Foreclosure in 60624>Question Details

Natehowman, Renter in

100% list price offer rejected on foreclosure

Asked by Natehowman, Thu Feb 7, 2013

I just had an offer rejected in favor of another buyer on a Fannie Mae foreclosed property. I offered 100% list price, which seemed to be a fair market value based on my agent's comps. I offered earnest money and 20% down with a 30 year fixed conventional loan. It was a multiple offer situation and it had only been on the market for 2 weeks. Was the property just that hot, or could I have made my offer more attractive somehow?

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Nate,

The game has changed, banks are no longer selling these foreclosed properties at list price. Most of these properties are now in multiple offer situation. My advice, make sure you love the home first and bid higher second. If the home is in good condition and if you believe you can live in it for the next 10 years, than why not bid higher. Good Luck!

Jorge Vega
Newman Realty Group
jorge@newmanrealtyillinois.com
1 vote Thank Flag Link Thu Feb 7, 2013
There is one thing you can do to strengthen your offer. Take a look at your pre-approval. Is it a pre-approval or simply a pre-qualification. A pre-qual is a worthless piece of paper that says based on what you SAID, you would qualify for a mortgage. A pre-approval, a little less worthless but not by much, says your credit has been run and you qualify for a mortgage. Almost all buyers have been pre-qualified or pre-approved when they make an offer. Yet about one in three contracts fall through and are canceled because the buyer can't get a mortgage. Savvy sellers such as Fannie Mae know this so they do not trust the pre-apprival letters being submitted. So what can you do to avoid this? After pre-approval, make a formal mortgage application. Submit every document needed. Have your application submitted to underwriting so it generates a CONDITIONAL MORTGAGE COMMITTMENT. Those are gold. They tell the seller you are serious, and able to purchase and close. It will list all remaining conditions that need to be satisfied before you can close. When that list is reduced to a copy of the contract, title, appraisal and survey, you have made yourself a top shelf buyer any seller will bend over backwards to have. Do this, and you'll get the next house. Good luck.
2 votes Thank Flag Link Fri Feb 8, 2013
It could have been just that hot. The house I am purchasing had multiple full list price offers, including my own, the first day the listing hit the market. My offer was accepted due to my financing. My agent advised making a full offer and not to hesitate. However, when I made my offer, even at full asking, I was warned that I may still lose out due to a stronger all cash offer, someone with more than the standard 20% down or someone who was willing to go above asking. I couldn't reasonably go higher than asking, so I just crossed my fingers.

Remember, someone with all cash will always be the most attractive to any seller, including a bank. In my price range, where I live, that was proving problematic. All cash makes for a quick and easy closing. There is no lag time waiting for a mortgage approval and all cash buyers can overlook issues on the property that a mortgage company might want rectified.

Initially I wanted to offer less than asking, but I took my agent's advice. Knowing what I do now, I would have lost the house by trying to play hardball on a very reasonably priced property.

I'm not sure how much information your agent or the listing agent is willing to give, but my own has never had a problem telling me what offers have been made on a property and the financing involved. It just lets me know where I stand.
1 vote Thank Flag Link Fri Feb 15, 2013
My guess is you lost out to a cash offer. Cash is king and typically will beat financing offers since its more guaranteed of a closing than a financing offer is. Not your fault.
0 votes Thank Flag Link Thu Apr 18, 2013
How is this seller's market treating you so far?
0 votes Thank Flag Link Wed Apr 17, 2013
Multiple offers on a property typically means the winning bid is going to be over list price. With foreclosures banks prefer cash offers. Cash closes quicker and there's no appraisal to deal with.
0 votes Thank Flag Link Thu Mar 28, 2013
Hopefully by now you bought the right home, since you wrote this on 2/7/13 .
Not all are like that. You may get the next one.
Be sure to not rule out regular sales that are priced right and maybe in better condition.
0 votes Thank Flag Link Wed Mar 27, 2013
Multiple offers situation with 20% down and full price you will be rejected a 100% of the times , if you have a conventional or FHA loan .

You really need to send an offer over the full price with a homepath loan if you dont have cash ...they are looking for ....no appraiser (homepath doesnt require appraiser ) no contingencies .

