Banks counter offer

7 Replies

Just got an counter offer of $162k from bank on a property that was listed for 189k. My original was $130k (using hard money lender). Property has numerous liens from city for landscaping and unpermitted patio. Duplexes in the area are going for 200k. I plan to keep and rent out (or if wholesaling is best open to that too. What is best strategy to approach should I stay firm on my $130, go up a few dollars.. Thanks greatly in advance for your responses. 

@Bruny Joseph

Run your numbers. Determine your potential exit strategies. Figure out what your Maximum Allowable Offer (MAO) is for each exit. The rule is, the better you buy...the more exits you have.

But, never...ever...bid against yourself. The bank's counter offer is irrelevant to you...or it should be. Your numbers are your numbers. You want to get the property at the lowest possible price. Period. But, regardless of the counter or other bidders or anything else...you NEVER exceed your MAO.

People get burned all the time, because they want to win an auction or a bidding war.  This isn't Ebay.  You never actually win, when you exceed your numbers.  No emotion...no competitive instinct...just cold hard facts.  This is business.

Define your bidding strategy. They haven't asked for your "best & highest", so just come up a little, as long as it's below your MAO.

Bank is not always aware of the same deficiencies you are. I have been in a short sale negotiation where bank countered, and I raised my original offer by $400 (essentially staying the same but creating a slightly higher number) just so it would show as an actual counter offer in their computer system and look like good faith negotiations have been made for investor to approve. When I countered, I provided list of Non-cosmetic repairs required and cost to justify my offer. Include copies of the liens if you have them and the cost it will take to rectify the landscaping and tear down the un-permitted patio if its unsafe as well as other key house components that might not be obvious. I include pictures of items in very poor condition to show how hard it might be to sell the house over time and wait it out for another offer, the spreadsheet of total costs and put them in a tidy PDF along with the offer. If you are bidding against other bidders, it will become more about being the highest offer rather than convincing the bank to accept your only offer. Sometimes staying put with your original offer (and adding a couple of hundred) might work for you for your consideration. Good luck!

@Bruny Joseph Banks are not going to be swayed by your signaling that you are trying by bumping your offer a little bit.  They use formulas. And as already stated this often doesn't take into account deficiencies in the property.  I wouldn't bother changing your offer and I wouldn't get too excited. It sounds like you are too far apart at this time.  But time does change things for them. 

They have done "best and highest" 3 times from what I know and this is my 2nd time submitting (with same figures). Bank is aware of issues and disclose copy of all code violations from city. I've notice they play this "Highest and best" with a deadline a lot. I came up with number taking ARV 65% minus repairs

Originally posted by @Bruny Joseph:

They have done "best and highest" 3 times from what I know and this is my 2nd time submitting (with same figures). Bank is aware of issues and disclose copy of all code violations from city. I've notice they play this "Highest and best" with a deadline a lot. I came up with number taking ARV 65% minus repairs

Could I also look at there counter offer that no one has offered more than $162

@Bruny Joseph

65% of ARV minus repairs is very low - as long as both numbers are realistic. If you buy for cash flow and are able to make your numbers any deal where you have no or little down payment is worth doing. In other words if you are looking to grow your portfolio there is nothing wrong with 75% or even 80%. But make sure your numbers are not inflated on ARV or too low on repair cost.

personally, bruny, i am of the nature to try to get something as cheap as i can get it. its kind of a " i win" stragedy. lol. the better i do, the better i feel about it. from the the numbers you listed, $162 seems ok. they came down $27,000, you offered $59,000 less than original. my guess is that was a lowball offer for you. most banks aren't going to settle for a lowball offer anyway. i think i would come back at $150,000. you have come up a decent amount and are willing to assume other liens on the property, and you would be offering a reasonable amount to the bank for it. sure, they came down further than you went up, but if you add in the other liens, i would bet you pretty much meet in the middle

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