In this situation there may have been other circumstances that Aaron was not privy to. The additional $5000 may have been the incentive for the seller to make the necessary repairs so that the property would appraise with an FHA loan. Maybe the lender interceded between the seller and the FHA underwriter and provided additional comps or the appraiser missed something that has since been identified and ow the property qualifies. I am very glad that Aaron has purchased a home and moved on - but maybe someone else is still struggling with these types of quetions. And, don't forget - these types of questions are not localized they are nationwide and should be addressed as such.
1. How are you privy to all the confidential details of the other offer?
2. Is your agent the listing agent or the cooperating agent?
3. What proof do you have that your offer and counter offers were submitted to bank?
4. "they called me", who's they?
However a question such as this that calls for knowledge about buying bank owned homes and what the asset manager is thinking sometimes can be answered by anyone who has this experience.
Some people choose to answer knowing they are helping someone and not just trying to get that persons business. Potential buyers and sellers are on Trulia, they read answers to questions that they didnt ask, they can clearly see a true and honest answer over an answer that says "list with me or buy through me and this wouldnt happen." By answering questions not in your area, they can be looked at as 'independant" as the agent has nothing to gain but the satisfaction they are helping other people.
Now there is people who answer every single question and you will often see answers "what does your Realtor say" or "what does your lawyer say?" These drive me crazy and deserve a thumbs down.
But you shouldnt knock any agents from any other area, city or state for trying to help someone. If they are providing honest and useful answers, then they are providing a great service to this site and those who use it. As for a question being old, although that buyer or seller asked in in February, maybe someone else is having the same problem or anyone who is reading it, will retain this knowledge for if it ever does happen to them.
Please see my blog "What has Trulia done for me Lately" in order to see how Trulia can act as yoru greatest marketing tool and how to use it right.
Yes, Aaron's original question is from February.
According to the public record, he bought a house in June.
No need for all the out of state realtors to keep giving him advice.
He's done. Finished. Moved in.
Go look for other way out dated questions in other regions you don't serve.
Thank you for asking the question about CASH? Cash buyers like YOU don't get it. Yes, cash is king, but only to the right seller. I sold over 30 homes last year and 90% were FHA and when I was sitting with the sellers reviewing offers they would constantly say: "I don't care where the money comes from as long as they meet my number!"
Now, my advice to you is to keep chasing other properties and with enough offers you will find sellers that care about your cash position. On this property, if the buyer is savvy which it appears they are. I bet after they got denied with their FHA loan, they called the bank and said what do we need to do to get approved? They probably went with a rehab loan, and to make things even more appealing to the bank I bet they got their loan from the bank that is selling the property. Not only does the bank get that junker off their books, but they get a great borrower on their books. That is a double dip in the banking world and CASH buyers can't compete.
I will tell you this much. The seller that a cash buyer is most appealing too is a home owner not a bank who owns their home out right. They are older and don't want to deal with showing their home and the aggravation that involved. If I were in your shoes I would buy a mailing list for $200 bucks for all the people in your community that own their homes out right and mail them letters. I know you will have more success with this audience then with banks. Best
It sounds like you are looking for consistency on the part of the banks. It may seem logical that the banks would all behave the same way in a given situation or even that the same bank would act the same way in each similar situation. And why not? It is just about numbers, right? Unfortunately, this is not always the case. Different people at the same bank may do things differently, emotions can get in the way and sometimes (dare I say it) there are incompetent people in positions of power. Unfortunately, whenever you deal with a large entity (or several large yet similar entities) you will run into inconsistencies. And the inconsistencies can be very significant!
This is probably the best answer to your question, though it probably is very frustrating for you when the ground rules seem to change in a Behind the Looking Glass sort of fashion!
So risk vs. reward - $5,000 more in a month OR your cash offer. You may think that you will not be interested in a month. The fact is that this is a consistent poker match and from our vantage point as agents the banks make the wrong choice half the time.
However, its all other people's money so from their vantage point they can't really lose.
Welcome to the Banks World. There are no rules what Bank will do.
Sometime Bank will accept an offer from buyer with FHA loan that will pay $5,000 more over cash buyer.
Most of the time cash buyer will get bank to accept there offer that are less then the offer of the buyer with a loan.
What is this year new in the Loan World is that: FHA buyer can also get 203K rehab loan up to $25,000 for improvements that are needed.
It is Great time to buy (cash or loan)... It is Buyers market.... Good luck on the next one! TV
Banks have never been faced with the challenges they presently face relative to real estate. Accordingly, their behavior has left many scratching their heads.
There is no explanation for what you described.
