Were they lying?

Question

I made an offer through the short sale's listing agent. Early the next morning I received an email that the seller had not accepted my offer, and that they had another offer coming in. They wanted my highest and best.

It seems kind of suspicious to me--I wonder if there really was another offer. Is this just a technique to get the highest and best out of someone before submitting the offer to the bank?

Aaron McGinnis · Answer

Figure out what you're willing to pay. Offer that amount and don't go a penny more.

Listing agents will lie, cheat, and thieve as much as they can.

Aaron R. · Answer

Newbie alert. New to RE investing and this forum.

I have been working with an investor who has had the "Highest and best offer" request. and it has gone both ways, 
One some offers our highest and best was not the best offer the bank had and the property went to another.

I have seen the bank come back after a month or two and accept the original "lower" offer when our "highest and best" did not change from the first offer.

We have had agents come back and let us know what the declined "highest and best offers" were, and we came in 1000 higher, then got the offer accepted. So ask what the bank has for current offers, you might get some insight about the specific property.

One property we got accepted as a lower offer than others, with different terms, and a more detailed construction estimate.

Jim S · Answer

My last property I just bought was listed for $285,000 with an arv of $330,000.  It had a Dom of about 90 days. I bid $235,000.  I listing agent came back with a highest and best. I told them that was it. After a week we were told $255,000 was the lowest and they dropped the listing price. After 2 more weeks I resubmitted $235,000. They ask for highest and best again. I stayed firm on my offer. I knew I needed about a $100,000 split to profit $40,000 on this property. The listing agent told my agent that the bank would never go below $245,000 and they would rather let it sit. We stayed firm. 
We received a call about 2 weeks later asking us to resubmit our original offer.

The moral to this story is know what numbers are right for you in the deal and don't get caught up in the fever. The banks listing agents will do whatever they can to protect they client and to make their BPO look accurate.  You need to fall in love with the deal not the house as your majority of profit is made on the purchase.

Michael Power · Answer

Bienes / Don't take the situation as personal...it's just business.  Throw another $3k on the table and you get the right for the bank to do the same thing to you again.

Put your best offer out there and move on to the next deal.

Good luck.

J Scott · Answer

The listing agent has a responsibilty to try to get the most money for his/her client.  This is one way of doing that, regardless of whether there are other offers or not.  This is very common with REOs btw...

Amanda Hensley · Answer

This happened to me both times I put offers in on short sales, and so I tend to think YES they are, or they were holding one offer back to see.  I quit offering on short sales b/c of this, just got too frustrated.

Jim S · Answer

Highest and best is getting to be common place in my market. One property was listed for $186,000 and we submitted $206,000. After 2 weeks the bank called for highest and best due to multiple offers. After several days my agent was notified that more new offers had been submitted so the had a second round of highest and best would start. I stayed firm on my offer and lost the property.
Last week I put in a contract on a total POS that had 45+ DOM. A total train wreck that was definitely investor and cash only. Magically the same day that I placed my offer there was a 2nd offer. They called for highest and best. The listing agent told my agent that the other offer looked better (I was cash and zero contingencies) and that they were making a decision in 24 hours. We held firm and got the deal.

J Scott · Answer

You are always welcome to put in an offer below the approved short-sale price, though this will result in having to go back to the bank and renegotiate -- this can take days/weeks/months, depending on the situation and the bank.

What I'd recommend is not going back just a little bit below the approved price, as then you'll spend a lot of time and risk having the seller get a better offer; but instead either going in with the approved price (and take the quick close), or submitting an offer a good bit below the approved price (and wait it out).

That's just how I like to do it...

Andy Hayes · Answer

Is the pre-approved price negotiable?  Or if the numbers work, is it best to simply offer that price?

Thanks in advance.

Bienes Raices · Answer

Peter, I have started doing that on REOs but since this is a short sale I assumed that the bank makes it's decision solely based on the seller's mortgage balance and what the house can actually get on the market.

Were they lying?

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