Another topic of discussion lately in the real estate world is “Why do banks take so long to respond?” If you’re an agent or a waiting prospective buyer, you either already know that it may take one, two or even three weeks (or months) for the bank to respond to your offer or you’re about to get an education.
Unfortunately these days, this is neither unusual or unexpected…almost considered standard practice. Having put in an offer in on an REO (Real Estate Owned aka Bank Owned property) about three weeks ago, Troy Reeves finds himself in the same position, wondering the same thing. “Why do banks take so long to respond?” Troy and The Reeves Team are experienced real-estate-owned agents who have worked with small and large banks in getting responses to offers. So, while having lunch the other day, we brainstormed some ideas as to why the process length seems to vary:
1) The Asset Management Company (who has been hired by the bank to handle the sale of the property) has been given strict instructions to hold any offers for a minimum number of days.
2) The Asset Management Company has been instructed to hold all offers until a minimum number of offers have been received.
3) The Asset Management Company has been given strict instructions to hold all offers until the end of the month, end of the quarter or end of a fiscal year.
4) Sheer Volume – Consider the stacks of paperwork that one Asset Manager deals with and is responsible for processing; then consider the number of signatures (approvals) that may be required to advance the purchase process.
5) The offer has been approved by the Asset Management Company and then requires a secondary approval by the Investment Group (that purchased the loan previously). Take into consideration that this group may only meet once a month. If this is the case, an additional 30 days could be added on to the waiting period.
Perhaps just the sheer volume of foreclosed homes on the market is overwhelming. Certainly the banking industry could not have been prepared for this influx – even with advance notice. Is there a solution? The bank’s first solution was the moratorium. The period of time that the banks “held” off on putting any new properties on the market. What did this waiting period accomplish? If the intent was to slow down the fall of property values, perhaps it did help accomplish just that. While the prices are not exactly where they were before the 2005-2006 housing boom, at least we’re hopeful that the downward spiral has slowed. While it may be too soon to tell, for now, we’re all in this together … waiting.