Counter offer requesting all contingencies removed

Asked by Mdwilson373, 85737 Mon Nov 5, 2012

My wife and I have put an offer on a foreclosure and there is an additional offer from an investor. The listing agent has asked for "best and final" offer and has also REQUIRED that ALL contingencies are removed. Is this a common practice? Seems shady to me. If the bank wants a cash offer, then ask for only cash offers.

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Spirit Messi…, Agent, Tucson, AZ
Wed Jan 9, 2013
Seller can counter any way they like. If you made an offer, do you have a Realtor? If so, they need to be answering your questions. If you are going to make offers on REO (Real Estate Owned), foreclosures you should be educated on what to expect, like "As-Is" on the offer(s). Most REO's price them below market, to get multple offers (like what happened to you) and ensure a "quick" sale. If the offers are close, bank will take cash offer because there are less hassles to deal with on the loan and a quicker sale. However, like most sellers, in the end they want the strongest offer that nets them the most.

Best of luck.


Spirit Messingham, PLLC
3rd Generation Full-Time Realtor®
Tierra Antigua Realty
Direct (520) 471-6900
0 votes
Minette Gold…, Mortgage Broker Or Lender, Tucson, AZ
Tue Nov 6, 2012
As a mortgage person I have seen that if you need a mortgage, you would be foolish to agree to no contingencies. It is not just you that needs to be approved for a mortgage, the subject property has to qualify too. So even if you are confident about qualifying for a loan, you may not be sure the house would be acceptable in the condition it is in now.

There are lots of good options for homes in Oro Valley (a great place to live!, I live there.). Don't start off with a bad taste in your mouth. If this is not the right house, you will find one soon enough where you will be more comfortable. Minette 975-3909 NLMS 261487
0 votes
Jo Ann Schlo…, Agent, Tucson, AZ
Tue Nov 6, 2012
I agree with Jeremiah. It is a common practice by the banks. I doubt the listing agent is the one asking for all contingencies to be removed. The listing agents have little or no control over the banks.

I don't think lowering or raising your earnest money will make a difference either. The things that make offers attractive to any seller are always the price, terms, conditions and the ability of the buyer to get their loan.

And, no. Your offer coming as an owner-occupied will make no difference to them. There are occasions with Fannie/Freddie/HUD homes where it makes a difference, but you indicated there is already an investor offer. If that is the case, the home is open to anyone to purchase.

Only you can make the decision if the home is worth removing all contingencies, and of course, I don't know what contingencies you have in your offer. When they ask for highest and best, I always tell my clients to do just that. Make it your highest and best, but don't let the frenzy of a bidding war make you overpay for the home. Inventory is somewhat low, but there are homes out there to purchase without overpaying.

Good luck!!

Jo Ann Schlott
(520) 982-0851
0 votes
Bill Eckler, Agent, Venice, FL
Tue Nov 6, 2012
With multiple offer situations "best & final" offers are common. The removal of all contingencies is an effort by the lender to not have to consider buyer stipulations.

Eventhough the lender may not be able to specify "cash only." They will likely give the edge to a cash offer. It's common for them to accept a lower cash offer over a much higher financed one. When we deal with buyers of foreclosed property we always make our buyers aware of this advantage. They just don't want to take the chance of having a financed deal fall through and have to begin over at square one.

This is most unfortunate for those individuals that must finance their transactions but it is the way most banks operate. This does not mean there is no chance for a financed buyer...many foreclosed transactions are financed but when given the choice.....

Make your best offer based on your needs and hope for the best.

Good luck,

0 votes
My NC Homes…, Agent, Chapel Hill, NC
Tue Nov 6, 2012
The banks are shady this is a given. You're being pressured and buying foreclosures is already inherently risky. In addition having been actively buying and selling homes for almost 35 years now I can assure you that rarely are foreclosures the deal that buyers think they are. Most are fair deals at best when the day is done.I've attached a link below to a popular blog I've posted here on Trulia that specifically deals with buying foreclosures.

If I were you I would not agree to removing any contingency that allows you 10 -14 days to have the property inspected and walk away without losing your earnest money deposit should you find out there are more problems and expenses with the house than you anticipated. Do not waive this right.. If the asset manager is demanding it I'd simply walk away.

If you need a mortgage you can't waive this either.
0 votes
Maria Gilda…, Agent, Manchester, CT
Tue Nov 6, 2012
In a cash offer, I can expect that there will be no contingencies added to strengthen the overall offer.

However, if you are getting a mortgage, you would not want to remove the mortgage contingency. I can understand the home inspection being removed.

Be very careful because if you remove this specific contingency, you may end up losing your earnest money deposit in the event that you can't obtain financing to consummate the purchase. We are in a precarious mortgage and real estate landscape.

Nonetheless, the bank's counter offer is not at all unusual.

Investors normally know what to look for and have the eye to assess the condition of the house.

Moreover, If you don't have this ability, home inspection is a must unless you know of someone who can evaluate/assess the condition for you via second showing.

The investor's offer must not be so enticing in terms of $$$ that the bank countered all other offers.

Good Luck.
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jerimiah tay…, Agent, Tucson, AZ
Mon Nov 5, 2012
Unfortunately this is all too common. The banks have figured out that we have very limited inventory and they are leveraging that fact to generate multiple offers above list price and strong arm buyers into paying over appraised value and waiving contingencies etc.

If these things are a concern to you I'd recommend you stay away from bank owned properties and look at equity sales and possibly short sales, but even in short sales you may experience the same issues.

It's a tough market out there and your agent should be explaining these things to you before they happen as it's quite common if they sell any volume of distressed property.

Jerimiah Taylor
0 votes
Seems like this should be illegal as an after-the-fact requirement. We are thinking of dropping the earnest money to a minimal amount and sticking to our initial price. We are above the offer of the investor we think. I have just never herd of banks acting this way and my suspicion is that this is being driven by the listing agent. Can that be the case? Will reducing the earnest money make our offer less appealing? And finally will being owner occupiers give us any preference to the bank?
Flag Mon Nov 5, 2012
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