I would like some advice on bidding. A lot of houses are listed low and sell for more than the asking price.How would I bid?

Asked by Robinred88, Sarasota, FL Sun May 27, 2012

Does having cash on hand make a difference? Should I bid right away or wait until the cut off date? Can I counter bid?

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Ron Thomas, Agent, Fresno, CA
Sun May 27, 2012
LISTING PRICE
Understand that the LISTING PRICE has one primary objective, to attract attention: It is not intended to be set in stone, and in many cases it is not even a good guideline toward the SELLING PRICE.

Some Sellers believe that by setting the LISTING PRICE high, they can always come down, and people will make an offer anyway: WRONG! Buyers will just bypass the property and look at houses that are within their price range. And six months from now, the Seller will slowly start lowering the PRICE, (this is called “chasing the curve”) and Buyers will be asking the question; “What’s wrong with that house?” and “Why has it been on the Market so long?”

Other Sellers set the LISTING PRICE low, to attract multiple offers. (The correct strategy.) We are asked; “Aren’t you obligated to sell at this price if someone offers it?” The answer is probably not; for that to happen, you would first have to have only one offer, and secondly, the offer would have be exactly the same, down to the smallest detail, (please discuss this with your Realtor).
Another thought; Buyer will search for potential properties by groups; for example, $400,000 to $450,000, and $250,000 to $300,000. If your house is priced at $460,000 or $310,000, the Buyers will never see it. (something else to discuss with your Agent.)

Different Banks have different philosophies about pricing their properties: You cannot draw any conclusions without a good analysis.

Have your Realtor do a CMA, (Comparative Market Analysis) to help you determine your Offering Price. It is the surest way to determine the Market Value of the property.
2 votes
Ron Thomas, Agent, Fresno, CA
Wed Aug 8, 2012
LISTING PRICE
Understand that the LISTING PRICE has one primary objective, to attract attention: It is not intended to be set in stone, and in many cases it is not even a good guideline toward the SELLING PRICE.

Some Sellers believe that by setting the LISTING PRICE high, they can always come down, and people will make an offer anyway: WRONG! Buyers will just bypass the property and look at houses that are within their price range. And six months from now, the Seller will slowly start lowering the PRICE, (this is called “chasing the curve”) and Buyers will be asking the question; “What’s wrong with that house?” and “Why has it been on the Market so long?”

Other Sellers set the LISTING PRICE low, to attract multiple offers. (The correct strategy.) We are asked; “Aren’t you obligated to sell at this price if someone offers it?” The answer is probably not; for that to happen, you would first have to have only one offer, and secondly, the offer would have be exactly the same, down to the smallest detail, (please discuss this with your Realtor).
Another thought; Buyer will search for potential properties by groups; for example, $400,000 to $450,000, and $250,000 to $300,000. If your house is priced at $460,000 or $310,000, the Buyers will never see it. (something else to discuss with your Agent.)

Different Banks have different philosophies about pricing their properties: You cannot draw any conclusions without a good analysis.

Have your Realtor do a CMA, (Comparative Market Analysis) to help you determine your Offering Price. It is the surest way to determine the Market Value of the property.
1 vote
John Woodward, Agent, Sarasota, FL
Wed Aug 8, 2012
Educate yourself as to the value in the area with the comps. Then, the only thing you can do is offer an amount based on that info (not the list price) that is high enough that you won't kick yourself if you don't get it and it sold for a "few more dollars" than you would have gone....in other words, make the best offer you are comfortable with and if you don't get it, you won't be disappointed.

John Woodward
Sarasota Real Estate Group
Web Reference:  http://www.sarasotaone.com/
1 vote
Jim Sweat, Agent, Venice, FL
Tue Jun 5, 2012
In addition to the info you have already received, many of the REO properties are sold using online systems.

Some of those show how many offers there are and even the highest price to date.
Others are entered directly by the buyer's agent and the listing agent doesn't even know if there are offers, how many, or for what price.

You have some good answers here.

All the Best,

Jim Sweat, ABR, CRS, GRI, CDPE, e-PRO, ILHM
Realtor
Sandals Realty
http://www.ExplainShortSales.com
941-306-7384
Team@JimSweat.com
1 vote
Daniel Barto, Agent, Naples, FL
Sun May 27, 2012
That is a good example of a time when a realtor with experience in the market over the past 5 years pays off. Knowing the market is very important. My suggestion get yourself a good broker or agent that typically works with investors/buyers and closes bank owned deals often, just like....me.
Besides the shameless plug- when it comes to REOs your first offer is your only offer. Highest and best on the first offer. Your agent should provide you with comps quickly so you know exactly how much fair value is, then you go for it. You need to work fast, very fast. My rule is trying to get bids/offers in within the first 3 days. The offer should be submitted in the format that the listing agent and seller prefer with all paperwork lined up and ready to go, so that when your offer is accepted, you can sign the bank addendums quickly, get escrow in and on towards closing. It's tough, you may not get the first one, but with the help of a professional, you will get a good deal and yes cash matters. So does closing date, inspection waivers, size of escrow, etc... Place yourself as the seller. They want it gone but would rather see a solid cash deal through to close than risk not closing a high offer mortgaged deal.
Hope that helps! Take a look at my website on the investor page- http://www.galleonproperties.com that may help answer some questions too.
Best of luck and if you would like some additional info send me a direct email by clicking on my profile or through my site. Danny Barto
1 vote
Lynn Brock, Agent, Sarasota, FL
Wed Aug 8, 2012
Robinred88, this greatly depends upon the property, its location, the seller and the price point. There truly is no perfect answer.

