Who Pays The Real Estate Agent When A Foreclosed Home Is Purchased
You may wonder who pays the real estate agent when a foreclosed home is purchased. In these economic times there are many foreclosed properties on the market. There are many real estate investors who are buying up homes rehabbing them and selling them for a profit to first time home owners and even to other investors. Some investors are paying as little as thirty cents on the dollar.
They are buying from foreclosed properties or what is known in the real estate industry as an REO. This stands for real estate owned. These are properties that the bank owns because they were foreclosed upon. The buyer or person who took out the loan on the house failed to make the requisite payments and defaulted on the loan and now the bank owns the property.
The problem however is that banks are not in the real property selling business. Banks are in the business of lending money. Now we have banks with a large inventory of foreclosed properties, or REO’s. Because of a very active and influential lobby group in Washington DC, banks cannot sell their foreclosed properties without a real estate agent.
So if you are looking to buy an REO for real estate investment purposes or if you are looking for a home to buy to live in you will have to go through a real estate agent and not deal directly with the bank. And in almost every case the agent will be paid his or her commission from the sale of the house which means that the bank will pay the commission.
However you need to understand that the agent commission is figured into the price of the property. So the buyer will not have to cut a check to the agent but the buyer will be paying for the commission in some form simply because the bank has added part if not all the commission to the sale of the property.
But usually when an agent is acting on the behalf of a bank he or she will not get as high a commission percentage as the real estate agent would when working with a private buyer and not a bank which has more ability to negotiate a lower rate of commission because of the volume of houses they deal in. Many banks only work with a limited number of agents.
In fact when you contact an agent you might notice that some will list on their business cards that they are REO specialists. If you are looking for a foreclosed property you will want to work with an agent with this specialty. What has been happening recently also is that many banks are actually holding onto many foreclosed properties.
There rationale is that if they release their REO properties little by little they will be able to inflate the prices of their properties and thereby not lose as much money as they would have if they released all their houses at once. The government is frowning on this practice as it is creating a falsely inflated housing market.
Whether you’re looking for Vancouver doctors or health clinics in Vancouver, be sure to check out the Canadian online directories where you can search by city or region. View local listings of Vancouver travel agents to Vancouver Real estate agents and more.
Related posts:
- What to Look for in a Real Estate Agent Regardless of the real estate company, you will find agents...
- Why Work With A Buyer Agent Selecting an estate could be a tricky situation. There are...
- What To Know About Buying a Short Sale Home Have you heard nightmare stories about short-sales and ever wondered...
(1 votes, average: 4.00 out of 5)
Good post.
Also when I look at REO properties I try to include as much as I can of the costs as part of the financing. Banks holding properties will generally pay for a lot of the buyers cost as well.
In this market, banks are overwhelmed with foreclosed properties, so good recommendation on finding a specialist REO agent in order to find the best foreclosure deals.
Chack Pesh, Publisher
Regardless of the reasons, I think there are three items which do not bode well for commercial real estate prices in the next few years. First and perhaps most overlooked, investment or income producing properties, during the boom years, where purchased more for appreciation, rather than “income”. In other words, many deals were justified by investors who were willing to forego a rate of return (income), for future price appreciation. But as its name suggests, this is not what “income producing property” is all about. If it doesn’t give you an income stream in good times, it sure won’t be able to in bad ones. Only a “flipper” can make money on appreciation, and the trick is to know when to get in and when to get out. Second, the credit crisis has reduced the chances of obtaining loans, and also the leverage previously afforded owners/purchasers. Less money means less deals, and more cash out of pocket. This can only lead to lower prices. Third, we are for now in a “new” economy (although Americans often prove to be driven by fads and can be short sighted), where we will consume less, which should mean less need for commercial space. If there is one truth that history makes clear over and over again, it’s that most sectors of the economy will move in conjunction with one another, not in spite of one another. No doubt prices are tied to supply and demand issues, but too much of a swing invites change. So when prices double and triple in one sector while the rest of the economy isn’t going in that direction, chances are some force will snap that imbalance back into its proper place in the overall economy. And that change can be from social, economic, and/or political means.
Holy Smokes, I have tried so hard to get a loan mod. My mortgage company won’t work with me. Anything I can do?
There are still some opportuntise to modifiy home loans, but it’s best to talk with a professional on how to go about this. One site that does provide loan modification agreement help is Loan Mod Help Desk.
Found your blog on Bing. It’s so true what you said about foreclosure. We’re definitely going through interesting times with real estate right now.
I recommend you do your own loan modification. There are many resources online to find out how to do it correctly.
THE GOVERMENT SUPLEMENTAL DIRECTIVES FOR THE HAM PROGRAM ARE PLAIN AND SIMPLE A JOKE! IT DOES NOT MATTER IF YOU HAVE THE BEST NEGOTIATOR IN THE WORLD,THEY WILL SIMPLY GIVE YOU FALSE HOPE AND SELL YOUR HOME TO THE AUCTION. REMEMBER AND DO NOT BE FOOLED THEY ARE ONLY (RULES) NOT LAWS!! THE BANKS NEGOTIATORS ARE LIKE CHEAP SALESMEN ,THEY GIVE YOU FALSE STATEMENTS ,THEY SEND YOUR FED-EX PACKAGE ONLY TO SHUT YOU UP FOR A WHILE ,THEN THEY KEEP TELLING YOU THAT YOU ARE UNDER REVIEW AND ALL B.S. SO IF YOU PLAN ON GETTING A MODIFICATION ,PREPARE YOURSELF MENTALLY STRONG(YOU ARE GOING TO NEED IT!!!! WHERE DID THE OLD AMERICA GO?????