Question Details

Alissa, Home Buyer in Arizona

Can someone help make sense of the bank?

Asked by Alissa, Arizona Sat Dec 13, 2008

We recently put in a very lowball offer on a house that has been on the market for over 6 months. In that 6 month time period, the bank has lowered the price substantially, but is still reasonably priced for that area. We bid as low as we did because the house has considerable water damage- no kitchen, no drywall downstairs, and some structural issues.
They are also needing cash only on the house to buy it, it is in a bad enough condition that it is not available for a home loan.
Yesterday, the broker came to us and said we should up our offer to 300k (we offered 220k) because there were multiple offers. This seems a bit shady to me, shouldn't they just ask for the highest and best offer instead of telling us what we should bid? Does this seem like a lie to anyone else? Oh my, this is so nervewracking!!
They told us that they would get back to us next week with a final answer. Would they even be entertaining us like this if they really did have multiple offers??

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Alissa, stick to your guns, and I suspect your hunches are correct. I've been in several negotiations on REOs, and I've observed similar behavior with multiple banks. The bottom-line is the banks want to get as much money as they can for that house, and you want to pay the right price for it.

Basically, the listing broker has a fiduciary responsibility to get the best and highest offer s/he can for that property, and the banks usually won't budge much on the price for a while--until a property has been on the market for at least 120 days. Tenacity and persistence are key here; you have to wait them out, and if the broker asks you a few more times to send him/her your best offer, then resubmit your offer. S/he will get the point after a while, and so will the REO manager handling that property. Also, as you stated earlier, if the REO manager really had at least 1 higher, all-cash offer on his/her desk, then you probably wouldn't have heard back from the listing agent, because most loss mitigation departments (typically the department in most banks that handle REOs, foreclosures, and pre-foreclosures) are already severely understaffed and overwhelmed by their caseloads.

Another thing to keep in mind is that negotiating on REOs isn't for the faint of heart; rather, it's a long chess match. Just make sure you keep in constant contact with that listing broker until: 1) the bank accepts your or another offer, or 2) the bank opts to re-list that property with another agent. Meanwhile, maybe you could do some digging around for information on the REO manager handling that property, and perhaps you could reach out to him/her directly.
0 votes Thank Flag Link Sun Dec 14, 2008
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