There is no rhyme or reason as to why some banks react quicker than others. I always have this image of an overworked bank person sitting at a desk with piles of offers in front of him that he needs to do all the pre-liminary work on (like verify seller's short sale package and order BPOs etc.), Then it probably goes to a person who is allowed to make a pre-liminary decision before two more people look at it that acutually have the authority to approve the offer. Has the bank a shortage of staff? Is the last person who needs to see the file on vacation? We just don't know......
But I am sure your agent told you that patience is the ultimate virtue to have when dealing with a bank foreclosure and the one who has most of it wins!

Hi Ratnam - there is no secret - but I can tell you everything that I know based on my experience on both sides of the REO transaction.

The price that the bank acquires it for (amount owed on first trust) when no one bids at the foreclosure auction is irrelevant to the price that it gets listed for. In your scenario, even if the amount of the first trust was $900K, they would have still listed it for $700K. Once the bank owns the property, their ONLY interest is to sell the property and get it off their books. They expect to take a loss in most cases. It is not priced with any relation to how much they are losing - the only factor in pricing is to determine which price will sell quickly (at or below other recent sold comps). They have even started renovating the properties if they are really bad - you may see some of them with new paint and carpet or where the bank has paid for the mold remediation, etc. This is again because they want the property to sell.

As far as the multiple offer situations, the bank will look at all of the offers and select one. The bank that I have listed bank-owned properties for in the past would always take the offer with the highest net price, regardless of the type of financing, even if it was only $1000 above another offer. I have put in offers on the buyers side with other banks where they will take a cash offer that is lower than one with a loan. Every bank is different. Every asset manager will have different guidelines to follow.

Tips and Tricks that may give you an advantage:

1) Most of the banks will not accept escalation addendums, but it would be worth it to make sure your agent will always ask if the bank (or agent) will process it. I have known one small bank that did it once and the buyer got the property.

2) It seems like about 1/4 of the time, the first contract does not go to closing - financing falls out or people come out based on home inspection contingency. Make sure your agent will stay in touch with the listing agent even after it is under contract and ask once a week if the transaction is moving smoothly. I have gotten houses for my buyers twice this way - getting the offer in before it goes on the market for the second time.

Finally, please keep in mind the larger market factors. Buyers have been waiting for two or three years to buy a home - there are a huge number of buyers looking now that the news is reporting that the bottom is here and that prices are even rising. Interest rates are still so low. Also, first-time home buyers are even more motivated because of the $8,000 tax credit. All of this means that you have a LOT of competition on each property. Just remain persistent and don't give up and don't get discouraged. Keep trying on every property that will suit your needs and you will find one where the circumstances are right and you will be the winning contract. Be strong and best of luck!

I have found no real fair average for either scenario, short sale or bank owned properties can take what seems like forever, and in other cases, it is so smooth their involvement is almost invisible. The suggestion that you be patient is probably the best, with a call to the banks reps once a week or so...Hope this helps, Jim.

Thanks Sonal Goda. It is a bank owned home. Home owner no longer lives in the house. We offered more than bank listed for. I heard people make offer less than bank listed for. My offer is in the middle of what bank listed for and trying to sell it last time in the auction.

For example original purchase price was $900K, when home owner left bank took it for $650K. Bank try to sell it the auction and did not get a good offer. buy back for $680K. Later bank listed for $700K. I offered them $720K.
I know the numbers are correct, I don't know how to interpret it.
Could some one explain the secret of getting a foreclosed home?

Hi Ratnam - I think you are asking about a bank-owned home and not a short sale. I think the first response refers to a short sale.

For a bank-owned home, 90% of the time, the bank will select an offer within a few days - at most a week if there are multiple offers. One time I had a bank take 2.5 weeks - but that is not normal and was due to the asset manager having to go to her management to approve the offer.

Once the offer is accepted, closing will take 30-45 days.

All of these things depend heavily on how good the agents are on both sides. Your agent should keep asking the listing agent if an offer was selected. Sometimes the listing agents for these bank-owned homes don't inform everyone whose offer was not selected.

I don't know what is going on with your friend - the story sounds like it is missing some pieces - I would need to know more details but sounds like it may be a short sale.

Thanks Debra for your quick response. Do you know any other banks are quicker in responding? Appreciated in advance.

Hi Ratnam,

National City Mortgage takes 45-60 days to approve the offer. After that, it usually takes 30 days to close. You have to be patient in these transactions!

Regards,
Debra Talley, ABR
Broker Associate
RE/MAX Preferred Properties
Vienna, VA 22180
debra@TalleyHurstHomes.com