Good luck
0 votes Thank Flag Link Wed Mar 27, 2013
You already have many great answers. Coming from primarily with buyers and bidding on multiple foreclosures and seen Multiple offers more than I want to. I would say that What Gary T. Stated, get a pre approval, It hold more weight than your pre qual. Also, make sure you don't have a bunch of contingencies in your offer. You Must be willing to accept it In it's As IS Condition of course get a inspection. How much was the Ernest Deposit, you may need to up that. Also how much closing cost did you ask for. Also, your putting down 20% the bank may assume you have the cash so no closing help. These are tips I got from a REO agent.

I tell my buyers to always assume if their are multiple offers, there is. Also, if you want it make a strong offer and generally that's going above list price. Your still protected by the Appraisal contingency so your not going to pay more than market value if your don't want to.

Good Luck! You will get the next one.
0 votes Thank Flag Link Sat Feb 23, 2013
Nate,

The market is hot right now and there is not much available. Often the banks go with cash offers. In the future, I can help you make your next offer more attractive to the banks.

Best regards,

Ivan Sagel
312.515.7823
Ivan@atproperties.com
0 votes Thank Flag Link Sat Feb 9, 2013
A few things come into play....closing date, seller concessions and purchase price. are you planning being an owner occupant? Was the property in first look? Did your agent turn in all the required paperwork...ie addendum, owner occ certification, disclosures, state contract.
Former Fannie Mae Asset Mgr
0 votes Thank Flag Link Fri Feb 8, 2013
Most likely hot. I have had clients make offers 20-30k over list price. All Cash! Foreclosures are crazy, and sometimes you get them, and sometimes you dont. Its just the nature of the beast.
0 votes Thank Flag Link Fri Feb 8, 2013
Both. The property was very popular and you could have offered more than list price. It is all about the money$$$. Someone might have offered cash...........and possible even slightly less than you, but banks might still take cash over financed. There are no rules on this.
0 votes Thank Flag Link Fri Feb 8, 2013
You won't know until it closes, but chances are you were outbid by a Cash offer. People are paying above list.
0 votes Thank Flag Link Thu Feb 7, 2013
My office is a Fannie Mae office ( my broker lists REO's for FNMA) and if the home was on the market for 15 days is was open to investors as well as owner occupants. As everyone has already commented the competition is fierce these day and a good property will have multiple offers and in many cases sell for well over list price.
All the best movign forward and as I tell my buyers, it was not meant to be and a better home is just around the corner!
0 votes Thank Flag Link Thu Feb 7, 2013
The party's over. Cash and multiples offers above asking are the norm now.
0 votes Thank Flag Link Thu Feb 7, 2013
Likely this went over list price in this market with current inventory levels. Remember too cash is king so if a cash offer wasn't too far off from list price the bank probably opted out for the cash offer
0 votes Thank Flag Link Thu Feb 7, 2013
Foreclosed property usually demands 100% cash. And you said it was a multiple offer scenario so you may not have been the highest bidder or maybe others had 100% cash. Multiple offers usually bid up the price above the list price so most likely you were not the highest bidder,
0 votes Thank Flag Link Thu Feb 7, 2013
It is not uncommon for multiple offers go over list. Don't worry because some of these deals fall apart and then they one back to those who showed interest on the past. 2 weeks means investors were involved and see a lot of investor offers being cash offers.
0 votes Thank Flag Link Thu Feb 7, 2013
Buyers are out and many of them with deep pockets...If your agent knows the area he/she should of had known how much activity there is in the neighborhood or building and advised you.

Good luck next time!
0 votes Thank Flag Link Thu Feb 7, 2013
They may have gotten a cash offer or they may have gotten a higher offer. Multiple offers are pretty commonplace these days and there are quite a few properties that are selling over list. High demand, low supply in many areas.
0 votes Thank Flag Link Thu Feb 7, 2013
Were you notified that it was a multiple offer situation? Did your agent tell you that you needed to come in with your "best and final"? Was it your best and final? If yes, then you shouldn't be upset. If not, then why not?
Web Reference: http://LucidRealty.com
0 votes Thank Flag Link Thu Feb 7, 2013
Chances are it sold for higher than list price; there's fierce competition out there amongst buyers so you may need to be even more aggressive on the next one! Make sure you're working with a full-time experienced Realtor who can guide you through this process. Best of luck to you!
0 votes Thank Flag Link Thu Feb 7, 2013
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