Eddie, Home Buyer in Barrington, RI

two offers on a forclosed home what is the process to make deal

Asked by Eddie, Barrington, RI Tue Oct 7, 2008

Placed an offer on a forclosed home, turns out a previous offer was placed on the same home, how should this process go.

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5
Pam Jacobs, Agent, Barrington, IL
Tue Oct 7, 2008
Eddie,
I'm not sure if the home you have put in an offer on is a home that is in the process of being foreclosed on, or if it is a bank owned property (often referred to as an REO). Also, if it is in the process of being foreclosed (pre-foreclosure), are the offers for more than the loan (s) amount or less. If less then it is a short sale (selling the home for less than is owed on the home).

For a short sale, the bank will often want the homeowner to negotiate the offer/offers and present the "best" offer to the bank. Sometimes in a short sale the bank will want to be involved in the negotiation of the offers, but usually they just want the "best" offer presented to them.

For an REO, you'll be negotiating directly with the bank and usually they are looking for the strength of the offers and may take a long time.

If it is a short sale, you'll want to be sure that the seller's real estate agent has been in contact with the bank and has secured approval to sell the home short and has had ver recent discussions with the bank about the current market condition.

If the home is being sold for more than the loan amount, you'll want to be sure that if your offer is accepted, that the bank is aware of the offer, closing date etc.

In any of the above, you'll want to have your attorney involved through the whole process AND you'll want to have an attorney who specializes in real estate AND is familiar with foreclosures.

I will say that as in most dual offer situations, cash is king...if you are a cash buyer, you trump every other kind of buyer and you are in the driver's seat. If your offer is not a cash offer, you must include a strong letter of pre-approval from a large lender. Bigger earnest money amounts, quicker closing dates and fewer contingencies are things that help with the strength of the offer. The highest offer doesn't always win, especially in a foreclosure. A cash buyer with a short closing date and not contingencies is a dream buyer in the foreclosure world and can get a price discount!

In summaray, as Michael says, there are too many complexities to cover here. Find professionals (realtor and an attorney) and get their help.

Look for a Certified Distressed Property Expert (CDPE) to help you.

-Chuck
1 vote
Hotlips, Both Buyer And Seller, Beverly Hills, CA
Sun May 31, 2009
Realtors try to create the false impression of a hot market by deliberately "underpricing" a house. Say a seller's agent knows that house will probably go for $400,000. He places ads asking $300,000 instead. (Bait-and-switch is illegal when selling toasters, but apparently not when selling houses.) The goal is to first of all prevent buyers from knowing what a realistic price is, and secondly to get buyers to blindly bid against each other. There are four players in this game and three of them are against the buyer -- the seller, the seller's agent, and the buyer's agent. Yes, the buyer's own agent works against the buyer, because there is no commission if there is no sale. There's a saying in Las Vegas: "There's a patsy in every game, and if you don't know who the patsy is, you're it."
0 votes
Scott Newman, Agent, Chicago, IL
Mon Oct 20, 2008
I handled hundreds of foreclosures a year with one of the best known REO agents in Illinois and I can tell you that there is never a lot of rhyme or reason when it comes to dealing with banks.

In a lot of cases the banks will tell the agent that no offer will be accepted for a set amount of days. This is done to ensure that the price the broker told the bank to list the property for- remember the bank has never even seen what they're selling- is in line with the maximum they can get. This period is usually 7-30 days. After that time, they will accept the highest offer that has been submitted. Additionally, keep in mind the banks take days even weeks to get back to offers and so having several offers come in on a REO property in that time-period is not uncommon.
0 votes
Bob Brandt, Agent, Schaumburg, IL
Fri Oct 10, 2008
It is usually like a silent auction, with the highest bid winning.
Web Reference:  http://www.realtybob.com
0 votes
The Michael…, Agent, Gurnee, IL
Tue Oct 7, 2008
It is unsettling to see someone looking for answers from strangers on a wwebsite to important questions about (probably) the largest and most important tranaction in their life. There are many factors involved here. While many of us could explain various scenarios that could play out and may or may not have much relationship to the situation you're involved in, you need the advice of a professional who understands the details and has your best interest in mind. Please do yourself a favor and consult one immediately.
0 votes
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