Making Mutiple Offers On REO Properties. Risky or Practical?

Real Estate Broker/Owner with Tutas Towne Realty, Inc and Garden Views Realty, LLC BK607690

Florida Foreclosures

Well my answer is easy.....practical. And here's why based on a real life example from this week.

REOs (foreclosures) in my area of Poinciana Florida make up 25% of the inventory of homes for sale but 60% of the closed transactions (last 90 days)!! What that means is that REOs are by far the best deals and are flying off the shelves. They also sell for 100% of the asking price.

The foreclosure market in Poinciana Florida is very, very competitive. Most of these foreclosures are being bought by Investors looking for good rental properties. On average they are able to buy a 3 bedroom 2 bath home with 1800 sq ft of living space and less than 10 years old.

These houses rent for $800 to $900 per month. And can be bought for an average of $64,000. If you do the math you'll see these are excellent investments.

Because these Poinciana properties are such great investments they are very hard to get under contract. It's a feeding frenzy of cash buyers looking for a deal. Taking the time to look at every property and then submitting offers on one house at a time is basically just a recipe for failure.

So......we have our Investors make offers on multiple properties at the same time. Usually sight unseen. The risk is in the timing. You have to make sure your buyer doesn't end up with more properties under contract than they want to purchase. Of course if they do they can always use the inspection contingency to get out of the deal. The  real risk is that you as an agent can ruin your reputation amongst your peers. You don't want to get a reputation as the agent who cancels deals.

To avoid this you have to be able to really monitor the negotiations and time perfectly when the buyer is going to withdraw their offer(s). It can be tricky but once you get the hang of it it's just a system like anything else in our business. These REO properties normally have multiple offers anyway so the seller is not left high and dry. They just negotiate one of their other offers.

This past week I used this technique with one of my investors. We made offers on 17 properties. The Investor wanted to buy 2. My timing was slightly off and they ended up with 3 accepted offers. After discussing this with my Investor their solution was to just go ahead and purchase all 3 of them!! I forgot to mention that benefit. Sometimes you end up with more. I like that.

So what do you think? Risky? Practical?

If you liked this article then you'll want to read these:

Buyers Making Multiple Offers. What the........................?

My Buyer only wants one house. Why make 14 offers?


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***I am NOT an Attorney nor do I play one on TV. Click the button below for my Bio.

The BIO for Bryant Tutas


 Tutas Towne Realty, Inc handles Florida real estate sales, Florida short sales, Florida strategic short sales, Florida pre-foreclosure sales, Florida foreclosures in Kissimmee Florida Short Sales, Davenport Florida Short Sales, Haines City Florida Short Sales, Poinciana Florida Short Sales, Solivita Florida Short Sales,  Orlando Florida Short Sales, Celebration Florida Short Sales, Windermere Florida Short Sales. Serving all of Polk, Osceola and Orange Counties Florida. Florida Short Sale Broker. Short Sale Florida.

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Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

reserved for TLW. Even though she never comes by anymore!!

Dec 11, 2010 01:17 AM #1
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

It is practical.  You just need to do your homework before randomly putting in offers.  Do your research, run your numbers as best you can.  Worst case your investor can try and wholesale that 3rd house and make the spread instead. 

Dec 11, 2010 01:25 AM #2
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

If you're on top of your market, this could be very beneficial particularly when the banks so slow. 

Dec 11, 2010 01:37 AM #3
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate

I suggested this because I would like to see a real discussion on it. I have no idea. So am interested in the wisdom of our AR bloggers and investors.

Also sometimes the investors not on AR chime in and I want to know their comments.


Dec 11, 2010 01:56 AM #4
Renée Donohue~Home Photography
Savvy Home Pix - Allegan, MI
Western Michigan Real Estate Photographer

Practical.  I make it so the offer needs to be ratified on a seperate addendum (such as the bank addendums.) It's not like you are sitting in 17 escrows until they close.  If the contract is ratified then I think it is risky.

At any rate, while you are on this roll, you should enter your photo in the "Kodak Moment" contest.  I was thinking about picking out a good non-trashed out REO for that :)

Dec 11, 2010 02:09 AM #5
Jason Sardi
Auto & Home & Life Insurance throughout North Carolina - Charlotte, NC
Your Agent for Life

Sounds practical to me.  Then again, like Missy, I have no idea and would be interested in a discussion on this as well.

