Home Buying in 55306>Question Details

Bbqgal, Home Buyer in Vancouver, WA

What is a fair 2nd offer?

Asked by Bbqgal, Vancouver, WA Tue Apr 29, 2008

We just got a bad news from our agent, the offer we submitted 2 weeks ago got rejected. Bank consider the offer too low to counter. (our offer was 37K below the listing price with no seller contribution and no contengince and even no inspection required.) Here we are facing the choice of whether start all over again or put another offer. Any suggestion on how to make a 2nd offer attractive to bank? or how much increase of an offer that would grab banks attention or anything we could do to make the offer stronger?!

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8
Voices Member’s answer
Banks do their homework. It depends on market time, they might be more willing to part with a property if it has been on the market for a longer period of time compared to a property that was just listed. Banks have invested interest in the properties and they too want fair market value for property.
1 vote Thank Flag Link Wed Apr 30, 2008
You have to negotiate differently with a lender than a private owner. There is NO emotion involved on the lender side in this transaction! The lender's representative doesn't need equity to use as a downpayment on their next home (as an owner/occupant might) and they normally get paid a salary whether they accept your offer or not! So there is no financial incentive for them to "cut you a deal". The lender cares about three things - the current value of the property, foreclosure inventory, and loss levels which are acceptable for write-offs. That value can be based on a broker's opinion, recent sales data, or a recent appraisal. The point is, it's all about the numbers.

You've already shot for the moon with your first offer - and were denied. Your offer was so low that the lender didn't counter. Get a current, level-headed market analysis for the property and base your offer on that figure minus whatever you think the lender may term "an acceptable loss" - say 5-10% (maximum).

Remember that negotiating for a bank-owned property is much like attending a 1-person auction: You must guard against overbidding. If the property doesn't make sense at your calculated offering price or a counteroffer price, you have to be prepared to walk away and seek a better deal elsewhere.
0 votes Thank Flag Link Wed Jun 24, 2009
This is hard to answer when I don't know the list price and haven't seen the property or judged the comparables. However, a first offer that exceeded 10% below the list price would probably be rejected. If this is the case, try going back at 10%. If you were better than 10%, try moving up 1-2% to a 8-9% discount from the list price for your second offer. Have patience and perserverence. In all my years in real estate, when I've had a buyer not get a home they offered on, they always have ended up with a better one in the long run. Best wishes.
0 votes Thank Flag Link Tue Apr 29, 2008
Many banks have BPOs done and base their decisions on what the BPO or Broker Price Opinion comes in at. Just because the bank owns the property doesn't mean they are going to "GIVE IT AWAY"....many times they are more willing to drop the listing price rather than negotiate a huge number under the list price. Some banks are willing to negotiate more than others....the only way to find out is to keep trying. I have seen some banks negotiate like crazy and when everyone walks away from the table they drop the price below what some of the past offers came in at. Unless you want to wait and possible be competing against other offers, you should really consider raising your offer price.

Percentages wise I have seen banks all over the place. Some accept 15-20% under list price, others keep it 5-10% under list price. If there are multiple offers, I am still seeing homes that sell over the list price....even in the current buyers market
0 votes Thank Flag Link Tue Apr 29, 2008
Bbqgal.....really hard to say without know more info or being intimate to the deal. What advice did your agent give you? I trust you had a agent representing you. 37k on a 150k listing is a whole lot lower than 37k on a 500k listing.

Thanks, Todd Norsted
Web Reference: http://www.toddnorsted.com
0 votes Thank Flag Link Tue Apr 29, 2008
The bank is looking for a specific number. You and your agent should get together and go over the prices of homes in that area and determine what the bank will net. Bank owned properties are usually appraised by the bank prior to the bank taking over. Once it is appraised, the bank will certainly try to get the appraised value. How was your price determined. Since bank owned offers are sometimes not seen but once a week they usually look at what they will be netting. It is all about the price. The best offer will get it. News media has started this frenzy that you can buy below market value on everything ---- not so. They should be agents and see behind the scenes as to what the real facts are. Again, your agent should be helping you put in a good offer by checking the area for selling comparables, and if you really want the home then you will have to up your anny
0 votes Thank Flag Link Tue Apr 29, 2008
First, brainstorm with your agent to see what may be the most desirable to the bank. Second, if the price for the property is already a good one, offer as close as possible to that amount. No deal is a great deal unless it is complete, and if you want this home badly, offer to close early if possible. The banks usually want it off thier portfolio, but won't go down if they don't need to do so. Third, always get a home inspection to know what you are dealing with! It isn't a good deal if there is as much to put in as you spend in the first place.
Good Luck,
Rosellen Dollahite-Auburn Ca.
0 votes Thank Flag Link Tue Apr 29, 2008
It sounds like you are trying to purchase a foreclosure since your offer was rejected by a bank. In today's market the banks have so many foreclosures out there that they are trying to recoup as much money as possible. Since most of the foreclosures involve interest only loans or adjustable rate mortgages the principle borrowed has not been paid down. Banks in our area won't look at a contingent contract. Listed as "as is, where is" meaning that they are not warranting anything and will not pay for an inspection. An inspection is only to provide personal confort and give you an out if you find too many repairs are needed. So in short, how do you make your offer more attractive? Offer more money.
0 votes Thank Flag Link Tue Apr 29, 2008
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