The simple reason the bank rejected your offer is that they feel they can get more money for the house then what you are offering.

The more detailed reason they rejected your offer: There are a lot of hidden costs that the bank has when the foreclose on a house, so often what a lot of people see as the amount the bank foreclosed on doesn't cover the true cost the bank has in a house.

For example, the bank gives a loan for $200,000 for a house, after a few years its foreclosed on with a balance of $190,0000. The bank is the winning bidder at courthouse auction (which is usually the case) with a bid of $150,000. So many people see that the bank has $150,000 for the property, when they really have $190,000 in that property. Now you need to add many of the costs associated with the foreclosure process: attorney fees for filing foreclosure, multiple appraisals / BPO's to determine the value, property preservations costs. I've seen reports that put these costs at 10 to 20% of the value of a loan. So, lets go with 10% in costs, so now the bank owns a property, has $209,000 tied up in it. Like any seller, they want to get the absolute max they can for it.

It sounds like the 18 months it was on and off the market was with the original owner, so now the bank is listing it. So in the banks eyes, it's just now on the market. I also wouldn't put a lot of stock in the neighbors saying no one's been to the house. I had a listing that had over 20 showings, and one day the neighbors said to my sellers "it's a shame no one's been to look at your house" My sellers laughed because we had multiple offers on it.

It sounds like you and the bank went back and forth with offers with you, until you made your final offer which the bank refused. Depending on how it was relayed to the other agent as "your final offer" the bank decided not to go with that and saw no point to counter. You've probably seen the best the bank is willing to do at this point, and you need to decide if that is a offer you could live with. If it is, have your agent write up a contract based on that and resubmit it, but thats no guarantee that they'll go with that offer. Or you can wait and see if the bank adjusts its price later, but the longer you wait, the more people who will see that and you may loose a multiple offer situation.

AMEN,

All banks operate differently somewhat like car sale's that have been sitting on the market. The powerpoint presentation tells the story on what decision they have to make at the right time. However it is a team effort to ensure that BPO is right on the mark and not just about making the dollars and run. THat is what hurt communities! We as agents must work skifully within our ethics to provide a reliable and accurate service. Banks rely on us as agents to tell the true story to reflect the market conditions of each property. I hate to say it but it is the truth is some local areas.

The bank is like any other seller,looking for the best deal and sometimes they make big mistakes and sometimes it pays off for the bank or lender. I assuming by what your saying is the bank just foreclosed and started the reo process. If the bank just started the reo process they will be trying to get what the appraisal reflected. It does not make any difference what is on the books for the bank, however, usually the banks are taking a good hit. Sounds like you found a good property and need to decide if you want it or not. If you want it you can do two things:either make a good offer that is likely to be accepted or wait and see if any one else wants the property and if no one wants it you may get it at the price you want.

When dealing with these type properties you always hear stories and I would not believe any of them, just do what you think makes sense.

Good Luck

Keith Manson
First Weber Group
Certified Distressed Property Expert
Greenfield,Wisconsin