Foreclosure in 91941>Question Details

Ajle, Home Buyer in 91941

What is the REO property offer process and what do the banks use in qualifying the offer?

Asked by Ajle, 91941 Tue Jan 24, 2012

I had my eyes set on this REO property, I wanted it so much I did everything to make sure I was qualified as an ideal offer. I got approved for a loan, got prequalified from the listing property's bank, had the money in the bank, and made an offer over $20k the listing price.

I thought I did everything right, but my offer got rejected. No explanation, just rejected. If our offer was out bided, that make sense, but the listing agent had an open house after my offer was rejected and continued to post on Craigslist as available...

Now I'm really confused...
Is this a common REO practice to reject an above asking price offer only to relist the property?
Are there some realtor ethic codes in jeopardy here?
What can I do to improve my standing next time?
How do I know my offer was actually submitted and not omitted?

Help the community by answering this question:


A typical REO or Bank Owned transaction takes 45 days or less. If you are paying cash then you can usually cut that time down to at least 21 days but not much more since the bank is dealing with multiple properties and they just don't have the time to act as quickly as you do.

Each bank tends to have slightly different procedures but I would always anticipate at least a 72 hour response time during the work week (Mon-Fri) and don't expect any answer over the weekend. They are a bank after all and keep banker's hours :-)
1 vote Thank Flag Link Wed Jun 10, 2015
Answers to your questions:
1) Keep in mind there are a lot of buyers out there and the competition between buyers is not always disclosed. For example; when you have your car for sale and three people come to you and one person gets the car, do you have to tell the other two how much it was sold for or if you decided not to sell and gifted it to a relative.
2) a lot of times a listing agent will keep marketing the property to generate buyers - this is in no way a violation of law or any ethics. (people typically don't buy the Open House they walk into)
3) From your post it looks like you did everything right. Did you include a request for repairs is needed?
If not on your next offer I would ask even though it say "As-Is" no repairs, I have gotten my clients hundreds of dollars credited at closing for repairs on REO's
4)There is not a sure fire way to know that your offer was even submitted. In a traditional sale there is a place for the Seller to sign and date that the offer was submitted and reviewed but with the banks a lot of time a service rep stamps the signatures and you are not dealing with one individual.

My question to you: Are you not being represented by an agent? and if so why are they not answering all of your questions?

Feel free to call if you have any additional questions (858) 829-2931
Web Reference: http://SanDiego4Sale.Info
0 votes Thank Flag Link Tue Jan 24, 2012
I have to disagree with the idea that banks don't to do repairs. They often do actually, it's the listing office that discourages it because it's more work for them. The problem with some repairs, is the lender will require them to be fixed before the loan will fund, so a lower offer price won't help. But, what is right, is that a cash offer at a similar price will win, and many investors don't ask for repairs.

Have your agent call or email to find out what your offer was missing.

Also, don't be fooled by some listing agents who try to get you to sign an REO addendum to submit with your offer. They try to make it look like a bank addendum, but if you read it, it's full of ways to avoid having to deal with repairs and other protections - for them, not the bank.

If you're not working with an agent, this is when you need one, and a good one that's not easily intimidated by other agents tactics.

0 votes Thank Flag Link Tue Jan 24, 2012

More information is needed to more accurately answer your question. Do you have an agent representing you? If so, consult them and also have them contact the listing broker to find out if there was a specific reason why your offer was rejected. Are you an investor? (Some REO's have a first look program where they only allow homeowner offers to be considered until a certain time period). Perhaps your offer was too much (leading to appraisal/loan qualification issues). There are many scenarios that could come into play depending upon the specifics of your offer. Price is not everything.

Kind Regards,

Marcie Sands, REALTOR
Simply The Best Real Estate Co., Inc.
0 votes Thank Flag Link Tue Jan 24, 2012
To answer your questions:
1) It is common for an offer above the listing price to be rejected. Keep in mind there is TONS of competition between buyers. There could have been an even higher offer, there could have been an all cash offer etc.
2) Many times listing agents will continue to advertise their listings on Craigs or through an open house to generate more leads/business - this is not a violation of any code, law etc.
3) It sounds to me like you did everything right as you said. Something that wasnt mentioned that you could do. This would be to disclude any request for repairs, termite inspections/repairs etc. When a buyer buys an REO property they should know that it is an "as-is" purchase and it is not very common for a bank to repair anything. An offer that discludes any of this will be more attractive to the listing agent or asset manager. Instead of asking for repairs if it is known they're needed, it to reflect them in the purchase price and submit contractor bids and comps with the offer!
4) Unfortunately there isnt really any way to ensure that your offer was submitted. It is the Listing agent's duty to submit EVERY offer that comes in and the sellers deserve to see every offer therefore we have to trust that they are doing so. You could always ask for an official rejection signed by the seller!
Hope this helps!
0 votes Thank Flag Link Tue Jan 24, 2012

From you explanation it sounds like something is not right about the situation. REO's are handled differently from Bank to Bank and even agent to agent. I have seen Open Houses on properties after an excepted offer. Open Houses are mainly designed to attract buyers to sell other properties to and typically held open by Junior Agents.

Ethically, all offers presented to a listing agent are required by ethics to be presented to the seller. Is the property still available on the MLS as an "Active" listing? If so, it would appear that there is something un-ethical taking place and I would encourage your agent (I am assuming you used your own buyers agent" to contact the managing Broker of the listing agent hangling this for the seller and advise them of the potential for ethics violations. Most Brokers will not tolerate their agents playing such games as it is the Broker of record who is actually responsible for all listings.

Please let me know if I can give you further assistance.

0 votes Thank Flag Link Tue Jan 24, 2012
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