First of all, you have to either provide proof of funds or a pre approval letter. My clients have won bids with both criteria. There is an art to presenting a blind bid offer.

Second, determine how much you really want to purchase the property. If it is a property that you truly want to own then you need to sit down and calculate the fair market value. Look at the property appraiser's website for value, look at core logic for market value, look at the past sales history, and tabulate the cost of repairs to make the property habitable. Zillow does not provide accurate information for this process. It's information is only 65% accurate, not enough accuracy to use as a resource in this situation.

Third, look at your breakeven figures if you win the bid. Contemplate if you still want to own the property, If yes, then realize that you have one shot at submitting a winning bid.

Fourth, if you will be submitting a cash offer, or even a financed offer, Write your offer on paper, then ask a few friends what they would bid for the same property. Compare your bid against their numbers. How does it compare. How does it stand out from a pile of offers that might be received? What is different unique about your offer? If your offer meets this litmus test, then put on paper and submit it.

Fifth, use an agent well experienced in winning bids. There is an art and a whole lot of strategy that goes into getting your offer on the Seller's short list and ultimately the winning bid. It is not easy, but, possible.

Good luck,

Lynn Brock
Brock Realty, Inc
941.313.1234
http://www.brockrealty-inc.com

If you'd like to search the MLS like an agent in real time, you can visit our website and sign up for a free Listing Book account. You will be able to change the search criteria to suit yourself and received morning reports regarding new listings, price changes and recent pendings.
0 votes
Faye Doyle, Agent, Sarasota, FL
Mon May 28, 2012
Pleasde contact me for tips on how to ALWAYS get the purchase you offer on.
0 votes
Alma Kee, Agent, Tampa, FL
Mon May 28, 2012
We have 3 types of sales:

REO/Bank Owned as mentioned earlier you will probably only get one shot and will be competing with other "bidders". True it's not a bid but it sure feels like a closed bid. Your Realtor can contact the listing agent to find out if they already have multiple offers on the table. If they do, then you will not likely get a counteroffer--unless the other bids are very low. Your Realtor can give you comps to help you decide what to offer.

Short Sale - listing price, if not previously "approved" may not even be possible even tens of thousands "above" the ficticious listing price. Realtors will often underprice to get an offer to find out the "required" sale price. The original buyer may simply walk away at that point and you may be able to get a property if you act quickly once the property flips back to "active" status. Short Sales are wrought with fraud so you can also overpay because some fraudsters prey on ALL CASH buyers. Make sure to pay a few hundred dollars to an attorney if you decide to buy a short sale "all cash" to make sure you are getting a clear title insurance policy without extraordinary exceptions.

Regular Sale - these are few and far between but you may actually get a better deal (and less repair costs) if you find a motivated seller.

Bottom line, you have to be FAST on all 3. Submit your offer within the first day or two, no reason to delay submitting. If a property has any "condition" issues (missing a/c, old roof, etc.) then CASH is King or if you cannot pay ALL CASH then an FHA 203K preapproval may aid a "retail" buyer.

Hope this helps.

All the best,
Alma Kee
http://www.SoldOnTampa.com
0 votes
Lynn Brock, Agent, Sarasota, FL
Mon May 28, 2012
Robinred88, the dynamics of our market in Sarasota and Manatee is very active. This means that good properties are going under contract very quickly. In some cases less than two weeks. This depends upon the condition and amenities of the property, the price point, zip code and whether distressed or not.

No matter which property you are considering, when you submit an offer, you will have to provide proof of funds and/or a pre approval letter.

With the market today, submitting your highest and best offer on a bank owned or property that you really want to purchase would be in your best interest. Frequently, offers are date/time stamped. If you are the winning bid re: distressed property, the lender will do the counter offer, you either agree or move on.

If you are asking about bank owned properties, highest and best.

Best regards,

Lynn Brock
Brock Realty
941.313.1234
http://www.brockrealty-inc.com

If you would like a free listing book account that allows you to search MLS in real time and like an agent you can sign up at our website.
0 votes
Annette Law…, Agent, Palm Harbor, FL
Mon May 28, 2012
Ron explained verywell the strategy and phlosopy of setting a listing price.
Daniel did an outstanding job explaining the process and what you should be prepared to expect.
Usually, you get one grab at the ring and if you miss, you are out of that game.

Now, the third element is your purchase goals. A wholesaler has different criteria than a flippper and they from one buyer investing for cashflow and all differ from the buyer looking for a play in which they will grow old.

Your purchase objectives must be considered. As Daniel implied, now would be a good time to have a transparent conversation with a real estate pro and try to get on their A-List. The good, non-competing properties are never seen by the pubic.

To answer your question, bid what meets your investment criteria OR what the market value of the home (adjusted for codition and repairs) truly is. You may get an opportunity to submit a 'highest and best' offer later but that depends on the policy of the parties involved in the sale.

Best of success in finding your new home.
0 votes
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