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Jerod Mayer's Blog

By Jerod Mayer | Agent in Valencia, CA

The Dreaded Multiple Counter Offer

Are you trying to buy a Foreclosure, REO, or Bank Owned home? Are you considering such a purchase? Working here in Santa Clarita and helping home buyers navigate through this interesting market, I wanted to share some valuable information with you. Something you should know if you are looking to purchase a foreclosure, REO, or Bank Owned property. Most of the time expect to be involved in a “Multiple Counter Offer”. When the Seller of a Foreclosure, REO, or Bank Owned home receives more than one offer to purchase-from different buyers of coarse, they will respond with a counter the Buyers in what is called a “Multiple Counter Offer”. Whether you offered, full asking price, less than asking price, more than asking price, all cash, etc. you should expect to be involved in a counter like this.  A “Multiple Counter Offer” puts each Buyer on notice that there are other Buyers pursuing the same home, and now the purchase you thought would go easy (since there are no buyers in the market right… wrong?) has now turned into a BIDDING WAR.

Quite possibly the most nerve racking part of all this is the terms of the counter offer may be the same, or different for each buyer, but one thing is fairly common with these counters, that is this: The purchase price and terms are usually left open ended. That’s right. The Seller does not specify to you, the buyer, what they want, they just ask for the best you are willing to give.

Typically, if the property is in a desirable location, in decent condition, and priced right, there is a good chance that Buyers will gravitate to these homes in an effort to purchase it.  When this happens, some or all of the prospective buyers will receive a “Multiple Counter Offer” – I say some, because if an offer is much lower than other competing offers, or not as strong, then the offer(s) may be excluded from the counter. Thus, the seller will deal with the better offers.

Here is an example of a counter offer I received recently with one of my clients who is trying to purchase a foreclosure home. “This is a MULTIPLE COUNTER OFFER. Seller is making a Counter Offer to another prospective buyer(s) on terms that may or may not be similar to this Counter Offer. Buyer’s submission of its “highest and best” offer through this system shall not be binding unless and until Seller subsequently accepts such offer by executing and delivering a Seller Addendum to the Buyer. Seller may negotiate in good faith with other prospective buyers until Seller has formally accepted an offer and created a legally binding agreement.”

If you get involved in one of these scenario’s, here are a few things to keep in mind: This is with respect to Foreclosure, Bank Owned, REO properties.

  1. Surprise! Cash isn’t always king. Cash offers may not make you any more desirable than a buyer obtaining financing. Sellers tend to focus on the bottom line.
  2. Contingency time frames will usually reduced.
  3. Banks don’t like to make repairs. Be sure you’re comfortable with the property, it’s condition, and your offered price.
  4. Inspections/Investigations may be noted that they are for Buyers knowledge only.
  5. Removal of Contingencies is typically passive. Time is of the Essence!!! Do your Due Diligence!!!
  6. Banks may charge the buyer a Per Day (Per Diem) fee if closing doesn’t occur on the specified date due to buyer fault.

If you are looking to purchase a home in the Santa Clarita Valley, our Team is very experienced helping buyers through the purchase process of a foreclosure and would be more than happy to help you reach the dream of home ownership. Contact us for a free consultation to find out if we are right for you.

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