Foreclosure in Madison>Question Details

Luckyone, Home Buyer in Madison, WI

bank dropped reo list price $10K THE same day they countered my offer. was on market 88 days w/NO offers & bam, in comes a 2nd offer. cause 4

Asked by Luckyone, Madison, WI Fri Mar 11, 2011

concern? or a ploy? BEFORE JUMPING TO A QUICK ANSWER, consider this..... bank told the listing agent that the people making the offer HAD been shown the house earlier on at the initial listing price. the property was already on market for 88 days when they dropped the listing $10K. 2nd offer reportedly came in 2 days after price drop. my concern is, if there really is an offer & those making it had been waiting for price to drop, they probably won't make a low ball offer now right? why wouldn't they have done that from the start? should I be worried that they have offered something closer to the new list price & up my offer? I have no idea if the offer is verbal or written, or if the people even pre qualify for financing. can the bank consider a verbal offer as a secondary offer or does it have to be in writing? and were the people making the secondary offer made aware there was a 1st offer when making their offer? or were they as suprised as i was to be told to give best & highest?

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7
I have handled a ton of foreclosures both as a listing agent for the bank and as a buyers broker. NO LENDER will even look at an offer without a full disclosure of buyers ability to get a loan (attached) to the offer. NEVER waive your inspection. Almost all banks want you to do the inspection as much for their protection, as yours. Remember, all foreclosure sales are being sold "AS IS". If your inspection shows substantial problems, walk away or renegotiate the price. If your broker is a good one, they will know how to write the offer so you can walk away, but the lender can't.
0 votes Thank Flag Link Thu Nov 17, 2011
All in all REO applications are difficult at best. Depending on the Financial institution (local or national) will determine how the transaction is negotiated. In many cases the right hand has no idea what the left hand is communicating in with national banks. The departments that handling pricing and the negotiations are completely different. Your financing may have come into play in this situation. FHA loans require more detail and can be more challenge to underwrite. The bank may have chose another offer for that reason alone. They generally go with the highest offer and the quickest close. Remember they want to move the property and they generally will not play games with a few thousand dollars. When they come back with a set dollar amount they are pretty firm on that number.

Good Luck

Donna Birschbach - The Birschbach Team
Keller Williams - Madison
0 votes Thank Flag Link Wed Mar 16, 2011
Lucky,
DO NOT DROP THE INSPECTION. Sorry if that was too loud, but I feel very strongly about inspections. 2 days is barely enough time to get a qualified inspector out to see it and review the report. Banks don't mind inspections; they just won't do much work. If something major is uncovered, like a roof, they may do it or consider a lower price, but I don't believe dropping the inspection is a good strategy unless you are a contractor able to take on whatever is found.
Banks want money, it's that simple. If this house is really what you want, pay for it. In 5-10 years the difference between what you offered originally and what it may take to buy it may not mean that much.
On the other hand, it sounds like you are making an emotional decision. Take a few minutes to think through all of your options, before you decide either way. New homes are coming on the market every day and the spring is the busiest season. Let us know how it turns out.
0 votes Thank Flag Link Fri Mar 11, 2011
Gosh, was that written with bad grammar in a fit of despair! I was always a serious buyer on this property, but when I found out that there had been no offers after 88 days, I said why not lowball them & see what they counter. I was actually happy with their counter offer & that my strategy might've worked. I countered back that I would accept the counter if they would pay my closing costs. When I saw my agent's # on caller id this AM I excitedly answered, ready to agree to whatever the bank came back with -- whether they paid closing or not-- only to be informed that another offer had come in. My whole day crumbled from that point on. If you only knew what I've been through with banks, loan officers & agents over the past year, you would agree that I am very unlucky. Just when I thought I was the 'lucky one' this time, of course it was not to be. Anyways, my 1st thought was that they might have a home-sale contingency, then remembered duh, banks don't even go there with REOs. That's when fear set in. I really wanted this house. I don't want to offer much more, but am considering increasing my earnest & dropping to a 1-2 day inspection contingency. Any thoughts on this strategy? I had a rather short closing period for a financed deal (FHA) to begin with. Thank you so much for responding!
0 votes Thank Flag Link Fri Mar 11, 2011
Luckyone,
BG is correct, the market is dynamic and the banks rules are to get the most they can and minimize their losses. I've also noticed that once I get an offer for one of my listings, another offer often seems to appear. People tend to want something as soon as someone else is also interested.
Verbal offers aren't worth the paper they are not printed on and any serious agent and seller knows this. You can improve your offer with an escalation clause requiring proof of whatever offer you are competing with. Talk to your agent about this strategy, I've used it successfully many times.
Best of luck.
0 votes Thank Flag Link Fri Mar 11, 2011
I lost a couple of bids because of this. Bank wants the highest and best offer , can't blame them for that. I can only speculate that Bank felt your Bid can be beaten by some one; therefore, they dropped the price to catch people attention and at the same time informed the public that this is a multiple offer situation. Guess what, lowball bidders dropped out and serious bidders upped their offers. You are no long bidding with the Bank, but you are bidding against competitors. You have a better chance to win if your competitor is an Investor than Homeowner. Wouldn't you love to have inside information on this bidding so you can only 1K higher ? .. but good luck on that :)
0 votes Thank Flag Link Fri Mar 11, 2011
You have a few options for extracting that info without showing your hand, and possibly without upping your offer needlessly. Instead of asking any of those questions directly, you could counter with terms that will prevent a bidding war before it starts, and will present a new offer price only if a neutral third-party verifies that at least one other compliant offer exists.
0 votes Thank Flag Link Fri Mar 11, 2011
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