Typical of a bank.  Thank you for your story.  Just made me feel a lot better about my choice to refuse to show REO's or Short Sales.  I fam them out and take referrals.

Jim, That is amazing that they didn't take yours. Maybe the other buyers were offering more, but the odds are they weren't as strong as your buyers. Seems like your deal would have been a slam dunk to me as well. Who knows what lenders are thinking these days.

An agent here in our office put in a fule price, cash offer.  The bank said it has to go through regular channels, and that it would take approx 2 - 4 months !  That sound you hear is the buyer going on down the road !

Gary, strange how some banks make the decision.

Elizabeth, other than an all cash offer, I also thought it was a best offer possible.

Bill, that is ridiculous that banks do that.

Generally all cash, no contingencies overrides a higher offer that includes financing, even if the all cash offer is lower when there are multiple offers. 

Banks look at the quickest close date.  They carry these properties, the faster they unload them the better.  So Two offers are in.  One has financing, and inspections, which means an appraisel, then the inspections, buyer will likely ask for something to be repaired......  The second is lower, all cash, as is, no problems.  The banks will take a lower offer for a faster close. 

Does that make any sense?  Likely not, but thats the way it is with REO's.  Its a different world.  Hop it helps anyways. 

Chad, thanks for pitching in. As far as I know, none of the multiple offers were all cash. In that case, I can see why the bank would select it over a conventional financing deal. It just surprises me how banks operate sometimes.

I have yet to hear any good tales on short sales  and working with banks.

Carol, this property is a bank owned home. It is better than shortsales but still the same type of thinking.

I have a client that offered almost 10k over asking only 3% down, but still had his offer rejected. He did put an offer on another REO same terms, but got it accepted for 5k under list. It was a much biggeer home and in a better area, so it all turned out good in the end.

It's closing at the end of the month, I'll let you know how it goes. So far I can say that the listing agent is not the best at communicating.

Jim.

I agree with Chad ... if your buyer is a slam dunk, then the offer should have been all cash (even though he is getting a loan) as-is, where-is close in 2 weeks. Price will not be much of an issue at that point.

You will need to show on your offer that you will close in 2 weeks or shorter to gain some advantage with your buyer.

Gosh! Its hard to say without knowing what all the offers had and putting them side by side.  Usually as some have said, they look for the best and then the highest offer.  Instead of the highest and then the best.  They want to close quickly.  Usually 30 days is a good time frame unless it is cash and they will go with 20+ days.  If you had any kind of inspection, they don't like that.  If you had them paying all the escrow and the other offer went 50/50% that would count.  If the other buyer had more money in the bank might look at the stability but I doubt it.  It is just hard to say without seeing both offers.

Maybe you were both pretty close and they took the first one that responded to the counter.  And by the way... I would never rely on what the agent tells you about the other offers.  Agents are taking more of a zip lip on that because of the real estate laws.

Strange starnge. I can't offer any advice but say what were they thinking. My assumption they were not.

I can share with you what works for me, especially since most REOs are underpriced. Pull up the listing agent in MLS and do a search of all that agent's sold listings. Look at list-price to sold-price ratios. Of those, look at the lender on each by pulling up the APN #. You can pretty much figure out how much over you need to go that way. Of course, you can also pull the solds for that area on a map search and compare the ratios, too.

Next, pull the tax rolls to see how much the trustee's deed was for.  Compare that to the original loan balance. Compare those two numbers to the comparable sales.

For example, if a listing agent sells most of his Wells Fargo REOs at 5% over list, then you will probably have to write an offer at 7% over. However, if your buyer is not strong, then you may need to bump up that offer another 3% to compensate. Banks lean toward all cash offers, even if they are a bit less than the highest bid, unless the highest bid is high enough to make up for the potential fallout.

Also, get your buyer preapproved by the bank that owns the property. Run it through the bank's underwriting guidelines and include all those pages with your offer.

Offer 10 days on inspections and don't ask the bank to pay for anything. Offer to split the city transfer tax and escrow fee with the bank.

Dot all your I's, cross all your T's and email the offer to the agent, don't FAX it, including on the cover sheet your cell, fax and email address.

Andrew, wow that is amazing. I'm glad you are able to get another house at better pricing. Look forward to hearing from you of the closing.

Richard, I agree all cash is a very strong offer. As far as getting a loan, it might be challenging to get it closed in 2 weeks. Would need to check with a lender to see if that is doable. Have you been able to do it?

Mike, same question I had posed for Richard. Have you had any problem closing in 2 weeks? I would need to check with the lender for that possibility.

Rosemary, we went 50/50 on escrow fees. The inspection was placed on the offer since I feel it is necessary for the buyer to see what the repairs would be. Also, they had given a deadline to all counters to be in their office by a certain time and all the counters came in within the time frame.  

Robert, the same thought process went through my head when I heard that it was rejected.

Elizabeth, thanks for the indepth advice. By the way, the necessary documents were given to the banks lender to do the approval so that was not the issue. Escrow fees were split 50/50. However, I asked the bank to pay for the city transfer tax. I was curious why this would be a big issue with them. My inspection, appraisal time line was for 17 days. Maybe that was the killer to the deal. Also, I had requested loan contingency to be removed once it's funded. This could have been another deal killer. I'm trying to protect my buyer at the same time while trying to get their offer accepted. It seemed like a 2 bladed sword here. Poof! 

When lots of offers are out there only one can win so the odds are not great.  There are some good ideas in these posts.  Thanks.

Hi Jim:

Some banks refuse to pay transfer tax. It's buried in their addendums. I've also seen some REOs listed that will accept only cash offers. No financing whatsoever. And that's their prerogative.

Robert, thanks for stopping by.

Elizabeth, thanks for the follow up to the question. Only accepting all cash offers? Wow, that is new. I wonder if banks think people grow money in their backyard.

Bank do know that people grow money in their back yard, which is probably why they want all cash offers they can substantiate. But many of those properties are priced under $200,000. Ah, the good old days. I can remember when you could buy a perfectly sweet rental in Santa Ana for $50,000.

AS far as I've ever experienced, banks are a pain in the ying-yang to deal with! It's no wonder they've got such a huge stock of repos-- they made stupid loans, and deal (or fail to deal) properly with good, strong, solid offers on the repossessed properties when thay get them!

Elizabeth, hahaha. Banks know about money in the backyard. That is a good one. :) Wow, homes for $50,000! Those must have been the good old days. It would be nice to have a crystal ball.

Laura, yeah sometimes it is difficult to figure them out. I even sometimes question their common sense, especially on shortsales. They always think they can get more and ended up losing good buyers who could not wait that long for their decision.