Select a State · Member since 2011 · 18 posts · 0 votes
I just don't get it. I'm looking at REO's for a place to live in. I'm in MI and real estate isn't booming here. I found a REO that I really liked listed for $53,200. This is a Homepath property so investors can't bid for the first 15 days. The day after this house is listed I put in an offer for the full price. The listing agent says there have been multiple offers and requests everyone to re-submit their "highest and best" offer. I really wanted the house, so I bumped up my offer to $70k. I just found out this morning that my offer wasn't the highest. The listing agent wouldn't say what the highest offer was. I'll have to wait until after closing to find out what the house sold for.
Damn, I'm really bummed and completely surprised. I thought everyone was bidding less than the REO price.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
So REO listing agents these days are convincing their sellers to list properties far enough below market that they are getting multiple offers well above the list price. Clearly, that's what you're seeing with this property.
Another thing to keep in mind is that it may not have just been your offer price that was considered. It's possible the seller accepted a low priced offer with better terms. Just something to think about, in the case where you have a lot of contingencies in your contract.
Still to it...another will come along. In fact, I've noticed a lot of really nice Homepath properties in my area recently...homeowners are getting a steal!
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
15y
So REO listing agents these days are convincing their sellers to list properties far enough below market that they are getting multiple offers well above the list price. Clearly, that's what you're seeing with this property.
Another thing to keep in mind is that it may not have just been your offer price that was considered. It's possible the seller accepted a low priced offer with better terms. Just something to think about, in the case where you have a lot of contingencies in your contract.
Still to it...another will come along. In fact, I've noticed a lot of really nice Homepath properties in my area recently...homeowners are getting a steal!
Lender · Chicago, IL · Member since 2010 · 84 posts · 23 votes
15y
Today I made a cash offer on a place for 26k above asking price with no contingencies and am still very uncertain that I will get it. I will not be surprised if I don't. Every reo I have made an offer on in chicago has gone above the asking price.
Residential Real Estate Agent · Costa Mesa, CA · Member since 2008 · 1k+ posts · 380 votes
15y
What you should take out of this is that with properties brand new to the market, list prices are generally irrelevant, for two reasons:
1) You are not the only one with access to the MLS.
2) Asset Managers might have bad information (BPOs that come in low), or have priced the property low intentionally, but if they get 20 offers over the listing price within 5 days of hitting the market, they won't care what you think you should get the property for, only what the highest and best offer in hand is.
You would be better off going after properties that have been on the market a long time and pre-empting a price reduction, although the Homepath properties aren't bad either, you just need to stop using the list price as your barometer for how much you should bid.
Select a State · Member since 2011 · 18 posts · 0 votes
15y
Do you think it would have mattered if the original offer I made was for $70k? Do you think they still would have asked everyone to re-submit their "highest and best" offer even with an offer in hand for $17k more than list price?
Involved In Real Estate · Los Angeles, CA · Member since 2008 · 89 posts · 15 votes
15y
Tip#1 - Go after REO's that have fallen out of escrow 1,2,3 or more times and/or are labeled Back On Market...
Tip#2 - Establish rapport with listing agents and submit offers through them or someone within their office. Also, what you put in your offers does matter, so keep that in mind...
Contractor · Atlanta, GA · Member since 2008 · 978 posts · 985 votes
15y
Originally posted by wrongsideof30:
Do you think it would have mattered if the original offer I made was for $70k? Do you think they still would have asked everyone to re-submit their "highest and best" offer even with an offer in hand for $17k more than list price?
The answer is... No, and yes.
If the asset manager sees more than one offer, they won't care if one of the offers is a hundred times higher than asking price - they will still ask for highest and best. Every. Damn. Time.
Reason for this? The high bidder doesn't know what the other guy bid. Nobody knows what anyone bid... so the high bidder, in his desire to get the property, may go even higher. Or the low bidder may have been trying for a one-shot deal, but is actually willing to go far higher than even the high bidder.
To put it in another way - the asset manager has no compelling reason NOT to ask for highest and best... it is literally win/win from their perspective.
Of course, for those of us trying to buy desirable, underpriced property... you will realize pretty quickly that the bidding process is basically a game of grab-***. Shoot them your best offer the first time, with the best possible terms you can offer, and hold your breath.
(And for the record, I have yet to buy a property under the list price. The highest I've gone is about double the list price, and I've lost those bids too.)
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
This sounds to me like a new strategy and sytems in place is needed.
I have paid under list price every single time of the ones I bought wich were on the MLS prior to me finding them. The tow most recent looked like this: $319k ask price, I paid $266k; $220k ask price, I paid $180k
All the rest I purchase are exactly the ask price because I know what the ask [price most likely will be before hand and it is a price I am willing to pay. This only happens due to my connections (relationships I have developed). Several others are given to me with a piice and I either take it or leave it, these are deals that never hit the MLS
gilbert, AZ · Member since 2011 · 16 posts · 0 votes
15y
Its sounds like its not your fault. Whoever did the BPO on that property needs to take a good look in the mirror. Im sure between the time he put it on the market and the time it closed its unlikely the market rose that much!
