Foreclosure bid rejected without counter

11 Replies

My agent advices me that the bank rejected my $40 cash bid on a 1bed co-op , listed @56k. The bank did not counter because they felt the bid was to low. The property has been listed for 50+ days with one price drop. I decided to want any see if price drops before revisiting. Do I have a chance bidding in the future or have I upset the selling agent & bank? Any advice??

I reviewed comps between 2017-19 and 1 beds have sold between 35k - 57k.. 57k was most recent sale. Currently 2 beds are listed for 60k- 70k (over 150 days). It doesn't look like these units are moving fast, but rental market is hot in this area. Based on HOA cost I will have good cash flow and I have wording in the sales agreement that property must be approved by board for rental.

Of course, you can bid again.  If your bid was seen as too low, it won't be countered.  It's important to know what the process looks like from the lenders' perspective:  "The major lenders say they are not deliberately holding back any foreclosed homes. They say that a long sales process can stigmatize a property and ratchet up maintenance and other costs. But they also do not want to unload properties in a fire sale. That contributes to a downward spiral in market values. The goal is to not only recoup the loss but also to help stabilize communities."

Being on market for "50+ Days" is not a big issue; recent comps (180 days or less) are the ones used to value property so that $57k sale is most likely setting the mark. With the price point so low, the priority is most likely being given to first time home buyers as well.  

Your best chance of winning a bid on foreclosures is to base your bid on current comparable sales (180 days or less) within a 1 mile radius.  That is the appraisal model for determine property value in residential real estate.

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If 40K is what your numbers are telling you stick with it. In my area I have seen foreclosures drop in price 10K a month and then it does a massive drop in price after a couple of months like $100K. The medium price in my are is about $500K on a 3bed house. Just witnessed a REO start its bid at $275K and there were no takers.

@Leslie Laboriel I would surly bid again at the price point that make sense as an investment...banks don't have feeling...wait a week or two and make the offer again...whatever you think is working for your situation.

Where I am REO prices vary wildly...some sell for 40% of original debt others at asking...hard to figure without actually bidding.

Most important thing with Co-ops though is to make sure you are allowed to sublet/rent from day 1. I know some co-ops in NYC which allow it but couldn't find any when I was looking in Westchester (White Plains, Yonkers and Port Chester)...many co-ops are difficult when it come to subletting.

Good Luck

@David London subletting is a most for me to agree to this deal. I requested the language in the contract. I was told by my agent I can sublet this unit, but this is not the case for all units in the development. I have read to keep questions at a minimum during the board interview, but this question is one I need the board to confirm in writing.

@Leslie Laboriel As others have said, continue to re-bid. It's futile to try to guess the bank's particular motivations and it really doesn't matter. Stick with your number. The bank will eventually face reality but sometimes it takes them a while!

I highly recommend that you get your answer about subletting ahead of time. The bank may reject your offer with that contingency spelled out. Better to use the physical inspection contingency (if you use it) as a "catch all" for any conditions you have. It makes the purchase agreement simpler and less likely to be rejected.

@Leslie Laboriel, I am going to go against the grain. Why are you investing in a coop? Do they know you are not owner-occupying the unit? A lot of coops I know of have strict rental/subleasing rules and requirements and this is usually after you've lived in the unit for a period of time. In my experience, coops are the least practical "real estate" to use for cash flow. 1- Find out what the rental policy is. 2- Find out the ratio of renters to owners are. 3- How will the board treat in-coming prospective renters and how will their approvals work? 4- is their a sublease fee on top of normal maintenance fees? 

Food for thoughts. 

@Jared W Smith I'm purchasing the co-op for my elderly aunt. She is having a major problem finding affordable senior housing in Rockland County. I have to purchase it because she never believed in credit and purchased everything cash ( old-school). No credit history makes it difficult to buy. A coop is a much better deal then the 5k-15k monthly assisted living programs that exist in our country for seniors. I will check out the rental ratio. I agree this is a good question. I hope this additional info helps you understand my thought pattern better.

@Leslie Laboriel If your offer is contingent upon you being able to sublet.....your offer will be ignored Every Time.  The bank has no control/knowledge of this, and doesn’t care.  You can investigate this now, or during your inspection period.