It seems that this question has lost the focus of discussion. The point of these forums, like you said, are for the average Joe needing information. Though, we may be putting ourselves out of business in the long run by posting all the answers to questions in a way that it is sooo easily accessible to everyone. But that is how things are moving these days: so participate, or lose your business. I personally like answering these questions because it keeps me sharp. Some of these questions really make you think:)
Here is the deal on these asset managers. Well, for BOA anyway.
BOA will hire asset managers who have no experience in real estate at all, literally off the street type people. Now, I am saying this b/c I was just at a seminar hosted by BOA, and that is what they said. Obviously they did not say it they way I am, but that is what it boils down to. So with that in mind, you can conclude there was no "thought" put into the transaction. The only thing that held any weight in the transaction was the bottom line. I would advise next time you write a "highest and best" put "$1000 over the best bid up to $X" You may not lose the house bidding in that way.
I see this question is from February. Just curious, do you know if the FHA buyers got their loan and closed on this property?
One idea, especially in a shaky situation such as this, is that you could go into a back up position. If their loan falls apart the seller moves onto you.
Keep in mind, FHA didn't decline the property. It was probably an underwriter's opinion, and the bank obviously doesn't agree with this opinion. The bank must feel that this property is in acceptable condition for FHA financing, or may be willing to correct some items this second time around. Paint is usually considered cosmetic and unless it is in really bad shape, it shouldn't make the property ineligble for FHA financing. If the other items are more structure related, then the property will probably be back on the market, and the bank is making an unecessary gamble.
You are right normally speaking cash is King and for a few % a bank, be it an REO or a short sale contingency, will almost always take the sure bet. So unfortunately there is likely something you don't know about the the transaction. It might make sense to call the listing agents and ask them for any info they can legally divulge to you about why your offer was not accepted. Perhaps your proof of funds wasn't clear enough to make you a sure bet? Perhaps there were agent concessions to help the buyers or perhaps the bank and the listing agent thought it prudent to put an owner occupant in the property? I have noticed a trend that is slowing down the flipping of bank owned properties. I have seen a number of banks placing deed restrictions on short sale and REO properties that do restrict the sale of the property for anywheres from 30 to 90 days
I'm surprised this broker knew the exact amount over yours. One might think the Bank has no obligation to disclose the exact amount of an offer in a best and final situation. There isn't enough speculation or bovine scatology that will make it easier to swallow.
There is one word that has always worked for me if something fell through...NEXT!
Best of luck as you move forward.
In my experience with foreclosures a cash offer with at least a 10% earnest money deposit puts you in a very good position but there is no hard and fast rule. There could be any number of reasons the bank chose the other offer. Best of luck to you on your next offer!
Being that I had just joined, I hadn't checked closely on the origin of the question to see what area it was from.
I was subsequently chastised by some agents from that area and even received an email from a moderator suggesting that I stick to my own geographic area.
Being that some of us are using trulia as a way to meet potential customers and clients, I can see the wisdom of that advice and have to wonder what potential service can a Realtor from, say, Buzzard's Gulch, Tx possibly offer to a customer in Toledo, Ohio?
I'm not being as corse or direct as some of those who chastised me (my what a pleasant welcome that was!), but I can see where the world would be a much happier place if we all worked our own side of the street.
By the way if in your offer you lapped over a month like closing in March it may not matter to the asset mananger what the differance in actual close dates were they just want to get the property off their books by the end of the month.
Typically you are right that cash is usually better than other deals except when the net to the bank will be more and the risk of closing is the same.
First Weber Group
Certified Distressed Property Expert
I would just keep my eye on this property if I were you. There are certainly plenty of times that deals fall through. You can have the listing agent call you or your agent if the property becomes available again. Also, I wouldn't try to figure out the method to the bank's decision, I've been plenty confused by them lately as well!
Cash is good because, with cash, the deal can usually go to closing quicker. But, money is money and the bank does not really care whether it comes from a loan to the buyer or from the buyer's bank account. If the improvements were handled quickly and inexpensively, and if the bank knew that the FHA buyer had a very good chance of getting the loan, then it probably would have taken the extra money.
Since the FHA requires certain property requirements, the offer that they made with the bank again probably included a request to fix the issues that stopped the home from FHA eligibility.
Cash doesn't always win, the bank is already losing money for this REO so they want to get all the money that they can. And if all they asked to repair were very minor, like repainting, then $5,000 would be the best offer in their eyes.
The FHA buyers were probably informed by their agent that they could still get the house for adding in the repairs as part of the offer to make it eligible for FHA. They probably really wanted this house because they went up $10,000 above their original offer.
This offer was probably accepted because there were very few repairs and they didn't want the house to be on the market any longer. The banks and their listing agents have resources for making these types of repairs. Foreclosure Cleanout businesses are on the rise as well. Banks would just prefer not to repair anything but because of the extra $5,000, they decided it was the best offer.