Multiple Offers on Bank Owned Homes JACK up the Prices

By
Real Estate Agent with Realty Team / JMA Properties LLC

Has anyone else noticed this?

You find a "great deal" for your buyers...

You write an offer and submit it.  You wait a day or so and find out there are 8 more offers just like yours in?  Then it ends up selling over asking price.  One we put an offer in, list price $119,000, sold price $135,000, with 12 offers, 6 of them ALL CASH. 

This has been happening in Los Angeles County, California for over a year.  Where a home may be listed for $400,000 (your standard 1,200 square foot 3 bedroom 1.5 bathroom home) and it ends up selling a month later for $454,000.  Not because the house is so wonderful, but because people get caught up in the bidding war and want to have what everyone wants to have (even if there are 6 more sitting on the street priced around $435,000).

The trend in the Pacific Northwest (Oregon and Washington) is we get the trickle effect from California... i.e. the market here feels the effect of what's happening in California about a year after it happens there.  

Sure, it's good for the banks, but Realtors need to educate their buyers that this is the tactic that the banks are going with.  It is similar to a bargain priced short sale listing, when sellers price their home low enough to get attention i.e. offers so they can avoid foreclosure.  This doesn't mean that they will sell it for the low price, or that price will even be legal, which in Washington states that the purchase price must be at least 80% of the home's appraised value, or it's ILLEGAL.

Recently I put an offer in for a $425,000 house for slightly above list price, but even then, the bank rejected the offer, because it didn't go with their plan, and the house sits on the market today, with a changed value range price of $425,000 to $465,000.  It is a little frustrating, because my buyers would have been extremely happy with the home and the bank would have gotten the home off their books.

Banks seem to be pricing their properties aggressively, but it may backfire on them because they are undercutting themselves, and chasing the market down to new lows. 

Comments (10)

Laura Gray
RE/MAX Realty Group - Gaithersburg, MD

Marjie - We see the same tactics here in the Metropolitan DC area (Includes Virginia, Maryland and Washington DC). The real kicker is nine times out of ten the buyer must be pre-approved by the banks loan officer , who sends out one of their own appraisers who doesn't appraise the house for the the escalated price. The whole deal falls apart , the bank just blew it again.

May 26, 2009 01:54 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Home buyers have a hard time competing with investor buyers for bank owned properties.  Investors are sweeping up the lower priced bank listings.  They offer cash, quick settlement, no inspections.

Private home buyers can't compete.

 

May 26, 2009 02:01 AM
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos

Hi Marjie,  Many agents list a property well below market just to get the bidding going !

May 26, 2009 02:05 AM
Kat DeLong
Realty ONE Group Mountain Desert - Prescott, AZ
REALTOR

I am seeing it EVERYDAY. And some, as Bill said, have been listed TOO low to bring on a bidding war. I don't like it one bit.

May 26, 2009 02:09 AM
Roy Kelley
Retired - Gaithersburg, MD

We are seeing the same thing. The good aspect of this is that the lender owned foreclosures are selling quickly. Lenders have learned that large price reductions will bring in the buyers in a strong market like we have in the Maryland suburbs of Washington DC. Agents need to be on their toes to quickly identify the bargains and immediately submit contracts. Need to have buyers pre-approved in advance to move as quickly as needed.

Follow me on Twitter:  http://twitter.com/roykelley  

May 26, 2009 02:24 AM
Billie Hillier
http://702IsHome.com - North Las Vegas, NV
Savvy Home Realty Solutions

Same thing is happening here in Vegas. Some will do a crazy offer knowing it won't appraise for that amount but the bank will accept the offer because it's the highest and then they renegotiate with the bank for a lower price.

May 26, 2009 02:31 AM
Sarah Eubanks
Hill Valley Financial Services - Oregon City, OR
Preferred Oregon Loan Consultant & Notary Public

Marjie,

I have yet to see this happening in our market here in Oregon.  It is a good heads up though, for making sure that my borrowers are capable of a higher amount just for their knowledge.  Thank you...

May 26, 2009 02:34 AM
Joni Gordon
Leisure American Realty/Jakus Realty Team - Fort Myers, FL

Unfortunately that's the norm here in SW Florida.  We offer well over list price and are still losing to "highest and best".  It's very discouraging and prices are, of course, on the rise because of it.  They still say it's a buyer's market here, but I believe it's soon becoming a seller's market.

May 26, 2009 02:57 AM
Jim Valentine
RE/MAX Realty Affiliates - Gardnerville, NV

Haven't seen it yet in Northern Nevada.  They are usually pricing very accurately and willing to negotiate some. 

May 26, 2009 10:57 AM
Anonymous
Vinnie

same thing in my home town fresno, ca I make lots of offers every week conventional and cash offers and still getting rejected everytime, I usually offer way more than the asking price on a conventional but full price offer on cash but still get rejected.  Real Estate Agents should be loving this!  I'll wait until winter when the rest of the feeding frenzy stops then I'll be swooping everything I can grab for wholesale just like last winter, take notes newbys.

Sep 09, 2009 06:31 AM
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