Your agent is probably telling you the truth about multiple offers. Almost everything under 400k is either a foreclosure bank owned property or a short sale. If the property is priced right and is in good condition, there will be multiple offers. You will be expected to put in your best offer. We are seeing offers of 30% over asking. The fact that someone may be paying "cash" may not matter to the bank. They are mostly interested in their bottom dollar. Hope that helps. Diane

Robert, it looks like the pros have some great answers for you. It's not unusual to have multiple offers in an environment like this. We are currently holding only 1.5 months worth of inventory according to the california association of realtors. I believe normal market in Sonoma County is 4 to 5 months. So, you're going to be competing quite a bit for a house that's priced well and is appealing to many people.

Hopefully Robert you have bought a home by now. If not, please refer back to Mike Kelly's answer below. As an all cash buyer you have a definite leg up in today's market in Sonoma County. The truth of the REO game in here today, as 2.5 months ago when Mike commented, is that bank-owned property sales still dominate our market at the entry level under $500K, heck under $400K. That said, many buyers even with experienced agents, are competing for the best apples in the basket. A good apple in this case may not be a perfect home but a cosmetic fixer with good bones. Or a good location, etc. These are the ones that are selling quickly (quickly in bank time not buyer time)

As a cash buyer you should move to the head of the pack pretty quickly but what can be confusing is that many of the active REO listings on the MLS are actually not available. They are not accepting offers beyond the first 5 or 10 or 15 they have already received. Unfortunately, because banks are taking a long time to physically ratify the best of these accepted offers in writing, they show as available leading to a lot of frustration and confusion among consumers.

Some of the listing agents who handle large numbers of REO properties send out daily email updates to agents indicating how many offers have been received on their listings and a cutoff date for new offers if appropriate. This is an attempt to bypass the current shortcomings of the MLS status categories when it comes to REO's. Bankes also may request highest and best offers in these situations and will not counter on major financial terms.

It is possible to find a great deal, even with some sales prices going well over asking, on investment property or a first time home in Sonoma County. It just takes preparation and persistence. Good luck!

Robert, you need a qualfied broker to work with you. Your current agent is not cutting it. Find an agent who will dig up properties for you, not the other way around.

You need to take control.

You need to know when houses just come on the market or before they even hit the market. Being able to offer all cash is a great place to be. Most Sellers will take an all cash (reasonable) offer over a financed offer a little higher than yours.

You posted this comment in July so you should have a home by now!

http://www.WineCountryMoves.com

Kim,Can you explain the "laws" about agent's making an offer?? Or perhaps clarify your last statement? And how many transactions have you done this year? Last year? For the past 30 years? I don't mind a warning as long as it is based on fact and not a ouji board!

Under no conditions offer over asking it is a clear rip off. "show me the offers" I went to make an offer they said it had multiples over asking, 6 weeks later they lowed the price! Does anyone out there know what the laws are about agent making offers for the buyer make your offer never over asking (never ever).

Robert, The REO agent is NOT going to kill the goose who is laying all those golden eggs! Just because you're first up at an REO is NOT indicative of a successful offer. Cash is king however. I've had Asset Managers jump all over a Cash offer and turn down offers of $20,000-$40,000 more as they realize how tough it is to get a loan in today's market with the more stringent appraisals AND underwriting guidelines. We just accepted cash off today on a property with an offer $50,000 more! The higher offer was an FHA, assisted down payment program offer which had some shaky buyers who wanted the world in credit backs.
My advice is to find the ugly duckling of the REO's. Everyone wants the undervalued, gorgeous house and multiple offers are going to get it. The agent is NOT going to recommend the first offer but let them stack up and start submitting them after an adequate time on the market. On my REO listings I allowing the local Realtor/Agent community to first tour the property on their "Broker Tour Day” do a public open house and then submit offers. The average time on the market for an REO in Sonoma County now a days is just over 2 months compared to over 10 months for a Short-Sale and 6 months for the county as a whole. So this is a raging "Seller's Market"! REO's make up only 15% of the active listings but 40% of ALL sales! Additionally 70+% of ALL sales are under $500,000 so you've got competition galore.
I've had some agents’ voice frustration over bringing in an offer OVER asking and NOT even getting countered. They wrongfully try and get a first time, FHA, homebuyer into a property which might NOT even be "loan able"! Asset Managers know this and the agent advising the AM does too.
And to those reading this who has to get a loan, try and get yourself pre-approved with the lender who has the REO. Countrywide, Indy Mac, Wells Fargo, etc. and then USE them! You'll be surprised at the outcome as these lenders want to re-coup as much of their losses as possible.
And lastly, make sure your Realtor/Agent KNOWS how to play the game with the REO Realtor/Agent. I make it extremely clear as to how the lender wishes to have the offers presented. One of the mandatory requirements of the REO lender is to have the buyers "pre-approved" with the lender's representative. I make it clean you DON'T have to use them but they still want you pre-approved with their rep. I get Realtor/Agents who just DON'T get this! They insist I use their pre-approval letter. This is especially true with those who are also the lender. They insist this is an unnecessary step and is hindering their offer being presented. I ask them what part of "mandatory" do they NOT understand? This is the REO Asset Managers request. No offers to be presented with out the rep pre-approving the buyers! So they just don't get presented and then wonder why?!!! Seriously--this happens all the time.
If your Realtor/Agent is trying to be the answer to your prayers you'd better make sure he knows what YOU'RE praying for!! You want the house--if the Realtor/Agent becomes an issue this stands in YOUR way. I go out of my way to communicate with those agents who bring me an offer on one of the REO's I represent but some just want to fight me all the way. I had one agent present an offer $150,000 below our listed price and called to complain that he never got a counter-offer!!
But if you have cash and aren't in to low-balling, your chances are much higher than the first timer who is struggling against investor's and those with superior down payments. This is the curse of the market for many who wish to get into this terrific home buying opportunity--they NOW can qualify but keep getting beat out by all those wanting to take advantage of superb pricing! They read it's a BUYER'S market but the agent doesn't tell them the real truth behind the numbers. But hang in their and you'll still get a great value. Good luck!

