Who says buying a bank-owned home is difficult? Your agent? If so, it’s time to find a good agent. Preferably a good buyer’s agent.

Candy contacted me last week, and said she’d been looking at homes in the Lake Las Vegas area with another agent. She loved the area, but wasn’t happy with her agent. Her agent, Candy said, told her REOs and short sales were way too hard to buy, so she was showing Candy only her company’s listings.

There is a different process involved in an REO sale than in a traditional sale. However, any agent that hasn’t figured out how to help you get a great deal on a bank-owned home should have found a new career about 4 years ago. Their chosen profession certainly left them behind in 2007. In my eyes, there is no excuse for not helping a buyer find the perfect home – and the best deals are generally found in REOs and short sales. An agent who convinces a buyer to avoid these is doing that client a disservice.

Only a willing buyer and seller can determine the purchase price of a property. Some REOs are a great buy, and may or may not be in need of repairs. I’ve sold several REOs that had never been lived in. When an agent refuses to show these, it’s generally a matter of convenience – their convenience. More steps are involved in purchasing an REO, and the process is a bit more cumbersome. The agent has to work a bit harder, but isn’t an agent’s job to help a client find the “right” home? How can an agent do that when they limit a client to looking at their listings?

The State of Nevada requires that an REO Notice be signed by every buyer making an offer on a bank-owned home. This disclosure details the major differences between buying a home from a bank vs. a traditional seller. If you would like a copy of the disclosure, send me an email at RobinCamachoLV@gmail.com and I’ll email a copy to you.

Bob picked up his worn out guitar, and sat on the edge of my deck looking out over the 270-degree view of Las Vegas. Within minutes, fingers were dancing on strings like sparks from a fire; like kids on a swing.

I always wanted to write that. It has almost nothing to do with my blog. Well, nothing actually. My friend Bob, who wrote the song with that line, did just close on his first home today. Woo-hoo! And thinking of Bob and the challenges that face first-time homebuyers, it seemed like a great time to throw down a few reminders that could save you some stress if you are looking for your first home.

Bob lives in California, and insisted on using “a friend of a friend of his fiancee” as his Realtor. She’d never sold a home, but promised to give him 25% of her commission at closing. He’ll regret that forever. He and Lena nearly lost the home days before the scheduled close, and as Bob says, “That was the most expensive free money we ever got.” As I told Bob, experienced agents don’t discount their commission – and he should run like hell from an agent that doesn’t understand the value she brings to a complicated transaction. But he’s engaged, and saying “no” to Lena was not prudent.

Bob and his fiancee were using “gift funds” for their down payment. Lena’s parents were giving them an amount equal to the down payment, and the closing costs were shared by buyer and seller. Had his rookie agent known anything about lending, she would have advised him to consult with his mortgage agent from the beginning. And his lender would have known that Bob’s savings, which looked remarkably like down payment funds when the loan officer looked at his statements, were earmarked for a new boat, not a down payment. The lender would have been informed where the down payment was coming from had Bob realized this was crucial information.

Fast forward to some time shortly before the close of escrow. The lender orders the “verification of deposit” from their bank, and there is little money in the account for a down payment. Bob returns from a day of boating to a frantic message from his loan officer. “Lena’s parents are giving us the money,” the loan officer hears for the first time the following morning, right after Bob deposited the funds.

Bob and Lena had no idea that using gift funds requires that a few important steps take place prior to receiving this wonderful gift. Unfortunately, their loan officer was unable to stop them before they dumped tens of thousands of dollars into their account. I’ve seen this done before, and it creates a mess that can be nearly impossible to unwind. At the very least, it will probably hold up the closing, causing heartburn for everyone involved.

There are several important guidelines to follow when using gift funds. The borrower will have to provide a “gift letter” detailing the amount of the gift, and the name and relationship of the giver. There is a limit on how much of a gift can be received – always discuss this in advance with your lender. The letter must state that this is a gift, and not a loan. Your mortgage officer should be able to provide you with a sample letter, or a form. Obviously, both parties must sign the letter.

The funds will be “sourced,” so be sure that the giver will be able to show a paper trail. Where did the money come from? If it’s from existing funds in their bank account, the givers will likely need to provide bank statements for 60 days. If it’s from retirement funds, the lender will need to see a retirement account statement.

Since the gift letter must match the amount of the gift, be sure that you deposit certified funds from the giver in your account as one deposit. Bob took a personal check from Lena’s parents to the bank, and deposited it with his paycheck and a check for a jetski he had just sold. This small error, which was very preventable, held the closing up for an extra 11 days, and cost Bob and Lena $1100 in late fees.

