REO and Counter-offers

Asked by Grdnofedn, 23662 Fri Dec 2, 2011

My husband and I had a written offer in on a REO property. The bank countered in writing and then responded with a 'highest and best' statement. We accepted their counter with no changes before the deadline but still lost the property to a higher bidder. I know in 'normal' situations a seller cannot entertain other offers if they have a first counter on the table. Is that the case in a REO situation?

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11
Lori Jeltema, Agent, Suffolk, VA
Sat Nov 10, 2012
In normal sales, a seller certainly CAN entertain other offers if a counter is on the table. A deal is not a deal unless it is accepted UNLESS you have something in writing from the seller that they will not entertain other offers while you are negotiating. A counter offer by a seller is simply an offer to you to buy the house on those terms. Unless the counter is accepted, the seller may may sell to someone else.
0 votes
Gary Geer, Agent, Antioch, IL
Thu Apr 12, 2012
Seller's (bank or otherwise) can entertain any offer until they accept one. Even then, there are some exceptions that will allow them to continue to recieve offers for consideration. It's common for banks to ask for the Highest and Best offer. This is normal practice. They want to get the most money or the best contract. It's not always the highest price that gets the home. The seller controls what they will or will not accept even if it's a full price offer the seller does not have to accept any offer.
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Sean Hyland, Agent, Williamsburg, VA
Thu Apr 12, 2012
Unfortunately, buyers are at the mercy of the REO manager. When they asked for your 'best and final' offer, this means there may be other offers on the table-so bring your best. I have buyers that also submitted a full price, cash offer on a similar property and even then-we were 'out-bid'.
0 votes
Gemmav Stokes, Agent, Chesapeake, VA
Fri Dec 2, 2011
When dealing with REO's you must move quickly, majority of the properties are discounted which brings considerable competition. Buyers should decide if they really want the property from the start, trying to save 3-5 thousand dollars are pennies when comparison to monthly payments; as for cash buyers who plan to rent it out for income the increase could mean an extension of several months of rent before they realize their full ROI. Most banks I have dealt with disclose that they have the right to accept another offer before ratification in their addendums. When you receive a "Highest and Best Offer" you should always increase your offer if you are serious. My trick is to increase according the market value, condition of property, financing, etc... and add an extra $100.00.

Also, banks are not willing to accept lower bids for recently listed properties, time is always a factor when considering making lower offers. Also, try auctions, and short/sales

Need help drop me a email. Best of luck.
0 votes
Dwayne & Mar…, Agent, Woodbridge, VA
Fri Dec 2, 2011
There is no difference between an REO (bank owned) and arms-length negotiation process. In your case the initial offer was refused (probably due to a low price on the initial offer), and while you were waiting for contract acceptance (ratification) the bank asset manager received another offer(s). At this point the position of the seller was to ask for the highest and best offer and chose the most attractive offer to ratify. There are several points to consider when receiving multiple offers. Contract price, type of financing, amount of down payment, contingencies like home inspections, sale of current home, closing dates, repair demands, and any other buyer demand tied to buying the home. You didn't have a ratified contract simply by submitting an offer. The seller is welcome to accept all offers until there is a signed purchase agreement by both parties. What happened here was honest and acceptable real estate practices. It seems this point wasn't made clear to you when you made the initial offer. We wish you luck going forward. We have included a link with this article from http://www.MoyersTeamBlog.com which should clarify the hurdles involved while attempting to purchase a foreclosure or short sale.

Dwayne & Maryanne Moyers
Avery-Hess Realtors (6 Offices serving Northern Virginia)
Top 2% of Realtors Nationwide
Maryanne: (540)379-7359 e-mail: mmoyers@averyhess.com
Dwayne: (540) 446-6284 e-mail: moyersteam@gmail.com
http://www.MaryanneMoyers.com
http://www.facebook.com/themoyersteam
http://www.themoyersteam.com
0 votes
Joe McAvoy, Agent, Newport News, VA
Fri Dec 2, 2011
Hello,

The description you gave leads me to understand that the "highest and best" statement became the most current response from the bank. The previous written counter offer was dead when the newer multiple-offer response was delivered. Regardless, even if you hadn't received an updated response from the bank, without your acceptance of their offer, no contract exists and either party is free to do what they want. It is true, however, that some asset managers will not consider backup offers while negotiating with a buyer as long as the negotiation is moving quickly and the terms are close to what the bank will accept.

The Realtor who wrote the offer for you should be able to explain all of this to you clearly and percisely. If you are working on your own, feel free to call me for assistance. I write dozens of offers a month on bank foreclosures. The link below contains my Trulia profile with my contact information.

All the best, Joe McAvoy
0 votes
Michael Remy, Agent, Newport News, VA
Fri Dec 2, 2011
The banks really can do whatever they want. In your counter it should have stated that this offer can be pulled at any time. It should have also said that they can accept yours or any other offer until the contract is fully radified at their full discrecion.

The reason they send you a final and best is because they had more than one offer on the table. They where looking for the offer that netted them the most money with the least amount of contingencys.

I would hope that your Agent would have explained that to you.....
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Vicky Chrisn…, Agent, Purcellvile, VA
Fri Dec 2, 2011
If they countered your offer formally... then you're right, but they usually don't do that. When you signed the counter offer, was it a complete contract and returned to the seller prior to their withdrawal of the counter offer? If so, then you might have a case to talk to an attorney about... If not, then it's probably not much of a case. A contract is not a contract until it is complete and fully executed. You say they gave you a "highest and best" statement, I believe that was notice telling you they were entertaining other offers and that you should increase/strengthen your offer if you were so inclined....it seems you were not inclined.

First, consult your buyers agent for their opinion, then talk to an attorney. Most agents will have an attorney they can recommend that can at least give you an opinion without charging you a fee. Keep in mind that if you decide to pursue this legally, you will likely be hiring an attorney to sue for specific performance and it gets sticky and can be very time consuming. I usually recommend you just move on anyway... besides, I believe things happen for a reason.

The key to transactions like this is making sure you have a competent and experienced agent who can guide you so you fully understand exactly where you are in any transaction. I don't know if you have been mis-informed, if you don't have your own agent or if you just don't believe him/her, but clearly you're not getting what you should be getting from your agent since you're asking this question.
Web Reference:  http://www.vickychrisner.com
0 votes
Ron Thomas, Agent, Fresno, CA
Fri Dec 2, 2011
The situation sounds complicated, with Offers, counteroffers and Best Offers,
but the simple truth is that until there is a signed contract, the bidding is open.
You obviously did not have a lock on it, any more than the other party did, and they got it.

Reverse the roles; you are the Seller, would you want someone to tell you which offer you had to accept?

Also, the HIGHEST offer is not necessarily the BEST offer.

Good luck and may God bless
0 votes
John R Beave…, Agent, Portsmouth, VA
Fri Dec 2, 2011
when the seller comes back with a notice of multiple offers and requests your highest and best offer this is sent out to all of the multiple buyers who have submitted a offer. Technically the seller has not accepted any of the initial offers so there is no accepted contract between you and the seller. This is good for any type os seller not just REO sellers.

If you are not under contract with another Real estate professional I will be happy to assist you in the purchase of foreclosed properties. Just click on web reference for my web site and contact me.
0 votes
Rich Homer, Agent, NAPLES, FL
Fri Dec 2, 2011
Did you have a Realtor? Multiple offers are common and cash buyers are favored as well.
0 votes
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