Hi Robert,

My first thought reading your question was " Does your agent have you set up to automatically receive NEW listings by email and then follow up with a phone call to make sure you received them? It sounds like you are always coming late to the table, either because you or your agent is not finding out about these properties early enough.

You mentioned you would offer all cash, are you buying as an investor? I have a service I offer that allows investors to track preforeclosure homes 4-6 months before they are listed with a REALTOR. This gives a competitive advantage to my Cash Offer Investor clients who are able to analyze these properties BEFORE the MLS listing goes live and is also a predictor of neighborhood values over the next 6 months. Please see my website for more information.

Angie, you can search all the preforeclosures for the entire state of California on my website either at the link below or http://www.goodbuyhomes.com

So how do i get lists of these REOs before they are listed ont he MLS

Wow--I was out all day showing property in Sonoma county yesterday and I think you got some great answers in the meantime! I agree with most everything said, and wanted to reiterate 1 point. As Dave said, you should be first in line to see the new REO's as they come on and be in a position to write on them prior to the submission of multiple offers. Also, many of the agents specializing in REO's publish status lists of offer activity for their inventory. At a glance, your agent can guide you to the ones available. One list I subscribe to will indicate as many as 13 or 14 offers for especially desirable properties. If a bank as received only one offer right off the bat, and is waiting for more--that will be indicated. Could it be that the first offer was lowball? One listing I was following had an offer on it for weeks. Once a second offer came in, the bank indicated they would cut off new offers 3 days later.

As a cash buyer you are able to be much more competitive than the first time buyers competing against you. Many popular listings, REO or otherwise, are shown on the first day on market to agents and their clients who were aware of the property's coming on the market in advance of day one.

Hi Robert,

As a Realtor here in Santa Rosa, I can tell you that you are not alone in what you are experiencing with multiple offers. The buyers market right now is very hot and homes that are priced at market or below are very desirable and yes, getting multiple offers. There are a lot of buyers and investors who have been watching the market and waiting and with the threat of raising interest rates I have seen in the last couple of months a great increase in buyer activity. With all cash, you are an ideal buyer - however, if you are looking at REO's the bank owning the property will be looking for the highest offer, regardless of cash or not. And I agree with several of the other comments below that some agents are pricing their REO's far below market value in order to garner multiple offers and drive up the price. These homes are coming on the market and quickly going into escrow after a bidding war.
There are several things you can do to successfully get your offer accepted. First, you could look at homes that have been are the market for some time or that have been in escrow and fallen out. More often than not the seller will be motivated to sell and your all cash offer would be a very welcome offer. Secondly, strong terms in your purchase contract, especially in a multiple offer situation, will put your offer ahead of others. Are you willing to purchase "as is?" Can you remove your contingencies in a short period of time or close the escrow quickly? Will you offer to pay some of the costs that perhaps a seller would normally pay?
Before I put a pen to paper and write an offer for my buyers, I call the listing agent to find out 1 - are there any offers that we are competing against, and 2 - what are the key criteria that their client will be looking for in an offer? Remember - the listing agent wants to sell their clients home so they should want to present the most favorable offer possible to their client.
Even if your offer does not get accepted, have you thought about going into back-up position? I've had great success with this option for many of my buyers. Almost 1 out of 3 escrows fall out here in Sonoma County....so this would put you in the first position to purchase the property should it fall out.
The escalation clause is not a bad option too, although more popular in the East coast, I have used it myself here. You have to know the value of the home you are purchasing and set a limit of what you are willing to pay for the home.
Patience and perseverance (and agent skill) are crucial in today's competitive market. If you have any further questions don't hesitate to call.
Lori Godwin, Realtor
CPS Santa Rosa
707-540-9818

I am finding that is happening with me alot. I keep getting outbidded. Buyers/investors are bidding 20 or 30 thousand over list, of course the bank is going to accept that when i may only go over 5k..have to stay in my price range...it can be frustrating..but i have faith i will find something..Yes it is a different market, I have learned so much about the market since over the past months..Very interesting I might add. Good luck in your search..

