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Monday, October 18, 2010

Pigs Get what Pigs Deserve

I have a couple of thoughts about banks and bailouts. I was opposed to the bailout because it insured the fat bastards that got us into this mess would emerge whole and unscathed. Their bad acts have gone unpunished. And they continue to reward themselves with gluttonous bonuses. All of this earned on the backs of normal people. BP Chairman Carl-Henric Svanberg (not a banker, I know) said this of what I call normal people: "we care about the small people. I hear comments sometimes that large oil companies or greedy companies that don't care, but that is not the case at BP. We care about the small people." Big banks and big oil care a lot about small people, you bet they do.

The big banks continue to deal with the foreclosure mess which they themselves created. It's a numbers game to them. And the staffs (inside the banks and outside contractors) crunch the numbers so that the result of whatever individual deal they are working on produces an acceptable result for the bank.

And it is not just the big banks that function this way. One local bank was acquired by an out of state banking system a while back. Then it acquired another local bank that was shut down by the FDIC earlier this year. The new bank spends lots of money on local advertising and seeks new business. Loan officers do what loan officers must do in small banks, they join service clubs and participate in community organizations to "reach out" and encourage new banking relationships.

This same bank has a huge number of bank owned properties acquired through foreclosure. You would think it would have all of those assets listed with local Realtors so that the non-earning assets could be sold. I used to manage bank owned assets for a big bank in Denver. I know what I am talking about. This is not "theory". It is dogma.

Mr. Potter - the ultimate sting banker

Instead this particular bank holds its bank owned assets in its stingy bankers' hands and ineptly tries to sell the banks with "bank owned" signs placed on the various properties. A phone number to an out of state location may connect an interested buyer with a special assets person who may have information on the specific property. Maybe.

Now I know the local person who is responsible for these properties. But when I call this person, the voice mailbox is always full and will not accept my phone message. If I call the local bank I am referred to the special assets departmetn in another state. When I call there I am told a local bank person will call me to schedule a showing. Eventually I will get a call back and we can perhaps see the property. In a recent instance the bank person did not show up for our appointment. He called later in the day and by chance we had just finished our last appointment. We scooted over to the property when I asked a couple of pertinent questions like "What is the price? " To which he answered I would need to talk to Special Assets in the far away state. Outside the presence of my buyer I asked "Will the bank pay me a 3% commission if I produce a buyer?" To this he answered he doubted the bank would be that generous.

A few months ago I wrote about a property that same bank owned in Old Town. It was not listed with a Realtor, and I spoke with a senior bank official directly about that asset. I produced what I thought was a very good, clean offer to purchase the property. I even delivered the contract to banker's house just as he requested. Later when I had not received any response from him, I called him back. He said the Special Assets person would respond to me. That did not happen. So I made calls to Special Assets. My calls were not returned. I called the senior bank official again and reminded him that I used to do the same type of work for a really big bank. I said that if I had failed to respond to a written offer that way I would have been fired. Within minutes I got a phone call. My buyer's offer was countered by the bank. The counter: full price. A few months later the bank listed the same property with a local Realtor at a price less than what my buyer offered months earlier.

I used to refer my buyers to a great banker that works at that same bank. No more. It is not personal. It's business. As nice and as competent as the banker is, I want to do business with individuals and businesses that I like and trust. I don't trust this bank. There are two other local banks that I refer buyers to plus a national bank that is getting a big Florida presence. Why should I send my buyers to deal with a bank that does not want to deal with me and my fellow Realtors fairly. I'm not talking just about listings. I'm talking about pricing, availability to show properties, to have good competent knowledge of what the bank is offering for sale, and to offer fair market compensation for producing a buyer.

Key West is a small town. This particular bank is sitting on millions of dollars of non-earning assets. It spends money and time trying to get new business but refuses to list most of its bank owned properties with local Realtors. It's business plan sucks.

Pigs Get what Pigs Deserve.


Anonymous said...

