This is the second in a series of articles on bank owned properties.

It seems to take a cast of thousands to pull together an REO sale. Unlike working in our neighborhoods with people we know and trust for real estate services, the sale of a foreclosed property requires that the players figure out how to dance with each other in the dark.

This information is being provided in an attempt to clear the air about how REO transactions really work and what buyers and their agents can expect if they choose to purchase one.

There are some major distinguishing characteristics.

An REO property tends to sell for a lower price than other comparable properties, depending on local market conditions and they generate so much public interest.

The seller in an REO transaction, the bank, acts through its employees and representatives, but more often may outsource the management and disposition of its REO properties to asset management companies

Unlike other sellers, the REO employees and representatives have not occupied the properties and have no emotional attachment to those they are selling. It is common for an asset manager to have 200 to 300 properties in their individual portfolios, which means they are working with 20 to 50 different real estate agents in various cities and states.

The REO properties generally are characterized as unwanted assets, although the banks want to demonstrate to their investors that they sold these assets for the highest prices possible.

The asset managers are graded on how well they sell off the houses and they are rotated out of the property if they fail to get it sold in a reasonable time. The same happens with real estate agents.

The real estate agent is the eyes and ears of the asset manager. I have found that when an asset fails to sell in a reasonable time, it is because the manager did not heed the advice of the agent in terms of original pricing of the property and agreeing to basic repairs to enhance the appeal of the asset.

Because REO lenders and their asset management companies have a lot of inventory to sell, they possess certain leverage when negotiating listing and sales agreements.

An REO transaction is generally more cumbersome and takes a longer time to process compared to other resale transactions from negotiating an accepted offer to closing escrow.

Whereas other resale sellers may be able to answer questions instantaneously, a question posed to an REO lender may have to go through the asset management company and several levels of approval at the bank. Sometime, the approval of the investor is required, who generally doesn't work evenings or weekends.

In recent months, many asset management companies have switched operations to a unique centralized reporting system where all communication, transmitting of documents and monthly reports and billing are handled. This transition was done in a day and without any training for brokers.

An REO listing or sale has many transactional features that differ from other resales. For example, an REO lender may want to use its own forms, such as its own status reports or sales agreements, disclosures and addendums.

An REO lender may offer attractive loan terms to help its buyers finance their purchase transactions to help regain some profitability.

The asset management company contracts all escrow and title work to one company generally far away which precludes the use of local service people for transaction assistance and delivery services.

This aspect has another unintended consequence, for there are many sales taking place in Ventura County but the revenue for title and escrow lands in another city.

REO sales begin and end with the players never meeting each other and seldom having direct conversations and never interactions.

As in everyday e-mail use, the tone of voice of the asset manager comes through very loudly. They receive and send hundreds on a daily basis, so information is kept to a minimum. One sentence usually does it, and there is little "have a nice day."

The sale of REO properties requires extra patience with the real estate community. Agents representing buyers are forced to work with rules not often made known to them until the effort begins. Agents working with the asset management companies have to do a good job of communicating so that the parties are well served.

REO agents are under great pressure to perform by providing monthly reports and broker price opinion updates. We also are required to maintain the property, turn on utilities, provide housekeeping and yard care, and keep those bills paid until reimbursed 60 to 90 days later.

I hope it won't take government intervention to prevent this from happening again. Free markets always have served our economy well, but the pain is very great.

We are now in role reversal. The pain buyers felt in the last price upsurge, has been transferred to sellers. There is much not right with any of this.

(Kay Wilson-Bolton is an REO and Shortpay Specialist and the owner of Century 21 Buena Vista and Century 21 Ability. She can be reached at 340-5025. On the Web, visit http://www.readysetkay.com.)