What happens next if the seller of a property does not respond to your offer before the deadline stated on your paperwork? That depends on you, actually. In part 1 of Time's UP, I outlined realities and suggestions for buyers.
And now for the realities of REO!
The REO seller does not even know when your offer expires. Maybe it's a little-known fact, but they don't actually see the offer. The seller sees a computer summary of only what they consider the significant facts-usually that includes offering price, date of closing, financial specifics (including type of financing, LTV, and lender information), requested inspection timeframe, buyer type (owner occupant, investor), and what concessions the buyer is requesting (such as closing costs). The date your offer expires often is NOT EVEN on the form. They don't ask and they don't know when your offer expires. If you are still there when they do respond, then you get to play ball.
If the property in question is a bank-owned property, the facts mentioned in part 1 of this blog still apply, but the actual process is very different. That is true even if your offer is the only one on the table, and it is especially true when multiple offers exist.
The person who makes the selling decision is not down the street from your agent. That person also is very likely handling around 600 different files. That means your offer has to wait its turn. While you may be ready to toss offers back and forth every few hours or even every day, that may not be the case with an over-loaded Asset Manager.
Sometimes, the property is being handled by an Asset Manager who works for an out-source company (an Asset Management Provider or AMP). When that is the case, the outsourcer gathers offers and then forwards them on to the actual owner. The property usually will have an Asset Manager at the outsource company and another Asset Manager at the owner company. Offers have to pass through both of those levels, just as a starting point.
Responding to offers may involve more than one level of decision-maker, even when the listing is an REO direct listing (handled by the REO company instead of by an AMP). One or more of the following may have to be consulted before an Asset Manager can sign off on the contract: PMI company (private mortgage insurance), the investor, and the bank who now holds the mortgage. There may even be a committee that needs to act on offers or “senior management” approval may be required. Do you really believe that will take place in 24, 48, or even 72 hours?
Consider this a sort of insider tip: The closer your offer is to asking price and the cleaner it is, the more likely it is to be accepted quickly. That is because the Asset Manager may be able to accept the offer without consulting others. A "clean" offer is one that asks for limited concessions, if any. The cleanest offer, of course, is a cash offer closing quickly! The farther apart you and the seller are, the more likely that the Asset Manager cannot accept your offer right away and the more likely that others will be involved in the decision. The best chance of avoiding a multiple offer situation in which the seller calls for Highest and Best offers (that's a topic for a different blog) is to put your best offer on the table right away.
Some REO companies will not respond to any offers when the property is first put on market. The listing usually states that fact and how many days the property has to be on market before the offers will be reviewed. Owner occupants may have a protected period during which only their offers are accepted.
One thing you can count on is that the REO seller will respond in their own timeframe. Then the ball is in your court. If your offer has expired and you have moved on, then you are not tossing that ball back. If your offer has expired but you still want to play, toss it back and the game resumes. Happy scoring!
Disclaimer: I am not a lawyer, and I don't even play one on the internet!
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