Of course I'd be hanging in the bleachers but always watching closely:)

Dec 11, 2010 02:14 AM #6
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

BB - Seems practical to me with some potential risk. Will depend on the buyer, and of course a knowledgeable, experienced agant like you.

Curous about homw many of these properties are being bought by investors. The rental market must be strong enough to support it.


Dec 11, 2010 04:09 AM #7
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

I list REO properties. If the agent who submits an offer doesn't show up on my lockbox showing report, then no dice. If the selling agent hasn't accessed the property, the bank will not entertain their offer. This won't work in every area, but it does in mine because we are required to use Supra iBoxes.

Dec 11, 2010 04:43 AM #8
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

That's interesting Cynthia. My buyer made full price cash offers with 10% escrow deposit and willing to clsoe in 2 weeks. Does the fact they didn;t see the property make their offer any less desirable? Does seeing the property some how increase the value?

My buyer is serious and is not playing games. I wish I could say the same for the sellers. Page after page of meaningless paperwork just to be able to submit an offer. Asking for highest and best in writing before we even submit an offer. 14 days to respond just to tell us they have multiple offers. Then when they "verbally" accept it it takes another week to get bank addenda during which time they may very well accept another offer.

Sorry but the banks don't control my business. We do it our way. If they choose to ignore or reject our offer then so be it. We have another dozen or so out there.



We just do the same.


Dec 11, 2010 06:04 AM #9
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Jeff. I don't know the stats on that. I do know a wholoe bunch of them our being bought by investors from around the world.

Dec 11, 2010 06:07 AM #10
Jennifer Monroe
Savvy + Company Real Estate - Charlotte, NC
Real Estate REALTOR®/Broker in Beautiful Charlotte


Dec 11, 2010 07:53 AM #11
Laurie Mindnich
Centennial, CO

BB, your area sounds different. I haven't seen an accepted offer, awaiting the period of the as is addendum being signed, jeopardized by other offers submitted (regardless of the verbiage)- at least in my experience, whoever gets the as-is, gets the house, provided it's returned on time. If there were a broker, even a really good looking one like you, submitting offers and then rescinding on a more than once in a VERY great while basis, the asset manager would be informed of this behavior, and it would be up to them whether to gamble on your offer, or simply move along to another. Therein lies the problem with this method as an MO- while you seem fine with moving on, if your buyer isn't, you'd almost have to disclose to buyers that your position is compromised (?) due to past history of canceled offers. Just another perspective.

Dec 11, 2010 09:57 PM #12
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

It makes perfect sense to me. Are most of the investors local or are you finding folks coming now from other countries?

Dec 11, 2010 10:49 PM #13
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Bill. Most of the ones I work with are from out of the Country. UK and Canada.

Dec 11, 2010 11:42 PM #14
Bryant Tutas
Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL
Selling Florida one home at a time

Laurie. I'm sure REOs are whole different ball game in my nexk of the woods. I don't do it ofter enough to matter. Usually the offers are weeded out when they ask fro highest and best. It's all about timing.

Dec 11, 2010 11:44 PM #15
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Bryant, I wish I had some good investor clients like that.  I have quite a few that are just fishing and no matter how good the deal, they just don't get it.

Dec 12, 2010 12:02 AM #16
Wendy Cutrufelli
Alain Pinel Realtors - Walnut Creek, CA
Contra Costa Realtor

I'm curious, what happens in a situation where your buyer can only afford two homes and ends up with accepted contracts on three?

Dec 12, 2010 10:44 AM #17
Coldwell Banker Camelot Realty
Coldwell Banker Camelot Realty - Mount Dora, FL
Homes for Sale Mount Dora Realtor


That sounds like a lot of paperwork :)

Good Work!

Keep getting those REOs off the market...

Dec 13, 2010 01:01 AM #18
Gary De Pury, ESQ.
Bay Vista Realty - Land O Lakes, FL

I was going through old blogs this morning and saw my blog I'm no Bryant Tutas....  Wow, I used to write allot and reading that brought back a few corp principles.  Bryant thanks for the years of teaching across the net.  This Blog is another example of your constant improvement of the community. Keep it up!


Gary De Pury, SFR

Dec 13, 2010 02:46 AM #19
Goran Utvic
606 Homes LLC | Chicagoland Brokers Inc, Chicago IL 60656 - Chicago, IL
We Buy & Sell Chicago Houses Fast

Soud like incredible deals! Heck whenever your client does get 3 instead of the targeted 2...I would take the 3rd!

Apr 29, 2011 08:27 AM #20
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