Be sure your agent understands the basics of lending. And while you’re at it, be sure your agent has a verifiable track record. Don’t think that just because the seller is paying your agent’s commission, you aren’t in a position to demand quality service. Most importantly, talk to your loan officer in advance and be sure he knows you are using a gift for your down payment. Using “other people’s money” isn’t as easy as it was five years ago.

How many REO agents does it take to change a light bulb? I don’t know – you can’t ever find one.

I don’t know who has a more difficult time reaching an REO listing agent outside of banker’s hours – we buyers agents, or those poor folks driving around without representation. Fortunately, those buyers who are represented by a good buyers agent are in good hands, even on the weekends. A good buyers agent can not only show the home, they can have an offer written and submitted within an hour or two of a bank-owned home hitting the market – all without ever having to get the listing agent on the phone.

Jordan and I spent half the day showing cabins in Mt. Charleston today. What a nice 1/2-day outing. My clients, who have purchased 5 homes from me, are now looking for an upscale cabin getaway. If you aren’t familiar with Mt. Charleston, it’s home to a ski resort frequented by locals. It’s the perfect getaway from the summer heat, with hiking, camping and other outdoor fun, less than an hour’s drive from Las Vegas.

Tony and Lila had a question about one cabin, and Tony said “Let’s call the agent on the sign.” Lila immediately shot back, “No, we call Robin when we need anything! That’s why she’s here now.” I smiled, remembering Lila telling me about another Saturday, when she and Tony drove around looking for rental homes all day and couldn’t reach even one agent. They’ve been loyal clients since that day, and that’s why we’re enjoying Mt. Charleston together, 40 miles from my office, on a Saturday. I can’t think of a better way to spend my day…nice people, great weather, beautiful scenery.

And for this I get paid? I have the best job in the world.

I pride myself on getting offers accepted. It brings me repeat and referral business; it puts food and an occasional glass of Pinot Noir on my table. Okay, that’s a gross exaggeration – I don’t cook. But I do eat out a lot, and being a top-producer does help pay the bills.

Today I’m just a bit frustrated. I’ve written 3 offers for Candy and Milt, and the first 2 were not accepted. When this happens, I always do a post mortem: I want to know why. Knowing how to write great offers, especially on bank-owned properties, is an art form. And I rule.

With the first home, the listing agent requested a prequal with a preferred lender. I sent the prequal we had, noting that we had a call in to this agent’s Bank of America buddy, and we’d forward the prequal as soon as we received it. Generally, the listing agent will wait for that prequal. This one didn’t, and my highly qualified buyers weren’t even considered after waiting 24 hours to hear from the loan officer. Bank of America blew that one – these buyers are solid gold, and are buying at least 4 homes this year. No Pinot Noir for that dawdling loan officer. And there’s an agent who’s being removed from my Christmas card list for not extending the courtesy of waiting for the specific prequal letter she demanded.

With the second home, our offer was $1000 over actual market value. It was a great investment home for my buyers, but it wasn’t worth list price. I don’t suggest offering less than list price if it’s accurately priced; however, this home was priced $4000 over recent comps. We came in $3000 under list and $1000 above market value, backed by a 25% down loan from a qualified buyer. I was shocked when we didn’t get a multiple offer notification or request for my client’s “highest-and-best” offer. The listing agent was also surprised that the selling bank didn’t ask for highest-and-best. We’ll probably pick this one up on the rebound in a few weeks, when it doesn’t appraise and falls out of escrow. It happens frequently.

When I have to write more than 1 or 2 offers for a client, it generally signals another slight shift in the way the market is trending. I sell enough homes that I’m writing and submitting offers every week; when I don’t hit the nail on the head, it’s either an anomaly or time to shift gears again.

In Candy and Milt’s case, it was just an anomaly. Two responses “out of the norm” in a row.

Just for fun, though, I had my Mad Researcher, Ron, pull some statistics. I hadn’t looked at list price vs. sales price in awhile. It’s the busy sales season, and we’re selling homes in near-record numbers in Las Vegas this summer. We should close the year out with close to 50,000 sales – but what are sellers getting for their homes right now?

Two years ago at this time, sellers were getting almost 103% of asking price. Buyers reacted to stabilizing REO prices in early 2009 by rushing back to the market, only to compete over a shortage of REOs. Only in a very hot market are buyers willing to pay $103 for every $100 the seller is seeking. Last summer, sellers were getting 99% of asking price; buyers were still looking for deals while expecting prices to slide again.

So what are buyers willing to pay this summer? The average sale price is now 98% of list price. For every $100 a seller is asking, buyers are willing to pay an average of $98. While some might consider this a cooling-down, sales are still brisk. You won’t see the fierce competition for homes that we experienced in the summer of 2009 and 2010. There are multiple offers on the better homes, but 2-4 offers instead of dozens.

Expect this to ease up somewhat in September, when fewer buyers are shopping. If you’re looking for a good deal, don’t lose patience – September could be your month.