Correction needed to a contract from possible overbid to a below market listing?

Asked by Jerry Zheng, Milpitas, CA Sun Jan 29, 2012

This seems to be a pretty good investment property listed @ 30 -35 % below market. I was told that the bank who foreclosed on this was owed only 95% of their asking price. To act fast, without looking the property, I made an offer and my cash offer (15% over asking) was accepted immediately. Here comes with my questions/suspicious about this whole thing:
1] Does this sounds right for the bank listed this so low while they can make more money?
2] How did this property even become foreclosure initially if the value of the house is much high than what the original owner's mortgage?
3] I was told there are multiple offer on this, this is why I act what I did, with the speed of getting accepting, I wonder if I overbid on this
4] What can I ask now to compensate if overbid was indeed the case, I can ask credit after inspection (paint, carpet replacement and etc), right? Any other idea?
Only 7/15 days for Inspection/closing, clock is kicking. Your prompt advice is appreciated.

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Ron Thomas, Agent, Fresno, CA
Sun Jan 29, 2012
The first time you said; is that it was Listed at 30-35% below market:
How do you know this?
If you BELIEVED this, and acted on it, how you find fault with anything anyone else did?

Here's the short story about 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.

As far as Multiple Offers goes; have you ever met a Used Car salesman who said something like this>
And, honestly, you didn't act because of the Multiple Offer tip.

You saw GREEN and you did what you did; no one coersed you. You cannot blame anyone else. You chose to move without a CMA nor an Appraisal, you chose to offer cash, if you offered more than Market, Caviate Emptor.

Good luck and may God bless
1 vote
James Tan, Agent, elk grove, CA
Wed Feb 8, 2012
Jerry,
I agree with Tina and Ron. If you have "Buyer's Remorse" and you no longer believe it is a good investment, your best option is to get out.
Unless you find some serious issue with the property, (e.g. structural damage - in which case you do not want it anyway), you probably will not be able to get seller to reduce by 15%. Just cancel the deal during the 7 days inspection period. Usually, the seller will let you have your earnest money back. Next time, you may wish to contact a good realtor, who will do the research and due diligence for you.
0 votes
, ,
Mon Jan 30, 2012
Well, if you are sure you getting the property bellow market price, than do not worrry about it. You are just having buyer's remorse.
0 votes
Keisha Mathe…, , Sacramento, CA
Sun Jan 29, 2012
Where is the like button for Ron Thomas' answer? No need to add anything else. Very nicely put and I agree.
0 votes
Tina Lam, Agent, San Jose, CA
Sun Jan 29, 2012
Jerry,

These questions need to be directed to your Realtor. If you're working with a competent investment real estate broker, you'll know exactly what you're doing and why.

A winning bid is by definition an overbid. As for any credit, that's not possible at this point. A deal is a deal.

Your own option at this point is to back out if you are truly concerned that you have a poor deal in your hands.
Web Reference:  http://www.archershomes.com
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