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San Ramon Buy, Home Buyer in San Ramon, CA

REO property and offer

Asked by San Ramon Buy, San Ramon, CA Wed Apr 7, 2010

If you give offer to bank owned property, is it possible that bank may come back and say we didn't look at your offer because yours was too low but if you offer xxxk we will look at offer. On what basis they come up with this number? Is seller agent trying for this amount or really a bank? what is the bank's interest to compete or spend time in15 k price difference ?

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San Ramon Buy:

Q: If you give offer to bank owned property, is it possible that bank may come back and say we didn't look at your offer because yours was too low but if you offer xxxk we will look at offer.
A: They will have looked (glanced) at your offer but rejected it because it was too low. If they say they want more, then … they want more. If you want the property, you need to step up and pay what they are asking or – if it ends up in a multiple offer situation, more. In the current market, if you don’t pay it, someone else very likely will.

Q: On what basis they come up with this number?
A: They have at least one BPO (Broker Price Opinion) prepared for them. Current comps for the area put the price much higher than the $439,000 number listed on RealtyTrak.

Q: Is seller agent trying for this amount or really a bank?
A: The agent does not set the price.

Q: What is the bank's interest to compete or spend time in15 k price difference?
A: In the current market, the bank knows it can get market value for homes such as these – the last two sales sold in 12 and 16 days.

There are a couple of other issues here. When you see a price on a listing such as this, you need to check to see if it is a RealtyTrac advertisement.

In this case, what you are seeing is not a listing … it is an advertisement for RealtyTrac.

RealtyTrac notices can be very deceptive because they give the loan amounts, or, in this case, ESTIMATED sales prices - not the purchase OR actual listing price. When properties such as these hit the market, it will be at market price for the neighborhood.

Bottom line: RealtyTrac is trying to get you to sign up for their service.

The following links may be helpful:

When Is The Price Not The Price?

It’s Too Good To Be True: REALLY – Top 4 Buyer Myths
0 votes Thank Flag Link Sat Apr 10, 2010
Hello San Ramon Buyer,

Yes, it's very possible that the bank refused to look at your offer. The listing agent wants to sell the property and move on to other listings, do not doubt their intention. I've seen banks squabble over a $365 home does not surprise me to see them asking for $15,000 more. The listing agents are instructed to do exactly what the banks want them to do.
So the question for you is; do you feel this property is worth an extra $15,000? If so, go for it, if not, wait around for another one.....or counter. I've had clients obtain bank-owned properties by countering back. All counters are verbal at that point.
Best of luck.
Isabelle Javier
0 votes Thank Flag Link Thu Apr 8, 2010
San Ramon Buy, in summary of what the other agents have presented, it comes down to seller motivation. If the property is high-end real estate versus entry level/investor grade real estate (b or c class) and/or the bank has low or high level of REO inventory, and the level of buyer activity (demand), this is what will dictate whether they will entertain offers of 'Y ~ Z' price range. Initial pricing as was previously stated, comes from a Broker Price Opinion. Sometimes the agent has flexibility in price reduction decisions, other times not. In essence, the rule is, the 'right' price is what willing 'buyers' will pay in the market. If you consult with your agent and they give you CMA comps that support price 'n' and that homes in the area are selling above list price, but you decide to offer an amount lower based on the fact that the property is bank-owned, you may be sabotaging your opportunity. Best advice is to work from a knowledge position and not supposition. Happy house hunting!...Arturo C. Shivers, Realtor, DRE Lic. No. 01779941
0 votes Thank Flag Link Wed Apr 7, 2010

Every bank works differently. They may instruct that the listing agent only submit the best offer or offers above the certain amount.. It is the asset manager 's job to make sure the property is sold for the best price , so they can minimize their loss. it does not matter what is the listing price or What type of property it is. The property will be sold for the market price.
You need to know the current market value in the area and the local market condition, So you will not miss out on a great deal by offering too low .
0 votes Thank Flag Link Wed Apr 7, 2010
Yes, it's possible for the bank to counter your offer. If your offer is accepted, and if you need to get a loan, your appraisal may give you a reason to negotiate IF the appraisal is lower than what you offered.

The foreclosing bank's asset manager will look at fair market value, what it cost the bank to foreclose, what the investor (holder of the note) wants. Many asset managers will tell their REO agents how much to list the property for.

When writing an offer on a foreclosure, be sure you are armed with information that will best position you and your offer. Sometimes, you may only get one chance, so make it your best and highest offer. Your realtor should be able to give you information (such as recent comps) to guide you in your decision-making process.

But don't assume for a moment that just because it's bank-owned that you can offer 50% less than list price. The asset manager will already price the property to move it fast, but the bank isn't going to just give it away.

Remember, may not be the only one looking at this property since there are many investors (many all cash buyers) who are competing with regular home buyers for the same properties.

Good luck!
0 votes Thank Flag Link Wed Apr 7, 2010
To answer your question, the likelihood of the bank explaining why they did not consider your offer is pretty negligible. They don't explain their reasoning to anybody, not even their listing agents.

As others below explain, the BPO is the guide line that the bank uses to determine where to price a home. The bank typically won't know anything about the home they are listing. They may not even be in the same state.

A lot of the time, the bank wants the home to be marketed for at least 7 days before they consider offers and then they want the listing agent to send in all the offers. Sometimes they will then take the top 3 and tell the listing agent to go back to the buyers and ask them to resubmit their "highest and best" offers.

In my experience, if you see a home you want, your best bet is to get your agent to show you what it should sell for and then write your offer based on that.

Bernard Gibbons

Bernard Gibbons, DRE License # 01331583
J. Rockcliff Realtors, 15 Railroad Avenue, Danville, CA 94526
Phone (925) 997-1585 -
0 votes Thank Flag Link Wed Apr 7, 2010
The basis is their Broker Price Opinion (BPO). They order several of those prior to marketing the property and thoughout the sale (sometimes during escrow to make sure it's the price in the market). Seller's agent don't really have much of a say on what the sellers will accept.

The REO lenders flexibility ranges with each lender but it's not a wide range. Some may have 5% rule, some may just want to sell at asking price or a few thousand less. If there are competing buyers, your chances are get worse.

Your buying agent should tell you what a price the property will most likely sell based on his/her CMA and go from there.

If you are adamant about the price, you may have to wait 30 days after marketing to see if the price reduction will be close to what you want to pay for it. Chances are, there will be another buyer already that is willing to pay at that price and you may miss your opportunity.
0 votes Thank Flag Link Wed Apr 7, 2010
The bank may instruct the listing agent to only submit the highest and best offers and/or only offers that are at least at the list price to them. So if your offer is less than other offers or below the list price, there is a good chance that the bank may not look or even respond to your offer. However, if the property has been on the market for a long time and the bank has not received any offers until yours comes in, they may counter your offer to sell the home as close to list price as possible. The bank has to be able to justify to investors the reason why they agreed to sell a property at a given price. It is best when making an offer to have reviewed recent comparable sales and other similar properties that are for sale so you can make an offer that you are comfortable making.
0 votes Thank Flag Link Wed Apr 7, 2010
A bank owned (REO) is pretty much like any other seller. They have an asset manager whose job is to maximize the bank's return (or really limit their loss). Before they listed the home with a Realtor, they ordered several BPO's (Broker Price Opinion) and that's the basis for their selling price.
0 votes Thank Flag Link Wed Apr 7, 2010
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