Tell me about the Feds -

8 Replies

A common scenario I find is this:

1. Fannie or other property is listed for sale.

2. It sits unsold for some too-long period of time.

3. I make an offer.

4. My offer is accepted. 

5. I am informed that there are suddenly multiple offers so I must submit a 'highest & best'.

This all has a funny smell to me.  I am supposed to believe that the property sits there idle for months until I take notice and then what?  My fan-club members all jump on the bandwagon and make offers too?  "Oh!  If Stevie wants it - it Must be good - let's bid on it too!" <g>

How does this thing work?  What goes on behind-the-scenes?  Does anybody have a handle on this kind of thing?

stephen

-------------------------

Stephen, if a home has been on the market for awhile with no recent price reductions/other changes I would be wary also. One solution to consider is an escalation clause in your offer. So you offer, say, $100,000 but will beat the highest offer by $1,000 up to your maximum, but they are required to provide proof of said offer. Disclaimer: (A) Typical agents are afraid of out-of-the-box thinking, so this could be a hard sale. (B) I guess theoretically you could get into a bidding war with Mickey Mouse, Donald Duck, or some other fictional buyer that just happen to bid $1,000 below your max...

I think the reason your "fan-club" is jumping on the deal is that the price was just reduced and it hit everyone's radar.

I have the same thing happen every week and it's frustrating but what's the alternative?

Using a buyers agent that is in the same office as the listing agent might get you some better traction.

I'm going to try submitting large earnest $ with the offer and see if that helps. 

If it was easy anyone could do it.

Good Luck

I offer all cash - in immediate escrow, immediate closing, no contingencies - if there is a stronger offer please tell me what it is. <g>

stephen
---------------


Originally posted by @Bob B. :

I think the reason your "fan-club" is jumping on the deal is that the price was just reduced and it hit everyone's radar.

I have the same thing happen every week and it's frustrating but what's the alternative?

Using a buyers agent that is in the same office as the listing agent might get you some better traction.

I'm going to try submitting large earnest $ with the offer and see if that helps. 

If it was easy anyone could do it.

Good Luck

last handful of properties I've put bids on the same has happened.  I normally assume its from the price reduction.  If it is a vast price reduction it makes sense.  If its just a small one and suddenly everyone jumps on I'd be cautious

Are you following up with the properties you don't buy that this happens to? Are they ending up being sold?

Eric Thomson, Escalation clauses are not acceptable with government owned foreclosures, first off. Many independents don't care to review escalation clauses either. I want to be very clear on this, because I have represented many REO listings and I used to get Selling Brokers presenting escalation clauses, regardless of how I explained to them that I only get the change to enter ONE sales price into the computer system for each offer. Unfortunately for those agents, offers can come in after theirs, so I might make a note about the details of the escalation clause within the computer system, but Asset Managers say no to escalation clauses, they will only review your total sum offer (minus the escalation clause), in spite of your willingness to pay more. If you will pay more, they expect you to simply offer more.

Plus, there are some limitations on exercising an escalation clause. They will not show the offers of other people to exercise an escalation clause, because that is considered confidential information to another Buyer. 

I am telling you this not because I am REMOTELY afraid of out of the box thinking, it is because I know the mechanics of making offers on foreclosures, because I work for the banks who I present these offers too.  I have info, that you, and potentially your agent, do not.   

Stephen, It is not uncommon to call for multiple offers.  When you make your offer, I am calling all of the other Agents who have asked me to let them know if I get an offer.  That generates more offers.  My job is to get the most money for my client, so your offer may be used as leverage to increase competition.  The listing agent is working for the Seller, so they do not stop any marketing activity just because one offer is received.  They stop all marketing activity once an offer is accepted. 

didn't you say your offer was accepted? That should meen that you have it under contract Not sure what exactly what is happening as the post info is limited. Sounds like you may be dealing with an auction house here If it's a foreclosure auction house they like to bluff All the time so best bet is to call their bluff and stick to the highest offer that was given and wait them out The "other " so called interested parties are likely not real and they are just trying to get a bit more money out of you. Typically they will come back to you with the deal at the original accepted offering within a week. If they don't then may the sinkhole have it Never let it emotion get to you Stick to the MAO

No;  the offer gets "accepted" but the feds take a week or two to get the contracts back.  That is the window in which this trick of theirs happens.  It's not an auction - it's a property for sale through a RE agent/broker.  

stephen
--------------



Originally posted by @Randy Fahrenkrog :

didn't you say your offer was accepted? That should meen that you have it under contract Not sure what exactly what is happening as the post info is limited. Sounds like you may be dealing with an auction house here If it's a foreclosure auction house they like to bluff All the time so best bet is to call their bluff and stick to the highest offer that was given and wait them out The "other " so called interested parties are likely not real and they are just trying to get a bit more money out of you. Typically they will come back to you with the deal at the original accepted offering within a week. If they don't then may the sinkhole have it Never let it emotion get to you Stick to the MAO

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

Lock We hate spam just as much as you

Join the Largest Real Estate Investing Community

Basic membership is free, forever.

By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.