Home Buying in Detroit>Question Details

Chris, Home Buyer in Royal Oak, MI

Do sellers have to take the first offer if it is the highest? I offerred 192K (FHA). House sold for 160K to

Asked by Chris, Royal Oak, MI Fri Feb 27, 2009

someone else. I dont understand

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17
Chris emailed me ... the VERY interesting thing here is that the listing agent double-ended the property and served as the selling agent, too. Yes, ultimately the transaction closed in cash, but foregoing $32,000 seems a lot just to accept a cash offer.
2 votes Thank Flag Link Fri Feb 27, 2009
Andy's correct in most cases; however, banks sometimes will also entertain offers that are miles apart from the asking price if the property is trashed, and if the property has been on the market for a long time.
1 vote Thank Flag Link Sun Mar 1, 2009
It's sadly not terribly uncommon -- in most cases, what the bank determines to be the "least risky" is going to be the "best offer."

In this case where it was "double dipped" there were likely other factors involved, but in my experience, banks look at deals like this:

#1 - Cash
#2 - Conventional loan
#3 - FHA/VA

See if you can get a different loan if possible, as many asset managers get leery of FHA and the higher safety standards (mostly perceived) than cash or conventional.
1 vote Thank Flag Link Sun Mar 1, 2009
Chris,

As confusing as this is, there are other factors that can make a positive impression on the seller and can carry more weight than the sale price.

Quick closing date, no contingencies, cash deal are a few consideration that may have caused the seller to accept less money for the sale of the home. The seller can elect to sell their property to anyone regardless of the offer amount...it is their choice.
1 vote Thank Flag Link Sat Feb 28, 2009
". . . foregoing $32,000 seems a lot just to accept a cash offer."

You're correct; however, if the seller has already lost $32K via a combination of declining market value and holding costs, then perhaps the immediate 32K in cash appeared to be "a bird in hand" for that seller.
1 vote Thank Flag Link Fri Feb 27, 2009
No, sellers can go with whichever offer they prefer best.

I suspect the seller probably went with the other offer, because your offer was made with FHA financing. Some sellers--especially ones selling homes with issues that might not pass a FHA inspection--simply opt to sell to buyers with other forms financing (especially in the case of all-cash offers).
1 vote Thank Flag Link Fri Feb 27, 2009
That is odd!
Perhaps something was discovered in the home inspection that brought the price down further, such as broken water pipes.

Meagan Kempf
Coldwell Banker ALM
Manistee, Michigan
http://www.MeaganKempf.com
1 vote Thank Flag Link Fri Feb 27, 2009
Hi Chris,
It may be that there was something about the other offer that they preferred... A cash deal maybe? Are you sure that your offer was presented...?
1 vote Thank Flag Link Fri Feb 27, 2009
Did it sell for cash? The other offer could have had no contingencies and been cash with quicker close. The MLS will state if it was a cash sale.
0 votes Thank Flag Link Sun Mar 1, 2009
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
Contact
I assume I had the first offer in because that's what the seller's agent said when he received it.
0 votes Thank Flag Link Sun Mar 1, 2009
Quite possible you did not have the first offer. Why do you think you did? I have worked with banks that stop looking at offers once they have one in their acceptance range. If something came in the next day, or even later that day, they would not look at it.
Web Reference: http://miOaklandCounty.com
0 votes Thank Flag Link Sun Mar 1, 2009
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
Contact
I use this analogy when dealing with my bank-owned buyers --

"Sharpen your pencil before you get there"

Essentially, banks will only counter if they deem the offers to be close enough -- on my bank listings, it's generally that deals need to be within 5% of each other...but each specific end lender has different criteria for determination.

Keep in mind these homes are already at a severely depressed price. Banks know the market is depreciating continually, so if you REALLY like one, I'd advise you bid NO LESS THAN full price net, or maybe even $1000 or so more.

That way you're really pressing the issue as to WHY the bank wouldn't take a FULL price offer, etc.
0 votes Thank Flag Link Sun Mar 1, 2009
Yes, ultimately the transaction closed in cash, but foregoing $32,000 seems a lot just to accept a cash offer

~~~~~~~~~~~

Unless there were other terms that were not favorable about Chris offer such as low down payment or contingencies.
0 votes Thank Flag Link Sun Mar 1, 2009
I expected that the seller would counter a first-in offer with terms it deemed more favorable, rather than not respond at all. I'm in sales (not real estate) and that's how we do it.
0 votes Thank Flag Link Sun Mar 1, 2009
It all depends on when you submitted your offer, If after option period expired seller is obligated terms and conditions of executed contract with that buyer.

There are many many factors come into play when submitting an offer for all parties review difficult to state unless both offers are reviewed compare all why's.

GREAT QUESTION

Dallas Realtor and Consultant, Mortgage Loan Officer, Lecturer regarding Credit Repair
– Lynn A. Crosby
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sat Feb 28, 2009
Chris:

To answer your question-no the seller may not always take the highest offer for reasons listed below. A clean offer (no contingencies) closing sooner than everyone else could be the difference even if the price is lower. I had a client win a bid on a bank owned property when he did not have the highest offer because he was not doing an inspection.

If the agent served as a dual agent representing both the buyer and the seller in the transaction, greed may have taken over. Are you positive that your offer was presented to the seller? Is it a bank owned home? I find it hard to believe anyone would take a 20% lower offer b/c you are using FHA. There are no seller mandated fees, so unless the property needed major repairs, I cannot see why they would care about that.

You may contact the Dept. of Licensing in your area as well as the board of realtors to file an ethics complaint if you feel your offer was not presented.
0 votes Thank Flag Link Fri Feb 27, 2009
That is VERY interesting ... would you mind emailing me the address outside of this system? My email is Derek@DoorToDreams.com. I will look into the house, likely have some questions for you, etc.

Did you have a buyers agent submit it on your behalf? I'll get into the rest of the questions in our emails...

Thanks, Chris.

Derek Bauer, Associate Broker / Realtor
Real Estate One
http://www.DoorToDreams.com
Web Reference: http://www.DoorToDreams.com
0 votes Thank Flag Link Fri Feb 27, 2009
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