Home Buying in 21227>Question Details

mrs dwight k…, Other/Just Looking in 21157

Is there any Buyer protection when dealing with Multiple offers on a Foreclosure? Is it ethical for the bank to tell you how much to make your BAFO?

Asked by mrs dwight k schrute, 21157 Fri Jan 28, 2011

We submitted an offer on an REO property. The bank responded that it had 3 offers and wanted our Best and Final Offer (BAFO). It included an amount it recommended that we consider offering in our BAFO. This seemed strange. What rights do we, as buyers, have in insuring that the bank actually received multiple offers? What is to stop them from using this ploy to try to inflate our offer? Why not just counter offer and ask us to respond? Are there any laws out there regarding if and when a seller must disclose the content of other offers? Also, isn't it strange that the bank would recommend what our new offer price should be? Everything here feels wrong. What is typical?

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I ,too, never heard of a bank recommending an amount for your BAFO. I do not believe that the bank will have to document how many offers and for which amount they have. The seller does not and should not disclose the content of any offers to a third party. How would you feel if your offer amount and terms were disclosed to another buyer so that this other buyer can out-bid you?
0 votes Thank Flag Link Fri Apr 8, 2011
Hi Mrs.,

I have never heard of a bank giving a "recommended" price. However it is common for them to ask for your best and final offer in a multiple offer situation. Make it YOUR best not theirs. And base that on a thorough market analysis of the properties value LESS and improvements that it may need. Sometimes people see foreclosures as a great bargain when in fact it is NOT uncommon for the bank to over price them. Follow your gut on this one for SURE!
0 votes Thank Flag Link Fri Apr 8, 2011
It is not atypical for a bank to ask for your BAFO, usually they are looking to get the property off of their books and don't look to deal with negotiations... asking for all a buyer's got is the way around it. Recommending a price has happened to me as an agent, while I agree it seems unethical, it also saved us (myself and the buyers) time... simply put the property wasn't worth what they requested. Banks have little to no attachment to the homes they are selling, it is only about numbers to them... so while it may seem unethical it could merely be a case of them looking to hit a quota.

In short, it really does not matter what they want or advise you to offer, you have an agent looking out for your best interests to assist you with that. Have them run the numbers, comps, etc... and only offer what you feel comfortable offering (if you even decide to do so). Other homes will come, I assure you that. If it feels shady, walk. I definitely suggest you talk to someone who knows the situation (hopefully the Realtor you hired) before moving forward.

Respectfully,
Dan Johnson
0 votes Thank Flag Link Fri Jan 28, 2011
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