Hi Robert:

My guess is that you are looking at the very many REOs in Santa Rosa. They have multiple offers galore.

I think that's the strategy of some agents and lenders, where they price the homes really low to start with, but anticipate multiple offer to drive up the prices. Some are processed through eBAY type of services, where the bids continue to come in.

Have your agent give you ideas about some of the recently sold REO properties, and see what the bidding trend is. Set your target offer price for that specific property and go from there. It's an amazing new phenomena.

Sylvia

Jeanne correctly indicated that you are succeeding in identifying the bargains in your market. Not every home gets multiple offers, so you are choosing homes that other buyers agree are good deals. Shel-lee also made a great point about having a strong cover letter stressing why your offer, especially with all cash, should be the one the seller accepts. She also made a strong case for relying on your real estate agent to help with assessing the fair market value.

One aspect of your search that I would want to review with your agent is why you aren't seeing these listings before there are multiple offers. If you are new to the area I can see why it would take some time to review the inventory of homes in your price range. On the other hand, you sound like you have been doing this long enough to have lost some offers. If you have seen most of what is out there, you should be spending your time looking at the nearly half a dozen REO homes coming on the market every day. Make your all-cash offer the first one the seller sees.

Finally, I know from Jeanne's answer that she has been through the multiple-offer wars before. Most experienced agents have been there as well. The only advice I can give you is to stick with it. My personal record is eight offers for one client before one got accepted, but I wouldn't be surprised to hear of ten or twenty offers before a successful escrow. You will get a house you like if you are persistent and have cash to offer.

The link below is to a blog post I wrote about the details of Sonoma County overbids in the REO market. It may have some information you can use.

Hi Robert, It sounds to me as though you are doing a fine job in picking out the best homes in the inventory pool in your area if they are attracting multiple offers. Shel-lee makes a very good point, in terms of the "right" price to offer, a thorough pricing analysis will give you the answer here. Your agent should be able to help you with this. It will be based on the facts of the market, of homes sold, those under contract, and extrapolating the trend in the market and applying it to active inventory, it will yield an appropriate bidding range.

Now, in a situation as you describe, with multiple offers on the property, you know you have company and are in a competitive siutation and so you should put together a strong offer to be in the contest. Certainly, as a cash buyer, you are off to a great start. Remember that the seller is looking for as much certainty as possible - and the mortgage piece in these uncertain times can be - well - uncertain. And so, with proof of funds accompanying your offer, you should have a leg up.

Here is another idea - in 2004/2005 when multiple offers were a mainstay in our market, we developed a tool to help us succeed in this highly competitive time - a Escalation Clause - essentially it accompanies your offer and states that if other bona fide offers is presented and is higher than yours, then you will increase your bid in increments of "x" up to an offer price of "y".

In multiple offer situations, you may only have one opportunity to give it your best shot - this tool essentially gives you several shots in one at the bidding table.

It cannot be "kicked in" without proof of another offer. Don't be shy about entering the contest -- just be ready to compete!

Good luck to you!

Best,
Jeannie Feenick
Weichert Realtors
Search and connect at http://www.feenick.com

Robert:

Just because there are multiple offers, does not mean that they are over asking price. Your realtor should not be afraid to put in a reasonable offer, especially when you are an all cash buyer in a world where banks are going out of business every day and no sale is final until the loan funds and the money is actually received via wire.

Your realtor should guide you to what is a reasonable offer. Sometimes it is below asking price, sometimes it is at asking price, and sometimes it is above asking price. The important thing is to make sure you are not paying more than fair market value for the home. Asking price does not always reflect fair market value.

When I have a strong buyer (and even when I don't), I present all my offers with a cover letter highlighting the key aspects of the offer and explaining why my offer is the best one for the seller. In this competitive market, I have been told that this "executive summary" of the key benefits in my offer and the strength of my buyer has tipped the balance in my client's favor. An all cash deal IS a very strong selling point, and your agent needs to HIGHLIGHT this fact to the listing agent. Just submitting a form with the "cash offer" box checked is not really enough. Many agents, especially if they are handling REOs, don't take the time to look over the offer carefully. The cover letter is essential in these situations.

Hope this helps you in winning in this new home buying market and Dare to Dream.

Shel-lee Davis
Real Estate Consultant
RE/MAX Palos Verdes Realty