Originally Posted At www.bigbearilluminated.com
Lately I have been writing up ton's of bank owned properties. Good news, right? Well, it is and it isn't. I am grateful to be busy and have clients who want to buy property. The problem is, there always seem to be other agents with other clients who like the same properties we do. The last five times that I have written up an REO, there have been multiple offers. As you know, banks don't typically make counter offers in a multiple offer situation. They send out a little addendum which basically says " Make your best and final offer ".
I always make sure my clients are aware that this scenario may come up when they are making an offer. Of course they have been so inundated with misinformation about how banks are giving property away for nothing that they don't really dwell on it too much. They always say the same thing " But we made a great offer". Well, that all depends. You may have offered asking price or very close, but how much of a hit is the bank taking? Is the property priced $100k below the last sales price? Did they price it extra low on purpose to garner extra attention and create a multiple offer situation? Every bank owned home is a new scenario and presents it's own set of issues. I explain all this, again, to my clients and then the big question comes up. " How much are you willing to spend to buy this house"?
Sometimes I have a client who was just fishing for a great deal and they will bow out immediately. Other times, they have grown used to the idea of owning the home and they are willing to play ball. I have had some clients who just wanted to stay put and see what happens. I have never had that work out in our favor. I have had some clients go considerably over the original price. This has always worked. Then I have clients who go up a little. This has worked and not worked. The one thing you can control is the strength of your offer. Make it air tight in every facet you can. Get a good deposit, don't ask for a home warranty or a termite report. Let the bank choose the escrow and title company. In short, don't put anything in there that doesn't absolutely need to be there. These homes are sold " As-Is" anyways and it could make the difference in getting the home.
Of course, all this could be for naught. The last time this happened, the listing agent accidentally faxed his own personal offer to our office. I looked it over and saw it was $1,500 over my offer. He had all the other agents put up their best and final offer and then made sure his own personal client made a bid just a tiny bit higher. He didn't realize that he had sent the offer to our office, so I had a little fun with him when he called me to tell me that my clients didn't get it. He tried to act like it was just some other agents offer that got accepted. I kept asking him leading questions and laughed inside as I listened to him squirm. I'm a Scorpio, I can't help it.
In conclusion, be prepared for the worst. Discuss the possibility with your clients and have a best and final number in mind. At the least, you will not be shocked when it happens. I have been in a situation with eight competing offers and come out on top. There were higher offers than mine, but mine was rock solid on all the terms and financing.