If a bank owned home is for sale and the price is set on the listing can the realtor/broker then turn around and ask for higer bids on the property ?

Asked by CC Berg, Orlando, FL Tue Oct 1, 2013

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Shanna Rogers, Agent, Murrieta, CA
Tue Oct 1, 2013
Hi CC Berg,

Yes, they can and will. The price listed is the 'suggested' list price. The bank will usually ask buyers to submit their 'highest and best' offer - which usually ends up being higher than the list price. The bank is going to want to get the highest offer they can to minimize the loss they are taking on the property.

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
1 vote
I read some where that there is a reserve price and the Florida Bar stipulated that it was illegal to do so. Am I correct or not?
Flag Tue Oct 1, 2013
Thank you Shanna
Flag Tue Oct 1, 2013
Ann Ryan, Agent, Doral, FL
Tue Oct 1, 2013
Yes, and they regularly will. Foreclosures regularly trigger bidding wars. Make sure you don't pay more than a regular sale would cost!

Ann Ryan
Keyes Real Estate
305-786-3225
AnnMoffettRyan@gmail.com
1 vote
Is there regulations in Florida on this form of sale?
Flag Tue Oct 1, 2013
CC Berg, Home Buyer, Orlando, FL
Tue Oct 1, 2013
Thank you for your responses, HOWEVER, the leading question still remains unanswered. "What guiding regulations via the Florida Realty Bar predicts or governs the rulings on such sales"
0 votes
Annette Law…, Agent, Palm Harbor, FL
Tue Oct 1, 2013
You bet!
If you are looking to purchase a home to live in, youi must anticipate this strategy and NOT attempt to purchase a bank owned that is listed at the top of your buying capacity. You will be well served to acutally know the market value of the home in question. That is what it willl sell for, based on condition.
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Your agent can share with you the 'real' saving realized with purchasing a bank owned or short sale home. An informed buyer is the very best buyer.

Best of success,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
0 votes
Antonio Vega…, Agent, Saint Cloud, FL
Tue Oct 1, 2013
CC:

The issue is with the question. The Bank list it's REO for what ever price they determine is market value. The assigned Realtor/Broker must then receive all offers and present them to the Bank in a timely fashion. The Bank then selects the one they determine is the best offer and accept it, making it into a contract.

It is never the Realtor or Broker who ask for a higher bid, it is the seller...in this case the Bank. They will actually let you know that there are several offers and it is up to the buyer if they want to make their offer "Higher or Better" to have improved chances of being accepted. It is simple offer and demand rule.

If your Realtor (representing the byer) is telling you to make a higher offer, that is because they know the market, know what it will take win a contract and likes to eliminate wasted time of making offers the bank will never accept. Be grateful you are not working with an agent with a "low ball" mentality who will write offers over 6 months and get NONE accepted.

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Tony Vega
Antonelli Realty
0 votes
Abraham Bidh…, Agent, Orlando, FL
Tue Oct 1, 2013
Hi There:
This is actually a very common practice which we see happening more and more often. There has been instances that my clients have made offers $50K over the asking price and we still did not get the home because someone else was willing to offer $84K over the asking price :) . To be frank in most instances the asking price is simply not going to cut it unless the home is overpriced,…

Below is the link to homes for sale in Orlando:

http://abidhendi.orlandopropertiesonline.com/listings/proper…

Hope this helps.

Abraham Bidhendi
Top Producer Realtor® with over 26 years of experience
Awarded as Exit's TOP Buyer side Transactions for the State of Florida
We have had 142 successful transactions during the past year alone.
Exit Realty Access, LLC
Direct: (407) 744-2533
Fax: (407) 444-9925
Email: REOsofflorida@msn.com
Website: http://abidhendi.orlandopropertiesonline.com
Kissimmee Office: 391 N. Main St., Kissimmee, FL 34741
Altamonte Springs Office: 660 Palm Springs Dr., Suite D, Altamonte Springs, FL 32701
0 votes
Jim Olive, Agent, Key West, FL
Tue Oct 1, 2013
My take on this is a bit different...I am NOT a fan of the practice, but it is very common for bank owned properties to hit the market at unrealistically low prices, designed to draw attention and spark a bidding war. For investors who deal with this regularly, no big deal...but for first time buyers who see the listing and think it's priced normally, and that they might even get the property for even a little LESS than the list price, it can be very disheartening. It is a valid technique to sell a property quickly though. I guess it's just another case of "buyer beware"...
0 votes
Mark LeMenag…, Agent, Lake Nona Orlando, FL
Tue Oct 1, 2013
Do read my blog on this topic: http://www.trulia.com/blog/mark_lemenager/2012/05/investor_g…

