Bank of American's Unpopular Requirement for Foreclosures

I have been corresponding with Realtors across the country who are sounding off about Bank of America's  requirement to present a pre-approval from Bank of America when you submit an offer on one of their foreclosed homes.  Buyers and agents are not happy with this extra step when buyers already have a valid pre-approval in hand.  Some agents have even said they will not show BoA listings because of this requirement.  Why do you think BoA is doing this?  Is it to try to force buyers to take their business to BoA?  I don't think so. 

Back in the day when "liar loans" were made, buyers who were not qualified to purchase homes were encouraged to look into creative financing.  The result:  they financed a home and many later lost that same home when the economy had it's downturn. People lost jobs, had a health crisis, divorced or discovered their interest rate was not fixed, as they thought, but carried an adjustable rate that had skyrocketed so the buyer could no longer afford their home. As a result, we faced a flood of short sales and foreclosures.

Lenders reacted by tightening up the requirements needed to qualify for a loan.  Since BoA has had such huge losses from their bad loans, they are working hard to make sure more bad loans don't enter their pipeline.  This new requirement to have a pre-approval from them when submitting an offer on one of their foreclosed homes is their way of scrutinizing a buyer right up front to determine if  this loan will be a good financial risk for them.  If not, they can move on to another buyer.  This does not mean that the buyer cannot stick with their original lender.  It just means another group of lenders will be looking over the buyer's financial information to make certain this will be a good loan. 

The pendulum has swung from no-doc loans to lenders imposing multiple layers of investigation into buyers' finances.  While it requires more time and effort, I think the requirement is fair and reasonable.  I encourage my clients to comply and remind them they just may find a better rate with BoA, so why not go along?  Hopefully all will go well and they will find themselves being approved by a second lender and ultimately purchasing and living in a home of their dreams.

Who me? Sell during the holidays? Are you kidding?

No, actually I'm not!  Selling during the last 2 months of the year can be a very strategic move.  Often other listings will come off the market during this time, so you could end up being the fresh new listing the buyers have been waiting for.  Supply is down and demand is often up during November and December as buyers try to find a new home before the end of the year.  Often people who are relocating have a deadline to buy if they want to take advantage of their company's generous relocation assistance.  I've met more than one buyer who is anxiously combing the listings looking for something new.

Besides the supply and demand aspect, there is also the fact that many sellers will decorate for the holidays and this "staging" makes your home look better than ever.  Add some smells of cookies in the oven and some holiday music and buyers are picturing themselves in front of the fireplace with a mug of cocoa and a good book.

At the end of November I had the opportunity to list a lovely home for sale.  I did an extensive market analysis and then noted how low the inventory was and priced the home accordingly.  My open house on day two was swamped and on day three I had not one, but three buyers writing offers.  The inspection is behind us and we are moving towards closing.  I wish I could clone that home and the sellers. They listened to my suggestions to remove wallpaper, paint and stage.  Viola...the home sold just as I said it would!  The lucky buyers are so excited to be moving in and hope for a closing before the end of December.  A new year in a new home...what could be nicer?