Involved In Real Estate · Los Angeles, CA · Member since 2008 · 89 posts · 15 votes
15y
Oh one more thing just because they excepted another offer doesnt mean its gona close. Track the property, i typically send out an LOI during pending status. Remember its not a done deal until it closes so don't give up keep tracking it
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
This price-them-low-and-let-the-buyers-bid-them-up strategy seems to be a common strategy for REOs. Has nothing to do with bad BPOs. Its a deliberate underpricing to draw interest.
If you want to get a good deal, make offers on at least 10 different REOs. Your odds of buying one will be pretty good. Do not get attached to any particular house. REOs will break your heart.
Select a State · Member since 2011 · 18 posts · 0 votes
15y
Jon, you're right, but it's a little tough not to get attached when I'm looking for a place to live. REO's might not be the best choice for my situation.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
15y
Getting a good deal on a house by buying a REO is definitely possible. Getting a good deal on a specific house if much, much tougher. Last house I bought I made over 20 offers on REOs and short sales to get two accepted contracts. One of those never went anywhere and the house was sold at the sheriff's sale. If you want a great deal, you need to be flexible in what you're going to buy. That's easier for an investor who's only looking for a profit than a homeowner who has specific requirements. You may indeed be better off dealing with individual sellers.
Real Estate Investor · Dubliln, OH · Member since 2011 · 30 posts · 9 votes
15y
How many bids have you placed as it appears presistance is key... If you are in the Market to make 20 thousand dollars on the buy end, how many hours would you have to work at your job to make the same amount of money...
Perhaps you should plan to put forward a little more time into it and stay positive....
Not all of them are going to have a lot of bidders and now you are a little bit smarter than anyone else...
Decide on a value less repairs how much you want to make on the house and offer the same...
You can always ask the agent if they have any other bidders if there are any deadlines for the bid....
In other words stay on top of it and keep asking questions
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
15y
My husband and I recently closed on a REO condo in FL. It had been on the market since last July, had fallen out of escrow once. List price was $79K, we closed at $66K. For now it's going to be a rental, and in later years a vacation property/2nd home for us.
Investor · Middletown, NJ · Member since 2008 · 2k+ posts · 1k+ votes
15y
Yes, it was cash. We've offered financed as well as cash offers before for REOs, didn't get them.
As others have said, it can be either price or terms, or how long the property has been available, or the bank itself. Try not to get discouraged. As we've all learned, there are always other houses. Even when you're looking for a primary residence. Before we bought our own condo, there were nearly 2 years of offers on other properties (15 years ago). It was all worthwhile when we finally got this one.
Just keep thinking there's something better for you ahead if you don't get the current property.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
In the world of REO's cash is where you typically need to be. Much of the "bidding" competition comes from homes that are in livable and financable condition, if on the MLS, I don't even bother with these. From an investor standpoint, it would do me no justice. From a homeowner standpoint, you are at the advantage of a willingness to pay closer to retail but a disadvantage because you will have financing and contingencies.
Your best bet is to look at properties that have just gone from pending to active (fell out of escrow), those over 90 days DOM (days on market), or just stay away from REO's all together. Since you are an owner occupant buyer, you may be better served using a buyers agent to show you properties in areas you are looking at and make many offers.
Select a State · Member since 2011 · 18 posts · 0 votes
15y
Thanks Will. I am using a buyers agent. One of the advantages of homes listed with Homepath is that for the 1st 15 days, only owner occupents are allowed to bid. I'm guessing that the majority of owner occupents will also need to obtain a mortgage.
There is another house that I am interested in. It's listed as "back on the market". The sales price was just reduced by $5k. The asking price is $105k. It's been on Zillow (do any of you look at that?) for 242 days. The "zestimate" (what zillow thinks it's worth) is $144,500.
Developer · Santa Clarita, CA · Member since 2008 · 15k+ posts · 10k+ votes
15y
Never, ever, ever rely or use "zestimates" for valuations, they are as good as a screen door on a submarine.
Real colosed comps are the only true valuation of market value for homes.
If the price has dropped to $105k, then your agent should be making contact with the list agent right now and ask some questions.
Questions for you: Have you seen the home yet? If not, go see it first. Agnets do not appreciate receiving offers from OO's without them seeing the property. As far as what you should offer, that is difficult for me or anyone else to answer as there are so many variable involved. If $105k is affordable to you and you love the home at that price, then offer that. If you think it is worth less, offer that. If you think it is worth more, offer the $105k right now and hopefully, you are a strong buyer and can have the least mount of contingencies and the highest earnest money possible to increase the strength of your offer.