Good bank owned properties often sell for more then list these days.
0 votes
Offer Guide to REO/Bank Owned Properties
I must have explained buying bank owned properties to investors 300 or 400 times, so let me post my ideas here so there is an easy link for everyone to review.

Bank owned properties (also called REO, Real Estate Owned) are normally those that have gone all the way through the foreclosure process and have had their ownership transfered to the bank by the courts. I say normally because there can be other reasons that the new owner has gotten possession and the new owner is not always a bank. Do note that Trulia's and Zillow's data mining programs call a lot of transactions "sales" when in fact no money has changed hands. I frequently get asked, "the internet says this was sold two months ago, what's up?" a transfer reported as a sale is always what's up.

There are three main owners of REO/bank owned properties:

1) The mortgage market clearing houses: Fannie Mae, Freddie Mac, and HUD. (HUD, the US Department of Housing and Urban Development is not a mortgage market, but we'll lump them with the other two as they use similiar rules.)

2) The lenders: BoA/Countrywide, JP Morgan Chase, Wells Fargo, SunTrust, and the list goes on and on and on.

3) Others: wholesalers, professional flippers, etc.

As an investor the first thing to remember is that your bid on a Fannie Mae, Freddie Mac, or HUD property will NOT be consider for the first 3 weeks. The first 3 weeks is strictly for owner occupants. Cash is not King with Fannie, Freddie, and HUD. Getting owner occupants is King with them. Even after the 3 weeks, a financed owner occupant offer will get priority over an investor's cash offer.

The lenders and others all have their own rules and of course no two are the same. They will usually take a bid from anybody after a few days and CASH IS KING with these guys. I have certainly had investors win the bidding with cash offers that were lower than financed offers.

How much to offer? All REO sellers operate a "Dutch Auction". The asset manager starts with the price they want to get and then lowers the price (usually every 30 days) until they get an acceptable offer. Investors are unlikely to get much if any discount from list price in the first 30 days. If it is an attractive property or any property in a hot area like Lake Nona comes on the market, then the real question is how much OVER asking are you willing to bid. These kinds of properties can attract upwards of 30 bids within a few days of coming on the market. (In the Lake Nona area, 58 of the 113 bank sales in 2012 went for list or more. 9 went for more than 110% of list.)

Of course, you want to take a look at the comparable sales to determine what a reasonable price to pay would be, but in the first 30 days if your conclusion as to what it is worth is less than say 95 to 97% of the initial list price then do not assume that the asset manager will care about your conclusions. They won't. If it is NOT a hot area or it's been on the market over a month, then I suggest an offer of say 92 to 94% of list to see if you can get a counter with their best price at the time. Do not expect that they will counter again. It's just business to them, so don't take it personal, but they really don't care what you think.

If you want to bargain on a bank property, then look for fixer uppers or properties that have been on the market more than 60 or 90 days or look in areas that are not "Hot". The other thing to look for is mistakes by the asset manager where the initial price is below what the neighborhood is selling for.

Finally, the focus of this is what to bid and not contract terms. When it comes to Fannie, Freddie, and the banks there is no negotiation on contract terms. They all have contract addendums that override the local sales contract and those addendums must be accepted without change. They will of course be in the banks favor. If you are not comfortable with this, they will not care. They will just wait for the next offer (or choose another of the many they probably already have). Again, it's just business to them.
Flag Sat Jan 10, 2015
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