Foreclosure in Detroit>Question Details

Anp86, Home Buyer in Detroit, MI

Multiple bids?

Asked by Anp86, Detroit, MI Wed May 6, 2009

I recently bid on a foreclosed home and I was told that there were multiple bids and the bank wants all bidders to bid there best and highest bid. I almost feel like this is a scam, so the banks can get the highest bids out of the possible buyers. Is there always "another bidder" or sometimes do the banks just say that to up your bid? And does this mean the other bidder was close to the amount that I bid? Why wouldn't the bank just decline the lower bid and counter the higest bidder?
Also, they were asking $78,000 and I bid $52,000 with 3% concessions, and then when they told me to bid my higest and best I bid $52, I have a chance or was this just a waste of time?

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Jeremy Sulak’s answer

I am Glad you're here! Often times when the banks offer these homes for less than the market price or even below the state equalized value they have already done the negotiating for you. Just like you know a good deal when you see one, so do thousands of other qualified buyers, so I do not doubt the multiple offer situation.

When advising my buyers in theses situations, I like to refer to this as a "no regrets" offer. If you can honestly look at the home and say its not worth more than 52,300-3% concession then you made the right choice.

But if you think you are going to outsmart the seller and you know the home is worth more you need to figure out what its worth and at what price it would still be considered a good deal for you. Whats the worst thing that could happen with a "no regrets" offer, you get to buy the home you want?

I have seen buyers offer 15-20k more than the asking price, because they know the home is worth it, and they have no regrets saving only 100k on the right home as opposed to losing it trying to save 130k. And you know what they bought the house but they were only a few hundred over the 2nd highest bidders price.

I hope this was some help to you, I am happy to answer questions for you at anytime.

Best Wishes

Jeremy Sulak
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1 vote Thank Flag Link Thu May 7, 2009
This is a question posted in May 2009.

The market just might have been different then.
Today, the citizen who is unwilling to COMPETE, pays the retail price.

Those who are best prepared, look for VALUE in undperprice or distressed property and they KNOW there are others looking at EXACTLY the same real estate and opportunity.

If you are believing yourself ready to compete understand:
1. you must be fast
2. bold
3. offer with authority

Sorry, this is a highly competitive environment and there will be no hand holding.
Is there really another offer? Don't respond to the 'highest and best' and you can be sure someone else will make your choice for you. That will be the ONLY confirmation you will receive.

I don't make the rules. Those competing with you do. All the professionals can do is give you guidance regarding the consequences of the decisions or lack of decisions. And of course you will look for someone else to blame when you make bad decisions. And that someone else is always the agents involved.

Talk to those who ACTUALLY buy and sell dozens of homes every year. They will confirm the timid mouse never gets the house.
0 votes Thank Flag Link Mon Sep 22, 2014
This is really a subjective question. How much do you want the property? Your Realtor should be able to guide you in this complex arena.

One poignant question you pose is "is there really another offer on the property?". In order for this not to be true, you would have to presume that the bank or Realtor is not telling the truth. This is a dangerous position for them to take should someone call on them to prove the statement. Although the public often asks this question, I do not believe a Realtor or a bank would perpetrate such a ruse with the down-side of potential serious sanctions or loss of a professional license.
0 votes Thank Flag Link Mon Sep 22, 2014
I'm like you, realtors seem to be getting as bad as the other "bad taste in your mouth" professional fields. I don't like the deal win getting, I walk. I don't play the Earnest Money Game or deposit or good faith money. If I'm not over a barrel I get the hell out of Dodge, fast.
0 votes Thank Flag Link Tue Sep 16, 2014
How many houses have you purchased in the past 12 months?
Flag Mon Sep 22, 2014
I bid in a foreclosure that has been on market for 6 months, realiter just told me that there is multiple bids, and asked if I wanted to raise my bid
0 votes Thank Flag Link Mon Jan 13, 2014
home is in need of lots of work, no front window and rear door kicked in along animal urin throughout home
Flag Mon Jan 13, 2014
anp86, as a professional who works with many foreclosures I can tell you that multiple bids on a foreclosure are very common. These listings come on the market priced to sell (below market value) which in turn generates multiple bids. To be fair to each bidder and in the best interest of the bank to see all offers they advise you of multiple bids.
0 votes Thank Flag Link Tue Sep 29, 2009
Most of the realtors will tell you to pay higher price. I hope they buy their used cars the same way. Multiple bid is a SCAM, especially in this market, where the world is crumbling down under the weight if the foreclosed properties. Banks have to be bailed out by the taxpayers.

If there are multiple bids - ask for the identity of the bidders. If they do not give - walk away. IT IS A SCAM. You will be bidding against yourself. Most likely, you have given your financial capacity to the broker so they know how high you will go.

0 votes Thank Flag Link Mon Sep 28, 2009
More and more multiple offers are being written on better quality properties because the market seems to be turning around an little and buyers want to get there property at a rock bottom price. What happens with bank property is a little different than normal resale. Banks and have a set price they want out of a property and if that price is not meet with an offer they will not sell. Banks love to see multi offers because they will tell everyone to offer there best price and most of the time buyers will raise there original offering price. Not a scam but a way to get better offers.
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0 votes Thank Flag Link Wed May 6, 2009
We own nearly 300 homes nationwide, 78 in the Det. meto area. 6-12 months ago I could bid on a bank ownd porperty and be the only bidder who set the price. Not today!! Out of state and foreign investors have flooded the market. 14560 Piedmont went on the maket at 3:00AM for $10.3k, by 2:00 the next day there were 7 offers. Within 5 days there were 60 offers, highedt $47,000.

It's called Highest and Best. But, if you ask 10 agents/brokers you'll get 10 diffirent answers as to what that means. Highest is easy. Best is the problem, each bank has diffirent measures and exposure on each property. Mortgage vs. Cash, Concessions vs. As Is, Cross out vs no cross out, etc.

Highest and Best is not a scam, the bank has every right to get the highest offer for a property. In a bid sernario, highest and best gives all parties an opportunity to fine tune their respective offerbBecause

Brokers and agents can purchase properties themselves. How do you really know there are multiple offers? How do you know the bank even saw your offer? I"M WORKING ON IT!!!

Good luck to you. The Detroit market is changing. Inventories are down. Good properties are disappearing in 2-3 days. Make sure your first offer is your best. If you really want it go after it. Get the right agent/broker.
0 votes Thank Flag Link Wed May 6, 2009
John gave you a very good and very accurate answer. I hope you have a chance but my experience tells me that if it is listed at $78,000 and you bid $52,300 you probably don't have a very good chance. Banks arrive at the listing price by sending agents to evaluate the homes vale in the present market. Then they usually list competitively so as to sell in an abbreviated marketing time.
0 votes Thank Flag Link Wed May 6, 2009
We have seen for the past few months that some properties are generating multiple offers. The Seller or the Sellers Agent should be able to provide you with a document stating that you are in a multiple bid situation. There is no way of knowing what the others are bidding. It could be that you may have the highest bid and the Seller is trying to get the other(s) to come up. Only you can decide how high of an offer you are willing to submit. Also, if you do not get the house, are you satisfied that you offered your highest and best? What are similar homes selling for in that area?
You are facing what other buyers and their agents are in this market. As you will see, the good homes are going quickly and and usually with multiple offers. Good luck!
0 votes Thank Flag Link Wed May 6, 2009
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