different business models and our members' opinions may vary as to the effectiveness of each," said spokesman Mark Giberson.
So Mr. Potier apologized for his exuberance, admitting he was not authorized to speak on behalf of the 105,000-member realty group, NAR's largest state affiliate, and saying it was not his intention to mislead anyone.
Yet, his unofficial statement shed some light on the debate that took place before the board passed its unanimous policy directive aimed at what this particular real estate broker sees as some pretty shoddy practices.
He isn't alone, either. The General Accounting Office has previously pointed out that because HUD deviates from the norm in unloading REO, it takes the agency up to 110 days longer to dispose of a property than either Fannie Mae or Freddie Mac. And a HUD inspector general audit has estimated HUD's abnormal policies cost the FHA insurance fund roughly $188 million.
When it comes to selling foreclosures, according to Mr. Potier, the industry standard for loan servicers is to delegate a full-service listing agent to work closely with borrowers in default to make sure that when and if the property is vacated, it is in good condition.
Fannie Mae, Freddie Mac, Washington Mutual, Wells Fargo, Bank of America, Countrywide, Chase, Citi and all other major lenders also employ a full-service agent to market their REO properties.
Not HUD, though. An agent enters HUD's REO into the local multiple listing service. But these are "limited service" or "entry only" listings which lack the many basic sales tools used by others when they list a foreclosure for sale, said Mr. Potier. But that's only one of the points discussed by the CAR leadership, which said HUD needs to improve its property disposition methods with regard to the condition of the property, maintenance during the marketing process and access by prospects and their agents.
According to Mr. Potier, who sat in on the debate, these points were discussed:
* The lack of lock boxes makes it "very difficult to show and sell" houses.
* The lack of for-sale signs flies in the face of industry research which has found 60% of all homes are sold as a result of a sign in the front yard.
* HUD's mandated electronic bidding process means new and inexperienced agents without computers cannot make offers for their clients. The process also has no provision for language translation.
* When multiple offers are received, the highest bid is accepted without asking other potential buyers if they would like to raise their offers.
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