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.
1 comment:
I totally agree with your comments. Buyers need to make their best offer up front on these REO's. I think it is good advice that they leave the emotional attachment to the house at the front door. When dealing with REO's, you are dealing with a business decision for the bank and they have no emotional attachment to the house. Buyers need to work with their Real Estate Agents to decide what is the best price for the house and then make their 'best and final' offer rather than expect the banks to counter. In most cases, that will never happen.
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