Jenny's Blog

By Jenny | Home Buyer in San Francisco, CA

Discounted REO-Too good to be true

Posted under: Home Buying | March 25, 2009 8:19 AM | 381 views | 1 comment

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This is our unhappy experience in bidding a single-family home located in Daly City, California. This property is 1300 sq. in a 3000 sq. lot and fully detached. It was added to the Multiple Listing Service on Friday, March 20, 2009 with an asking price $375k. What a bargain? It is a REO with open house showing from 2:00pm to 4:00 pm, Saturday, March 21, 2009.

Our family went to the house that afternoon and fell in love with it instantly. We exchanged the busy card of my agent with that of the listing agent. We told her that we will ask our agent to contact her and submit an offer. She told us that she will be busy with something else and should not be contacted until the oncoming Monday, March 23, 2009.

In the morning of March 23, 2009, our agent called her and learned that she has already received one offer and that she is expecting more offers to come and that a higher price makes a better offer for this REO-property. Since we wanted this house badly, we offered 410K and faxed in our offer in that afternoon.

But today, March 24, 2009, we were told that they have accepted another in the morning of yesterday. I guess that this is the only one that was presented to the bank. When I check MLS, I now found that the status of this property was modified as "pending with release" at 12:52pm on March 23, 2009.

I just could not understand that the bank can act so swiftly to accept an offer while knowing more offers are coming. Since the bank operates so efficiently, should the listing agent alerts us that who comes first gets it, rather than a higher offer is better.

Did the agent intently delay our offer, because she should not be contacted on Sunday, March 22, 2009. Have potential buyers been given equal opportunities in purchasing this property? Considering what's happening after this REO property was listed on MLS, I feel that the answer is no. What's your thought? Please help so that we can do better next time.

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Comments

By Danielle, Wed Mar 25 2009, 16:48

This is business. It's not personal. You can't expect "fairness" from banks who care about numbers, not people. The banks want to get rid of inventory quickly, and for the highest possible price. They're not going to wait around for a month for everyone who is interested to get their offer in. And they're not going to necessarily take the first offer that comes in (especially if their data and analysis make them think they're likely to get more). There is no such thing as "not fair" when buying a home from a bank. The bank likely has a target, and if that offer comes in at or above their target, and the terms look good enough for the bank, that's all that matters. And, be aware that just because the bank lists it at $375k, that doesn't mean that's what they'll accept. Sometimes the bank will price the property very low in anticipation of a bidding war. They aren't obligated to accept any offer, regardless of what they list it for on the MLS.

For example, my husband and I put in the first offer on a bank-owned home in San Ramon. The listing agent sat on our offer for a week, while no other offers came in. Then, suddenly another higher offer came in, and we became the "back up offer", while the bank accepted this new, later offer. Sucks for us. But that's the way it works.

Perhaps have your agent call the listing agent and see if your offer could be considered a back up offer in case the first one falls through. But don't expect that this means you'll get it if the other buyer is disqualified or walks away. The bank might think they can get another, better offer, and will re-list it instead of accepting your offer. If they think they can do better, you can bet they will try.