Always overbid with cash offer in Brentwood, Why?

Asked by Qiao, 94539 Tue Jun 15, 2010

My three friends bought foreclosures in brentwood in the early of May, SF, Grith ranch, 1995~1996 built, 2200-2300 spft, 3 bedrooms with 2.5 bathrooms. Asking price 268K~295K, closed price 285K~310K, all cash offer.
This time it is my turn. I did some work in rental properties and inventory before I made the offern. Single family, 2130 spft, 4 bedrooms with 2.5 bathrooms, 1996 built, asking price $268K, I bid $255K with cash. After two days, the agent called me because Bank give me a count-offer, I incresed my offer to $260K, she said it is too little, I can not get the home , even i offer to $268K. I was so surprised and decided to give up it. I plan to find out another one. Last weekend, I watched this house is pending with a price of $247K online.
Big surprise! I start to think about something what I couldn't reach.

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9
Tom Schieber, Agent, Brentwood, CA
Tue Jun 15, 2010
Thanks for the kind words Brian.

Qiao - I think the key is understanding the "market value" in relation to the bank's asking price. The bank's asking prices are all over the place - they don't make sense, and they're often not driven by accurate market data. Sometimes they're too low, and the house will sell for more. Other times they're too high, and the house sells for way under.

The market is, however, fairly efficient. Local agents know what homes are selling for, and they are directing their clients to make appropriate/acceptable offers.

Don't think of your offer being being over/under asking price - figure out what the "market value" should be, and see if you can get an offer accepted (because you are all cash) without going over that number. That's how you get a deal.
Web Reference:  http://www.tomschieber.com
1 vote
John D Fink, Agent, Brentwood, CA
Tue Jun 15, 2010
Good Afternoon,

We do a large number of bank owned homes in Brentwood. The bottom line from the banks is, they want the highest offer. We have seen a number of cash offers come in on properties we were sure the bank would except however, they went with the highest offer even though the buyer was financing the property.

Hope that gives you some insight.

Regards,

John
1 vote
Oscar Linares, , Pleasanton, CA
Thu Oct 21, 2010
hello Giao: I am not sure if you were already qualified for the mortgage loan (if you need financing), and if you have a realtor working for you, but if not I can provide you with a free qualification for the loan and I can assist you in Brentwood, since I lived in that city since 2002 My phone number is 925-400-8357.
It is not exception to come across with such problem, but if you have a solid offer and a good loan approval in place, that would help to easy the process. If you have the cash, I can assist you in buying foreclosed properties before they even go to the listing market.
0 votes
Barbara Wils…, Agent, Danville, CA
Wed Jun 16, 2010
A few points
1) You do not know the price that the bank accepted until the sale closes - I don't know where that $247 came from, but I am very suspicious of it.
2) Many bank agents are pricing properties very low compared to where they know it will sell, to generate multiple offers and get the buyers in a frenzy to pay more and to get it pending quickly.
3) If you want to go in with a low offer, then you need to offer on homes that have been on the market for awhile and have not taken a price reduction. Your agent should be coaching you on this - experienced agents are quite aware of the games that go on, and the ways for their clients to get the home for the lowest possible price.
4) Any time you are in a multiple offer situation, you will need to go in at the highest price you are willing to pay, because the other agent is not obligated to give counter offers, and many don't because it takes time, so they will just accept or work with the highest offer. If you hold out, then you won't be the highest offer and you won't get the house.
0 votes
Bob Georgiou, Agent, Danville, CA
Wed Jun 16, 2010
Qiao,

Many cash buyers believe that the market is as it was last October where cash strapped backs were taking all cash offers to improve liquidity and not deal with fallout risk associated with buyers who were dealing with other banks. Once again that was then. Since then the mortgage market has pulled back from the brink and stabilized and we have gone back to the day when the addage "all deals are cash at closing."

True all cash buyers have lost their market power except at auctions. Those buyers with cash now are being asked to pay fair market value against leveraged buyer since the banks have been witholding inventory creating artificial shortage. In the short run its all about market stabilization until prices start going up again.

Being all cash you still have the benefit of short close!
Web Reference:  http://bob2sell.com
0 votes
Bob Georgiou, Agent, Danville, CA
Wed Jun 16, 2010
Qiao,

Many cash buyers believe that the market is as it was last October where cash strapped backs were taking all cash offers to improve liquidity and not deal with fallout risk associated with buyers who were dealing with other banks. Once again that was then. Since then the mortgage market has pulled back from the brink and stabilized and we have gone back to the day when the addage "all deals are cash at closing."

True all cash buyers have lost their market power except at auctions. Those buyers with cash now are being asked to pay fair market value against leveraged buyer since the banks have been witholding inventory creating artificial shortage. In the short run its all about market stabilization until prices start going up again.

Being all cash you still have the benefit of short close!
Web Reference:  http://bob2sell.com
0 votes
Emelia Sanch…, , Ontario, CA
Tue Jun 15, 2010
Qiao, additionally the pending price is not the closing price. You may keep your eye on it and see if it closes for higher than your offer. If it closes for less than your offer something is not quite right with the picture there may have been some terms in your contract that were not as appealing as the terms of the accepted offer. Price is not everything.
0 votes
Gilbert Rich…, , Santa Clara County, CA
Tue Jun 15, 2010
I believe John made it plain. If there are higher offers out there the banks will take it. The other thing to look out for is the fact that at these low prices, a lot of these properties can cash flow very well so that will motivate most investors to overbid if the price if the rent justifies the offer price.
0 votes
, ,
Tue Jun 15, 2010
I would highly recommend talking with Tom Schieber of Brentwood. Tom get exclusive listings there and knows the market extremely well. you will save yourself many headaches.

http://www.tomschieber.com/

Best of luck
Web Reference:  http://www.loansquawk.com
0 votes
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