Although, watch out.  Not all the time are there multiple offers on a property and the agent may come back asking for the highest and best offer when there are no other offers on the table to get you to offer more.  However, there are banks that will not counter on short sales or REOs and you must think about making your highest and best up front.

Banks are really trying to get these homes off their books as the bank may have hundreds more to sell.  Before making a higher offer, ask your agent to pull the tax records to find out what the original mortgage amount was and check to see how much the lender paid for the property.  It will help you paint a bigger picture on what number the bank is looking at and how desperate they will want to get this property off the books.  Your best best, is to offer a comfortable amount (without lowballing) and move up the closing date or more earnest funds.  The bank wants a quick close, so this will help entice them to accept your offer.

The varying situations of ownership are being seen quite often in real estate listings:

• Privately Owned – It was typically unusual for the mortgage company to have any say in the selling process since the sellers would have sufficient proceeds from the sale to pay off the mortgage and closing costs at the close of escrow, without asking the bank to accept less on the amount owed on the mortgage loan(s).
• Bank Owned Homes – These properties have gone through foreclosure auction and were purchased by the bank.  The bank is now the owner of the title and is selling the home.
• Short Sales – The homes are sold by the individual (they still have title) but they will need bank’s final approval on the sales price agreed since the bank or lender will be receiving less money than the full amount owed on the mortgage loan.

The best way to tell if the home is not a typical sale, is to review the description under Marketing Remarks.  Some times the listing agent will hint to the type of sale of the home.  Or, you could try using online lookup services like ziprealty.com which will note on the home if it is a foreclosure.  For short sales, take a look at the listing price and check out the price the owner paid for the house.  That will usually give you a hint on the type of sale it will be.

Via the MLS real estate agents will have access to additional information and can check tax records, ask a title company to do research or call the listing agent to obtain the information.

In some areas it is becoming increasingly common for REO properties to receive 2 to 5 offers.  If you are wondering how to stand up above the rest to win the home, here are 10 tips on packaging the right offer for the bank.

1.  Know What The Bank Paid

Do your research to find out how much the bank purchased the home for.  Some times you can ask your realtor OR you can look up the home on Zillow.com.

2. Know the Comparables Sales

Know the recent sales in the area and compare those to the REO listing.  The bank already has this information via a Broker Price Opinion (BPO) to determine a listing price.

3. Analyze the Listing Agent’s REO Pricing Record

Have your agent pull the history of the listing agent’s listing to see what their track record is of listing homes and check out the list price to sales price ratio.  If most of the listings are selling about 5% under list price, it will give you some guidance on what you need to offer.

4. Ask About the Number of Other Offers

If there are no other offers, you can probably offer less than the list price and get the house.  But if there are multiple offers, you will need to offer above the asking price in most cases.  If there are as many as 10 offers, you may need to consider that some of these offers may be all cash offers which the banks prefer.  If you are obtaining financing, you will need to increase the price to be considered.

5. Prepare an Offer Summary as a Cover Sheet

The cover sheet will simplify to the Asset Manager the overall price, terms, concessions, closing dates, etc.

6. Choose a Closing Date Before the End of the Month

Try to close escrow before the 25th of the month.  Banks are assessed their handling charges on the first and if they have not received the check before the end of the month, there is an additional charge for the bank.

7. Submit your Loan Status Report

Show you have the proof of funds!

8. Give Enough Time for the Bank to Respond

REO asset managers are usually handling hundreds of homes and when they receive multiple offers, it can be overwhelming.  It is suggested to allow 7 to 10 days to allow a response on an offer.  Sometimes responses can come quicker or even longer.  Make sure your agent is following up.

9. Don’t Try to Choose your own Title Company

Choosing the escrow company is typically the buyer’s choice but with bank-owned homes, the buyer needs to be more flexible.  The bank will more than likely choose the title and escrow companies since they have significant amounts of title work done during the foreclosure process so they will want to stay with that title company.

10.  Shorten the Inspection Period and Don’t Ask for Repairs Up Front

If other offers are coming in saying that they will conduct an inspection in 15 days, and you ask for 10, you may be deemed as the more serious buyer.  Make sure your agent can help you make that happen within 10 days (home inspection, termite  inspection, special inspections).  At times banks may pay for repairs, but they usually will not agree to do so up front.  If there are serious issues found during the home inspection, you could try to renegotiate after your offer has been accepted.  The bank may be more willing to work with you or offer conecessions once the offer is rolling.

Source

A lot of short sales have been sitting on the MLS during the last few months and it’s reported that typically lenders are only able to successfully complete about 6 to 7 percent of the short sales coming in. That means many of those short sales will be entering the market within the next few months as foreclosures and will bring home prices down even further down.

People are being mislead by ill advised real estate agents encouraging their clients to entertain counter offers in this down turning market! Many of these properties have been on the market for quite sometime and/or have a lot of properties in different stages of foreclosure. The listing agent is not out for the homebuyer’s best interest.

How would you be when all of these pre-foreclosures hit the market in the next 90 days. You will realize you’ve paid too much. You’ve lost instant equity and a down payment.

The end of the year is expected to yield a bigger wave of foreclosure properties due to the ARM resets that occurred the past couple of months. The next wave of foreclosures is being called the “tsunami” and it’s expected to create a very soggy market to a over-supplied real estate market.

It can’t be stressed enough that there will be a surge in foreclosures entering the market very soon.