I think the short story to all these answers - and this has been said many times.

Do not expect any sort of logical response out of a bank. They work on thier own time, thier own rules, and have thier own factors to consider that they do not make the general public aware of in many cases.

Working with banks in cases like this can be downright mindboggling in trying to figure out thier intentions. There are some basic ground rules you as a buyer should follow to better your chances - but beyond that it's a crap shoot.

The reason a bank would accept a lower offer is the the terms of the accepted offer were more to the bank's liking. For example, the accepted offer may have been a cash offer or it may not have included any contingencies (e.g, no inspection required). I've sold quite a number of foreclosure properties and know that banks want to sell as quickly as possible with as little risk as possible - they really like cash offers with no contingencies.

It could be that the bank knew that the property would not appraise for that amount,most loans are subject to appraisal?????

Could dual agency have been the reason my offer didn't go through? Assuming a 6% commission, It seems to me that the selling agent would have probably gotten $19,500 on the deal at $325k vs. only $10,500 if they agreed on our offer of $350k but had to split the commission.
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The commission is agreed upon in advance. Either the listing agent splits it or they get the whole amount.

Mr. O,

It was not a dual agency. The buyers broker (agent) was from a competely different company.

My experience and for a property like this, that offer was probably put in the day it was listed for sale since the price was really, really good in terms of today's prices.

I don't know if focusing on a dual agency is really such a good idea. The really good agents listing the bank owned homes (ones that put in the keys, actually take more then one picture and put a description in) that I know are buried right now and are not running around with buyers.

Many of them have hired on buyers agents but the experience factor has to be considered here and second, working on a dual agency is suggesting that you only want to look at their listings.... which as we know, there are several different banks using several different agents.

In other words, using a particular agent listing primarily Wells Fargo owned homes means you are going to miss out on the homes owned by Countrywide being listed by another agent.

Kind of like going directly to a builder --- that sales agent is not going to show you (or even make you aware of) other homes available for sale in the immediate area being built by another builder, resales listed by other REALTORS, etc...

Have patience with your agent, not all of us are winning every single bid that comes through on the really good deals and anybody who says they are is either not telling the entire truth or they have very little experience when it comes to these types of properties and are just jumping into the arena.

As far as keys not being in the boxes for properties listed on the MLS, that's a violation. Four days in a row is certainly unacceptable.

Mr. O,

Most REO (bank-owned) listing agents do not deal with buyers. They are too swamped with listings. Dual Agency has nothing to do with which offer the bank accepts.

If you are not happy with your Realtor with the way they get the job done, then get another Realtor. I have not had many problems with actually getting inside these homes. Maybe I have just been lucky. I have taken clients to see MANY bank properties though. Let me know if you would like my help.

Foreclosure properties are a totally different animal than regular resale properties.

Len McGuirk
Prudential Americana Group
(702) 203-6688

Could dual agency have been the reason my offer didn't go through? Assuming a 6% commission, It seems to me that the selling agent would have probably gotten $19,500 on the deal at $325k vs. only $10,500 if they agreed on our offer of $350k but had to split the commission. The reason I'm wondering is because in our continued search for a home, we are having a lot of problems even being able to see some of the homes. Keys are missing from the lockboxes and selling agents swear they were there. We tried looking at the same home 4 days in a row and still haven't been able to go inside! I'm not trying to whistle blow. I'm just trying to figure out how to get my family a nice home without over paying. So, my question is that shouldn't we just go with Dual Agency whenever we find a home that we like if it's bank owned?

Things happen for a reason! You can find a nice home for 80-$100 per sq ft..Good luck on your next one

Tom,

We already explained that it was a cash deal, not just money down. Why would the bank want to wait a longer term to occupy the property? They usually want to close ASAP. Like I already stated, it was probably turned in too late or the bank wanted the cash deal rather than the financed deal.

In all probability, it has to do with the terms of sale. Your competition might have been willing to make a larger down payment, was willing to wait for a longer term to occupy the property, might have presented a more acceptble credit risk. There are many reasons why the highest offer doesn't always get the bid accepted.

Yes, my realtor told me that there were 5 other offers on the property. That is why I offerred $350k even though the asking price was $324,900. I'm assuming that the offer that was accepted must have been a cash offer, but I'm wondering why a bank would accept $25k less? I just find it hard to believe, since I had pre-approval and was ready to close in 10 days. Thanks for all the answers from everyone. It seems that the answer that makes the most sense is that my offer was submitted too late.

Mr. O,

I checked out the listing and it looks like a beautiful home. You have very good taste. Who wouldn't at that price though? It was listed and sold at $128/sf! You said you recently submitted an offer on this property. This contract that they took was accepted on March 11th, 2008. Are you sure you submitted before then? It does state in the remarks that there were multiple offers too. Maybe your offer didn't make it in time before the bank made up their mind and accepted one. Did you use an agent for this? If you don't have an agent, I would be more than happy to find you another great deal! Let me know if you would like my help.

Len McGuirk
Prudential Americana Group
(702) 203-6688

Mr. O,

According to the MLS, it was listed for $324,900, sold for $325,000 Cash and closed within 24 days of being listed.

That one was certainly a good deal and I can pretty much guarantee you were competing against several offers on that one.

There are a couple of reasons that a lower offer might be accepted:
1. Some banks work with the first offer they receive while others want to give a particular time frame for offers to be accepted.
2. The other purchaser may have had a larger down payment, paid cash, had better credit. All of these would influence the decision.
3. The date of closing of the other purchaser may have agreed more with the banks timeline.
4. There might have been documentation missing from you file.

Remember there is a difference between a short sale/pre-foreclosure and a bank owned. The bank deals differently.

These are some concrete reasons why this happened other reasons aren't so easily identified. Please call me if I can help you with anything futher and don't be discouraged by this. This is a great time to purchase.

Yes, I was pre-approved and was putting down 10%. I checked the county website and that is where I found that the home sold for $25k less. The address is 530 Los Dolces.

I would certainly like to know more details on this... Generally when a lower offer is accepted by the banks it's due to the fact that the lower offer had cleaner terms (cash, etc..)

But... accepting 25K less is a little much. I'm wondering if the other offer was accepted before yours was submitted? Were you pre-approved by the bank that owned the home? This is a requirement on many bank owned homes -- even though you can use your own lender to actually close the deal.

Banks like many other sellers look not only at the bottom line in offers received but also in terms offered. How qualifed is the buyer? Is his/her down payment 20% or more? When will the deal close? What type of financing is being used (conventional, FHA, VA)?

Moreover, keep in mind the lower offer could have started off as the higher offer then negotiated lower based on inspection or appraisal reports.

Arm yourself with a Realtor who has extensive experience in such deals and you will see your odds improve when making offers with banks.

I've seen lower priced offers accepted when the other terms are more desirable than other offers (like financing, inspections,etc)

Hello Mr. O,

Here's a few possibilities:

1. The other offer could have been accepted before yours was submitted. Poor communication between bank, listing agent and your agent (To be clear: I am not suggesting your agent did anything wrong...but might not have received timely information from the listing agent.) is a possibility.

2. The bank accepted a higher offer than yours which fell through and then accepted another offer which was lower.

3. There might have been something other than price that disqualified your offer. Not enough $ down, not pre qualified with the banks preferred lender, insufficient or lack of earnest money, etc...

4. Possible but highly unlikely would be an "insider" offer or fraud.

I most cases, they would only take a lower offer if it was cash and a sure thing. Are you sure that it sold for $25,000 less? The county records would be accurate, but many websites the report statistics are not accurate. Were you asking for closing costs? I would be curious to see more of the details. What was the address?