Home Selling in Millington>Question Details

Nick Richards, Home Buyer in Millington, MI

Can a bank take another offer even if I was the highest and best offer, and was pre-approved for the loan?

Asked by Nick Richards, Millington, MI Mon Nov 2, 2009

Long story short, I placed a bid on a foreclosed house, came back to place my highest and best. I was outbidded. About 30days after come to find out the house was re-listed again (must of fell thru). Went back to my Agent placed another bid, and then the highest and best once again (this time I placed the bid $1,100 over asking price). Well the bank got in contact with my agent and asked for a "Prequal" called them up and come to find out I was not approved by the bank that has the house. But I was not going to use them anyways, because I had my own mortgage company I was dealing with. They stated "Seeing you are not approved with us, it might deter the selling from accepting my bid". Well I never got a straight answer if I was the highest bidder, so I figured I had to be the highest bidder. Well today after 10 business days of sending the highest and best offer (even though they have to get in contact with me 3 to 5 business days)

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Banks are like any other sellers and can do as they wish with offers...especially multiple offers.

Banks typically do require a buyer to be prequalified through that bank in order to ensure the buyer is truly qualified to purchase. Banks, like most everyone else in the sales process, recognize that preapproval or prequalification letters are only slightly less useful than toilet paper...in other words, they're essentially meaningless most of the time. So banks will want to know for themselves that you have the horsepower to complete the purchase. Is if fair? That's open to individual opinion, but I say yes. It's the very reason I no longer personally bid on bank properties...I don't wish to follow their rules.

Bottom line is this. Any seller can choose any offer, even offers that appear to be lesser offers.
Web Reference: http://www.phgbrokers.com
2 votes Thank Flag Link Mon Nov 2, 2009
Nick, banks have their own rules. Not sure what they are but I can tell you that yes, they can insist on you being pre-approved through them, and no they do not have to get back in touch with you in 3-5 business days or at all for that matter. Perhaps Michigan rules are different in that regard, but that is my experience where I am.
2 votes Thank Flag Link Mon Nov 2, 2009
I was told now they are looking into other buyers offer, then was told they are going with them. Can they do that, jump my bid because I am not approved for the loan thru them even though I was not going to use them, and I am 100% approved with my mortgage company, and also don't say anything for 10 business days even though it states it the bank has anywhere from 3 to 5 business days to respond?

Thank you nick.
2 votes Thank Flag Link Mon Nov 2, 2009
Nick....I'm going to be a little tough on you. The Seller can do what they want! You are not 100% approved. There are a ton of clown mortgage operations out there that will not do pre-approvals properly and that includes Bank of America but they will send out an Aproval Letter that has no substance. The Banks and a lot of Listing Agents are getting tired of Buyers that keep coming up short after tying up a property for 30 to 40 days and then not being able to close. If you want to play this foreclosure game you had better be nimble and you better have an agent that knows the rules of this tough game of bank owned properties. There are all kinds of traps. You could end up with a nightmare of a property or lose your earnest money at the very least. No FHA, no VA and at least 20% down at the very least and some cash in the bank. Quit being such a crybaby...do what your Realtor tells you and find a mortgage company that is a direct lender AND where you can actually talk to the loan officer or processor on a daily basis.
1 vote Thank Flag Link Thu Nov 5, 2009
Nick, having been in the mortgage business for awhile I do understand why banks require potential buyers to pre-qualify with them before considering offers. Not all loan officers are equal. As a Realtor, I've received many pre-qualification letters that were issued solely on phone calls. The loan officer had not reviewed credit, income or money sources. The pre-qualification letter was "if" the buyer meets their requirements. The bank wants to see for themselves you are qualified. You can still use another mortgage company if you want after they determine you can actually purchase the property. In many cases, the bank will offer incentives to use their services. For example, free credit report, appraisal, no application fee, etc. Countrywide (Bank of America) will not consider offers unless the bidder is pre-qualified through them first.
1 vote Thank Flag Link Thu Nov 5, 2009
I am most sorry to say: absolutely. Until someone of a higher power, i.e. the Federal Government, does something MAJOR to force banks to act otherwise, they will continue to work by their own set of rules, bypassing all ethical and legal guidelines the rest of us are required to follow.

Kim

Disclaimer: I am a licensed real estate broker and property/casualty insurance agent in the State of Ohio, providing information and sharing experiences acquired over 15 years in the industries. I do not profess to be qualified to give advice in any other field, though will share opinions and information obtained during my course of work. It is always highly recommended that consumers seek counsel from a specialist in each area in which there is a question or concern.
0 votes Thank Flag Link Tue Nov 10, 2009
YES there are some banks will only allow a buyer submit offers if you are approved by through them. You don't have close with bank as your lender. You can have best offer BUT if not approved your offer will be declined WHY as a Dallas foreclosure agent I need confirm any showing to a buyer does not involve lender specifications for approval.

Some banks may not care who your lender is.

Banks work in their own world anyone wanting purchase a foreclosure anticipate drama. Many Realtors prefer not work with short sale or foreclosure do to allllll particulars involved.

Best of luck

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0 votes Thank Flag Link Thu Nov 5, 2009
You know, your situation is one that my son found himself in about 8 years ago, except he was the seller.
He had 2 offers for his home, one that was higher than the other. But there were advantages to the other offer that made it a better deal for him. The winning buyer was willing to buy without a home inspection, and close sooner than the higher bid. That was worth money in the bank to my son, because he could save time and money with a quicker closing.
It's not always about the money.
If I were you, I would go ahead and get your pre-approval from the foreclosed home's bank. It permits the bank to take a look at your finances and see that you are a good candidate for their own mortgage standards.
Oh, and incidentally, if you use their bank for your mortgage you can sometimes get them to contribute to your closing costs. The banks want to keep the loan as much as they want to get rid of the asset.
Good luck,
Rita
0 votes Thank Flag Link Thu Nov 5, 2009
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