Winning The Bid With Multiple Offers

We are seeing multiple offers on most bank owned (REO) properties priced under $200,000. It seeems to me, that if there are so many offers on a listing, the listing agents must be pricing their listings too low. I'm sure they would disagree with me, but I've learned to counsel my buyers into making their "highest and best" bid when making offers and disregard the asking price. Most sales of REO's under $200K are selling well above the asking price. I always tell them, "don't get emotionally attached to real estate", and "to make your best offer", as if they will not get another chance and could lose out to another buyer. This is not just a salesman's pitch, this is the truth and after losing a couple of properties to higher bidders, buyers start to get the message. Also, "Cash is King" and there is a huge percentage of sales happening with "all cash" offers. Sellers will take a cash offer over another offer getting a loan about 90% of the time, sometimes even at a lower price, because there is a lot less chance of an escrow failing thru from a cash "as-is" sale.
I still see many buyers waiting to find a property before getting their loan pre-approval. In today's market buyers must be pre-approved before making the offer. Offers are not presented by many agents, if it is not fully documented. If it's a cash sale, you must provide "proof of funds". Proof of funds must be a copy of the buyers bank account showing funds in a liquid state, not in CD's. Pre-approval letters should be from a recognized lender, and should include DU, or "direct underwriter" approval. Escrows are taking longer, so plan on a minimum 45 days for the loan to process in your escrow period.
Buyers also need to be patient, as these REO sellers take their own sweet time to collect and review offers. They don't care that the contract says you want an answer in 3 days. The time they take is typically 5-10 working days for an answer to an offer. This is another reason why there are multiple offers. The amount of time it takes, gives the sellers a chance to collect offers and set the stage for a counteroffer of "make your highest and best offer", creating an auction like atmospheres.
In closing, the best advice I can give buyers is to be prepared for the action, and do a good inspection of the property as well as study the comparable sales before making an offer and getting caught up in the pressure of multiple offers.

Federal Tax Credit Extended into 2010

The federal tax credit for home buyers was signed into law by President Obama Friday, Nov. 6. The tax credit, which was set to expire Nov. 30, has been extended through April 30, 2010 with a 60-day extension if a binding contract is in place prior to deadline. It also was expanded to include existing homeowners who have lived in their primary residences for five consecutive years out of the last eight years.

First-time home buyers still may be eligible for a tax credit of up to $8,000, while existing homeowners may receive a credit of up to $6,500. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.