Discrimination against investors

7 Replies

I recently went through a bid process where my agent said I had the highest and best offer. My offer was above list and all cash with no contingencies and the bank chose to negotiate with an owner occupant. This was not a situation with an owner occupant bid period defined in the listing. There are already so many programs in place that favor owner occupants. When I finally found one without those stipulations I still got hosed. Has anyone else experienced this? What would cause the bank to favor an owner occupant if his offer was not better than mine? Is there some sort of incentive or kick back that I am unaware of?

It is just one of those annoying things. Lots of programs favor OO and first time buyers.

It is sad but the bank can sell to who they choose. just move to the next deal.

Joe Gore

Your agent said you had highest and best, but I'm not sure how they would know that. The seller always gets to decide whose offer to accept, and is not required to tell you what the other offers were. Feeling "hosed" by this is a waste of energy, frankly. Try to put it behind you.

Thanks for the responses. I'm not so much focused on that one property as I am on the trend. And there has to be a reason why a BANK of all entities would not favor the almighty dollar and quick closing. What is that reason? Does anyone know?

Many of the secondary market buyers of loans, or guarantors, like Fannie Mae and Freddie Mac are Government sponsored entities, whose purpose is to promote home ownership. There may be incentives or regulations working in the background to cause this.

It could also be that another offer looked stronger. Top dollar does not necessarily mean better offer. As mentioned generally you agent would not have access to what the other offers were.

Even if this is a trend just move on to other deals. Trends in what works in investing change all the time. Sometimes REOs are easy pickings and sometimes they are a waste of time. Figure out what works for you in your market.

Originally posted by @Jamie Watson :
Thanks for the responses. I'm not so much focused on that one property as I am on the trend. And there has to be a reason why a BANK of all entities would not favor the almighty dollar and quick closing. What is that reason? Does anyone know?

You have no way of knowing if your offer was the highest. Maybe your offer was the same as the OO buyer but they are getting their loan from the selling lender. Maybe it's a local lender that cares about placing OOs in the property in order to serve the community. Maybe.....the seller liked someone else's offer better.

Tell us more about all these programs that favor the OO buyers. The word must not be out there because OOs are still getting outbid in most markets and investor purchases are still way up.

Keep yourself busy making offers and don't focus on the ones you don't get. And consider making offers on properties with less competition.

Hey guys! Thanks again for the responses. So I just got off the phone with another agent in the area and apparently there is a PR initiative by banks to sell to owner occupant even when the property is not Fannie Mae or Freddie Mac. In many cases that includes them doing some of the rehabbing themselves and in other cases that includes favoring an owner occupant over an investor. I guess I just answered my own question but thought I would share. Happy Monday!

Join the Largest Real Estate Investing Community

Basic membership is free, forever.