Nobody wants to pay more than they have to for anything. For instance, if we are talking about groceries where a combination of the lowest prices with the best quality and shopping experience are important factors, price will usually win out. Buying real estate though involves a bidding or offer process. Bank owned homes are even a little more different. Many of the institutions and government entities with properties for sale have converted to electronic bidding systems. In many instances, these systems have eliminated the concept of a counter offer. The bidder has one shot. Sellers are dismissing the low ball offers while seeking to work only with the competitive bidders.
From the seller’s perspective, there are valuations from appraisers and brokers to consider. They are also not like a typical seller who might just be desperate. The banks are NOT desperate to move or give away their real estate owned! They want to contribute to a housing recovery by selling these bank owned homes at near market prices. Market prices mean similar to the range of prices the immediate area yields. The buyers with the low ball offers that are being sprinkled all over town, looking for a bite, will not get far with the institutional sellers.
There are also buyers who want to make their low ball offer on a bank owned home with a letter of explanation. This letter includes comparative sales they have used to determine value and a list of repairs needed to the property. I fully understand why somebody wants to present their case, we just have no way to facilitate this. The bank seller has their own comps and their own list of repairs. We have no way to submit a letter like this and, even if we did, I seriously doubt it would be read.
Suggestions to potential bidders for bank owned homes:
- Make your best offer the first time. Don’t expect a counter offer. If you do, and you made your best offer, stick to it. See what happens.
- If the property is one you want, for a home or investment, don’t wait. Bank owned properties sell quickly. The reason is they are priced appropriately for the market and their condition.
- If you are looking for an investment-review the aged inventory. This is the best place to find a property where there will be consideration of any offer presented.
- Offer expiration dates mean zilch to bank sellers. Sometimes offers are held until the bank holds several. Then they compare what has been submitted. I have seen banks come back three weeks after an offer is presented and ask if the buyer is still interested. The bank is now interested in bringing this old offer under contract.
- Finally, do not fail to provide a current proof of funds with all the details. This will make it very clear that the buyer has the resources, or an adequate loan approval, in place to perform on their offer.