Do they often ask a Realtor to cut his commission to make the sale go through? That seems to me to be very petty on the side of the bank when they know they have a strong contract and they want to argue over a few dollars.

Gary Thomas said...

Yes, All the time, but not by all of the banks. Bank of America, one of the big bonus banks, uses cutting commissions to help pay the bonuses to the guys that really earn their money-not the little people who make sales actually happen.

It also happens on many short sales. Banks are stingy with commissions there as well.


Anonymous said...

Sort of related question: how do you see the freeze on foreclosures affecting Key West in the near future?

Gary Thomas said...

I discussed the last comment/question in the blog -- link shown above.

I heard today that Bank of America is re-instating the foreclosure process in all but two states (and Florida is not one of the two). Otherwise, I don't see the freeze as anything significant. Banks will get over their fear of foreclosing the wrong property because there is too much money out there. They can't sit back and do nothing.

If you watch the Key West mls like a hawk, and I know there are lots who do this, you have noticed the mls has been super quiet for the past 3 weeks. Very few new properties and very few solds. I said the inventory is down. It is way down. There will be new listings in late November and early December-just in time for season. I said I expect prices on some properties to go up because of the scarcity of nice houses in Old Town.


Anonymous said...

Saw this on Yahoo! today about selling your house in a bad market. Here is number 8 on their list:

8. Everything Is Negotiable

Negotiate the fee with the broker. The fee paid to a Realtor for selling a home is traditionally 6 per cent. Sellers often believe that they can get that down to 5 oer cent or even 4 per cent. But, in a market where brokers are desperate for business, pressing for 3 per cent or even 2 per cent may work. Whatever the savings are, they can materially affect how much a seller can drop the price of his home and still walk away with a profit.


Who in their right mind thinks 2 per cent is viable? I don't care how bad the market or how much you need the business, asking a professional to drop their commission is insane.

Would you ask any other profession to drop their fees for service???? Who writes this crap and above that, who reads and believes it to be true?

Anonymous said...

Gary, this is in no way directed at you, but I believe (and assume you would to) that there are "pigs" on every rung of this mess we're in and have been in for awhile. These pigs include, of course, the big banks and the little banks and the Wall Street fat cats who came up with all the mortgage-backed investment schemes.

But, while those pigs enabled the gluttony, a lot of other pigs perpetuated it... developers, Realtors, individual mortgage brokers and even homebuyers (especially speculators).

Unfortunately, while the big pigs get bailed out... the smaller ones (and even the developers, Realtors, small bankers and homeowners where weren't piggish) are suffering now.

Oh, and to the person who posted that asking a Realtor to negotiate/reduce a commission is insane, I disagree. In today's economy, there are many professionals who find themselves being more flexible about fees. And there are millions of other workers who have had their salaries cut or jobs eliminated. Realtors are not above all of that.

Gary, for your sake, I hope the banks wise up and begin working with you and your buyers more thoughtfully in the future!

Gary Thomas said...

Would you ask any other profession to drop their fees for service???? Who writes this crap and above that, who reads and believes it to be true?

Thanks, Mom!

I didn't write the Pigs blog out of sour grapes. I've done quite well selling short sales and bank owned houses. I know what I am doing. The big banks are screwing with our entire economy. They are making billions on the backs of little people. I'm not complaining for myself, but every dollar they take out of my deal helps some big shot buy something he or she does not need. Whereas money to me gets spent in Key West and keeps Key Westers occupied.

Local banks that screw locals, whether it be realtors or service people, is really being mis-mananged. You have one thing in business: your reputation. If you screw somebody local over a few dollars, word gets around. There are plenty of people in my business that I prefer to stay away from. I do not trust them. Why show a listing of some agent that you do not trust? I only do so if absolutely necessary.

I used to work in banking. Have you ever gone to dinner with a banker not on expense account? They are the cheapest people in the world. Forget about buying a buddy a meal, they will buy the cheapest thing on the menu. I digress, but they are miserable people.



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Key West, Florida, United States
I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.