Does anyone have any experience to be able to say whether a large financial institution would be less inclined to accept an offer on a bank owned foreclosure sale if the offer contained a stipulation that the seller pay all or some of the closing costs?
In my example of a bank owned duplex from a foreclosure that is priced slightly under market, assuming an offer at the asking price plus seller paying all or a portion of closing costs, would that closing cost stipulation weigh negatively on the bank's decision to accept my offer over another offer that is lower than mine on the net sum of the offer even if by only one or two thousand dollars?
Thanks for any input,
The bank really just cares about the net offer price - offer amount minus seller paid closing costs.
If there are multiple offers a bank will weigh multiple factors in their decision. These include contingencies, closing date, cash vs. financed, type of financing (conventional better than FHA which is better than DVA)...
As @Bill Wallace mentioned the net offer will be what matters. As a side note, the closing assistance must be a fixed amount. You should be able to get a decent estimate from your agent or lender.
I don't know anything about the foreclosure market in Louisiana, but in my market foreclosures go fast. Here the best no contingency, no seller paid closing costs, quick close cash offer is accepted. Unless, of course, it is a government program backed loan. They want owner occupants and make it harder on investors.
I'm a Realtor in NOLA and my broker is an REO broker so I am very familiar with the ins and outs of selling and/or buying a foreclosure. The REO brokers don't deal with the banks directly. They deal with the asset management company hired by the bank that has foreclosed on the property. They submit offers to the asset management company and they then decide whether or not to send it up the chain to the bank. If there are multiple offers on a property (which many times there are in our market), then the "cleanest" offer is going to take precedence. Banks don't like to deal with any concessions and/or stipulations and many times they flat out refuse to pay any closing costs just as they refuse to pay for any repairs. The banks and financial institutions that own these REOs are trying to recoup a loss and they will try to force a multiple offer situation in order to get the bids higher. The best offer on an REO is a clean offer... go with your highest and best offer right out of the gate with no buyer concessions and no seller paid closing costs with an all cash offer and a quick close.
I'm in Louisiana and have done many REO's. My costs usually stay between 600 and 700 on a all cash closing. It's better not to ask for anything just make your offer reflect what you need. Hope this helps
As described by @Braden Smith is the way I've seen it go in my market too. A good "clean offer" with no seller paid closing costs or contingencies is what usually wins. That is cash of course. If a property is kind of a dog, that's been sitting on the market for a long time working it's way down in price reductions, there may be a little leeway there? But your best bet is to just factor that into your price and keep your offer "clean."
Thank you all for your responses. I could really use the closing assistance, but since my offer is based on financing and appraisal I decided to go with the cleaner offer and just eat the closing costs since I already have those strikes against me. I lost the last one of these I offered on and I offered $10k above the asking price so someone obviously wanted the property more than I did. You all have helped me tremendously in making my decision.
Thanks Bigger Pockets!!
Many thanks to all who responded:
Good luck, let us know how it goes.
Brandon, how did this turn out?
Thanks for asking. I lost both this property and another I offered on. Both were REO duplexes in my desired area of town and just others here suggested both went to "cleaner" offers that were cash offers higher than mine and well above list price. I am new to this and I am learning that REO multi-family here is a tough market for a newbie to enter.
These likely more experienced investors knew how much they could offer because they likely knew better than me how to estimate repair costs. That's ok though because I have since located another seller with a duplex that is not on the market and I may be able to get into it on some very favorable terms as he is willing to carry a note on a portion of the purchase price that will greatly reduce my down payment amount. If this deal works out I will be glad I lost the other two and have been patient.
Sometimes the best deals are the no deals. Hope it works out.
I have a similar situation. I offered double the asking. 25k I won the offer for 50k However. The property had squatters which set me back half a month and now the bank is refusing to pay 6% or even 3% closing because it has now been revealed that the property is a reverse mortgage foreclosure, which was not disclosed in the beginning of the transaction.
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