By now we all know about the housing crisis. Homeowners whose ARM’s reset were unable to handle monthly payments that doubled or tripled, and many didn’t have the credit scores to enable them to refinance into a better rate.

Adding to the pain was the fact that as more foreclosures came on the market, home values dropped dramatically, so thousands of homes were now worth far less than their outstanding mortgages. Even with the highest credit scores available, those homeowners could not have refinanced without pouring in mountains of cash.

The result is that in many areas of the U.S. as many as 90% of homes for sale are either bank owned or are offered as short sales. And in many cases they’re being offered far below market value in hopes of attracting multiple buyers to drive up the prices.

This may or may not be a smart tactic for the banks to use, but it’s causing real estate agents and home buyers a good deal of frustration.

REO agents at the banks are overloaded with offers to review, and they’re taking their time about it. A buyer might submit an offer on a home and not get even a verbal answer for 2 or 3 weeks. In addition, since verbal acceptance is not legally binding, some banks are backing out of verbally accepted offers when a “better buyer” comes along. We’ve even read of banks backing out after they’ve signed an acceptance.

Real estate professionals in many states are up in arms about banks operating with disregard for State real estate laws – and getting away with it.

Investors with cash or ready credit are anxious to snap up bargains, so many have turned to a method which some feel is unethical, and adding to the problem.

These credit-worthy investors are making multiple offers. In some cases, they’re submitting offers on homes the day they come on the market, without so much as a walk-through inspection. But by making an offer on many homes, they increase their chances of getting an accepted offer on at least one.

Because banks first respond with a verbal acceptance, these buyers know they have at least ten days to two weeks in which to inspect the house and decide if they really want to go forward.

If not, they simply withdraw their offer before the signed acceptance arrives. Further, since real estate purchase and sale agreements include an inspection clause, they know they can back out of the agreement based on the findings of a home inspector.

If you’re looking for a home in one of these markets, be sure to check your own credit report right now, and take any steps necessary to raise your credit scores. Then get pre-approved by a lender before making any offers.
Buyers who can’t show ability to purchase will be ignored in this housing climate.

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