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Bank won't take back up offers on REO. Is this typical?

Every day, there seems to be something new to learn. And in this sea of short sales, trustee sale and REOS, there are so many new or different rules, practices.

There is an REO property that was on the market only two days before it was posted as pending. An agent in the same office as the listing agent submitted an offer the day it was activated on the MLS; the bank countered the next day, and poof! It was accepted on the third day.

Unfortunately, my client and I couldn't see it until the fourth day on market. I called the listing agent to see if I can submit an offer for a back up position. He said that the bank is not accepting a back up offer, and that his instructions are if the current escrow fails, that he is put the property back on the MLS for 3 days (only 3 days?).

Hence, he told me not to submit an offer, but to keep an eye on this property.

Is this a typical bank policy not to look at, much less accept possible back up offers? Seems odd and unwise.

Posted by Pacita Dimacali, REALTOR, e-PRO, SRES on 05/11/2008 04:26 AM

Comments (8)

banks, lender, back up offer, offer, accepted offer

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8 Comments on Bank won't take back up offers on REO. Is this typical?

I have seen the same scenario here in SW Florida. Must be a management issue or perhaps management overload. Also note that quick-close cash offers seem to cause mild hysteria at some banks. Paper has to be moved in a precise, unhurried manner.
JimG

05/11/2008 06:15 AM

by Cape Coral Florida Golf Course and Waterfront Homes (Sellstate Advantage Realty)

Most of the lenders I work with say the home stays active on the MLS until a contract is fully ratified which includes not only the offer but all of the addedumns as well. Hard to believe that all of that was accomplished in 2 days. Some lenders will not even allow an offer to be submitted until the property has been on the market for 72 hours so I would find this little slight of hand a bit suspcious. Since it was an agent in the office chances are they knew about the listings BEFORE it was ever in the MLS and had the offer ready to submit the minute it was active.

05/11/2008 10:18 AM

by Cindy Jones-Northern Virginia Real Estate & Military Relocation Services (RE/MAX Allegiance #1 RE/MAX Company in the World)

I just had that happen to me too. The bank only wants to work with one offer at a time and doesn't want to see our back up offer. It's very frustrating because we could easily be a better offer.

05/11/2008 11:57 AM

by LaNita Cates (REMAX of Joliet)

I think we are seeing all sorts of odd behavoir. I saw a foreclosure listing, wanted to show it to a buyer, it went under contract within 24 hours of being listed in MLS. I've never seen a bank take the FIRST offer, at least not to date in our market. It's a wild and wooly market currently, and the old rules do not seem to apply.

05/11/2008 12:10 PM

by Carol Zingone, Broker Associate, GRI, SRES (Vanguard GMAC)

The REOs I have seen in office work that way. Only one offer is dealt with at a time and no back-ups are even looked.

05/11/2008 12:58 PM

by Brenda Carus (Re/Max Towne Square Realty)

The banks I have worked with do not take back up offers either - keep an eye on it and an occasional email or call to the listing agent can be a huge help

05/11/2008 03:33 PM

by Central Oregon Real Estate | Thesa Chambers, Broker (RE/MAX Sunset Realty La Pine)

Our offer on a forclosure had been accepted by the Mortgage company. We were told the legal department at the bank had signed the papers. Then tonight on the MLS I see they are saying they want back up offers. What does this do to my contract?

06/04/2008 10:33 PM

by Lee

Lee your contract is fine. They are allowed to take back up offers in the event you don't follow through with the purchase. Make sure you read the fine print on the REO addenduem as one day past escrow could result in them cancelling the agreement and taking a back up offer. Just make sure you meet all your timelines and close on or before the scheduled COE date.

06/08/2008 05:14 PM

by Jonathan Burgess (Code 3 Realty & Mortgage Inc)

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