I bid on a rehab for 5,000 that was listed for 11,999 on a fc site. It had been on books for 262 days. The re agent call me and says the bank has got a couple more offers and that they might have to reauction it which I find hard to believe because no one bid on it the first time. Then he calls back and says bank wants me and the other bidders to give the bank our highest offer then they will decide. Do you think the re agents is just saying this so I will bid closer to 11,999 or does this sound like something the bank would say. This is my first reo so I am clueless. comps in area are around 60,000, none sold recently, we live in the country. After 10,000 in repairs it will be worth 40,000, so would 10,000 still be a good deal to you investors if I was going to rent for 475.00 month?
They should not be telling you “highest and best” unless they really have more than one offer. You just need to make your offer based on your exit strategy and your numbers. Don’t get talked into paying more than you analysis shows.
Agents say “please submit your best and highest offer” all the time. They may have other offers or they may not. It is a convenient tactic to keep the potential buyers guessing. I always reply, “well, you already have it.” Sometimes, if I don’t really care if I get the deal or not, and/or if I think the agent is playing me, I lower my offer a tad :biggrin
Call the agent back and tell him you might have found another house.
Thank him for the call and leave with…
It’s too bad that bank is playing games, I was all ready to do a cash deal on that house with a 10 day closing, but this one is just as nice and it’s with a private owner. The only problem is she can’t close for 30 days.
Now he will show his hand. If he takes the bait his response to potentially losing a commission will be…Hey, fax me over that offer and I’ll get it to the bank today. If he doesn’t then you know the bank has other buyers.
Once they realize you’re willing to come up in price they’ll expect you to every time. Stick with your numbers or they’ll play you on every deal.
I am a RE agent and primarily sell REO homes to investors. I don’t ever let my buyer know there are multiple offers unless I have been told that from the listing agent. I would have your agent find out how many other offers are out there. You have the right to know that. They won’t tell you the other offers but they can tell you the number of other offers. Keep in mind that the listing agent stands to lose your bid if he is bluffing to get you to bid higher. There is not anymore commission in this case from $5K to $11,900 so there is nothing to gain here. What you want to find out from your agent is if the home just took a price change? What did the house price start at and how many and what were the prices reductions made over the course of the 262 days. I can tell you that if a significant price reduction is made on a long time listed property, that does cause some multiple interest. Hope this helps. God Bless! Sheila
I also agree with the other comments about sticking to your price. Every investor has a different price amount on their rehab costs. One may do the work himself and another may hire out the work to be done. If $5K is all you can pay for the house, then stick to your price. There are other deals out there. You may lose the deal but there are some cases where the deal that did win falls through and you are the next in line and at your price. God Bless! Sheila
YES! RE agents are trained to bluff so they can get higher bids and bigger commissions so of course they’re playing you to see if you can really play ball or get benched. These other posts have so really good advise. I’d stick to my guns…if you worked your numbers right then you know that the property will or will not work for you at a certain price. (Take it from a former agent.)
Do banks still do construction loans. If I close on this house for 5,000 shouldn’t I get a loan and not spend my money on this house? I want to buy more but do banks not like mutiple loans to customers for properties? Thanks for great tips .
First off, I would call his bluff. Stick to your offer. I agree that there are plenty of properties to choose from and a lot more coming, so don’t worry if you lose this one.
Give it a week or two and check again. Ask if the property is under contract. If not then chances are he was lying from the beginning. I do believe all Realtors, regardless of what state they are in, are required by law to submit ALL offers to the banks. They are not allowed to pick and choose. I have in the past contacted the bank directly to ask if my offer was submitted by the Realtor when I believed that it was not. At least one of those calls ended in the Realtor losing their license.
As for the construction loan…
For a $5k purchase I would advise paying cash. Other than hard money I don’t know of any lender that will lend $5k for a real estate purchase. I’ve never seen an offer that low accepted when it’s “pending loan approval” either.
Unless instructed in writing to only submit offers that meet certain criteria, real estate licensees have a fiduciary responsibility to submit all written offers. Most agents will also relay verbal offers, though they are under no requirement to do so.