Hopefully your agent advised you the home you sought was undervalued and to submit your highest and best offer. Some REO's, HUD's, etc are are now garnering multiple offers and buyer's are being forced to compete for specific properties. But fear not, there will be plenty of foreclosures to choose from for the next 3-5 years.
Sounds like this may have been your first attempt at buying a foreclosed property and not being fully aware of how the game is played. It is not uncommon for foreclosed properties to be in poor shape and require lots of "sweat equity" to get them back in great condition for resale or rental.
The banks will typically price them aggressively due to the condition and the need/desire to get them sold quickly. This usually means LOTS of offers, many of them over list price. I have worked with a buyer that reasoned (incorrectly) that if it was already priced below market value, and (considerably less than tax value) that they would go in even lower with their initial offers. Some of those offers were rejected or got no response and the prospective buyer watched as a savvy buyer of foreclosed buyers won the bid and bought the house. When faced with a response requesting "highest and best offer" it is VERY important to do just that and offer your BEST offer, based on what you are willing to invest.
As mentioned in another response, offers without contingencies and cash offers are very attractive to owners of foreclosed properties. Depending on the condition of the property, you may not be able to obtain traditional financing and can lose a deal when a lender will not lend on a property considered in "poor" condition if their requirements are that they only finance properties in "fair" or better condition. Again, most offers must have a proof of funds or pre-approval letter from the lender or they will not even be considered.
Your best bet is to work with a Realtor you trust and whose opinion you respect. And then, LISTEN to what he or she tells you regarding making an offer on a foreclosed property. Buying foreclosed properties can be rewarding and profitable, so be sure to follow the guidelines "to a T" and work with a Realtor that can guide you through the process! Good Luck on your next purchase!
Welcome to the wacky world of foreclosures.....your scenario is one that is a fairly common occurance with foreclosed property especially when the bank has it listed at a more than fair price. Todays' distressed market followers with good professional advice understand that offers on homes that are priced below the area's "price point" need to be aggressively persued.
Unfortunately, this most often means that offers at or below the bank's asking price will miss the opportunity to be seriously considered. Additionally, often a lender financed offer will not be given the same consideration. We have seen many situations in which the bank financed offer is significantly higher that a "cash" offer but the banks will lean toward the cash opportunity.
The fact that you were unable to make the top three is an indication that the property was priced well below the market value and because of this, attracted considerable interest.
Being a successful player in the "distressed" real estate market is often the result of learning from your mistakes or listening to solid professional RE advice. Our recommendation is to pick yourself up, dust yourself off, consider it a learning experience and then move on the your next challenge....all the wiser.
REALTOR | Mortgage Broker | Consultant
Keller Williams Realty | 360 Lending Group
In today's market, alot of Listing Agents/Banks are listing homes below market value to generate offers and a 'bidding war'. I don't think this is ethical but that is just my personal opinion. The best way to know what your offer should be is to have your Realtor to a Comparative Market Analysis (CMA) on the property you want to make an offer of to determine it's true market value. Base your offer on the true market value of the property, not the List Price. This will save you time and unnecessary frustration.
Please see my blog for tips and advice on buying a bank owned home