Put an offer on a foreclosure home – now a multiple offer situation?
My husband and I just place in an offer on a foreclosed home – it’s go-in ready, from the looks of it. It’s a Fantastic property, not at all what you’d picture a foreclosure to look like. The house isn’t trashed, it’s not in a terrible side of town, so the asking price is a steal! (We live in the Austin, TX area if that helps).
The list price is $86,900. My husband and I did NOT want to lowball at all since we really want the house, so we did offer $86,900. It was appraised last year at $100,500.
Anyway, our realtor told us today that multiple offers had already been received, and now they’re accepting buyers’ “highest and best offers” until this Sunday at 5 PM.
I was under the impression that you’re not supposed to overbid on a house. But, I can’t imagine why it’d go into a multiple offer situation unless if other buyers did also offer list price.
What should we do here… overbid, probably, but by how much? I don’t want to pay way more than the second highest bidder offered, because then we’re out more money than we could have been, but I don’t know how much higher others are willing to bid.
Given the figures, what would be a reasonable offer this time around?
Realtors, investors, homeowners, any advice? I appreciate it!
Foreclosure Angel: Weirder Buys Foreclosed House at Auction and Gave it back to Owner!
December 24th, 2009 at 7:12 pm
Just bid what it’s worth and nothing more. There are still plenty of houses out there.
December 24th, 2009 at 7:57 pm
As a homeowner be on guard here. I don’t know what the deal is but this could be an offer to get the bids up, still, for my money I’d stick with my original offer and that’s that. If they go with someone else then there are other houses.
December 24th, 2009 at 8:42 pm
Me and my husband recently went through this roller coaster. It seemed like every house we really wanted would get multiple offers. Sucky thing is we wouldn’t be told how much more the offers were. Question your realtor how much the highest offer is and see where you can go from there.
If the house is in as excellent condition as you mentioned the offers could most likely go past $100,000.
December 24th, 2009 at 9:21 pm
If you’re looking at a house that’s listed for $86,900 and it appraises for over a hundred grand, I’m not surprised at all that there are multiple offers for it. That’s an instant $14,000 of equity, and there’s a ton of people that want that just as terrible as you do. Granted, the higher the offered price goes, the lower the instant equity will be but, still, ANY instant equity in this economy is fantastic. You did the right thing by putting in an initial offer for the listed sale price, but you also should have expected that higher offers from other buyers would be right behind you. I’m pretty sure the real estate agent is forbidden to tell you what the highest offer has been so far…..or even if she isn’t forbidden to, she still probably isn’t going to since it’s in her best interest to sell the house for as much as she can. Her commission depends on it. Besides, it’s her JOB the get the most she can….that’s what the sellers are paying her to do. There are no etiquette rules against overbidding on a house….that’s strictly a judgment call based on how terrible you want it. The realtor said there were multiple offers but she didn’t say that they were all higher than yours. Most nearly certainly are, but (like you) no one is wanting to pay more than they have to. Try to look the house up on Willow.com and see if you can find out what it’s value is today. Also, take into consideration it’s POTENTIAL value. The housing market will eventually pick back up and values will start to increase again. Even of you end up bidding as high as the appraised value, remember that was last years appraisal—-at a time when we were in the depths of the housing crisis. Homes dont go into a “multiple offer” situation because several people all offered the same price. When you submitted your offer, other people came in behind you and probably tried to offer the same amount. At that point, the realtor has to tell them that an equal or better offer has already been submitted but hasnt been accepted by the the seller yet. She wont say how much the other was for exactly, although she may drop heavy hints if your next offer is still too low. So the people who came in behind you made a higher offer. As did the people who came in behind THEM. It’s pretty much like a “silent auction”. I hope you are already prequalified for a loan because sellers will (quite often) turn down a higher offer from people who do not have their financing already set up, and show favor to those who do, even if their offer is a small lower. Foreclosed homes are no different….the seller just happens to be the bank that owns it. Not knowing anything about the house, where it is, or what it looks like, all I can do is take a stab in the dark as to what a reasonable offer would be. Again, it depends on how terrible you want it. Try maybe around $95,000. That may still be too low if the house is in as excellent a shape as you say. It’s hard to find foreclosed homes that havent been trashed and vandalized. That offer would still give you a few thousand in equity, and just might be high enough to outbid all the others. If you REALLY want it and cant bear the thought of losing it, bid more. Just dont bid more than it currently appraises for because banks only loan the amount that the house is worth on the market. Excellent luck!
December 24th, 2009 at 10:18 pm
Just because there are multiple offers, doesn’t mean yours is not the best offer. If another offer came in on the property the listing agent has a responsibility to the seller to get the most money or the best possible deal. If there are more offers on the property the person making the offer is in the same boat as you. They shouldn’t know the amount of your offer.
Questions for you :
1) Is your agent the listing agent? It’s hard for an agent to work both sides honestly knowing all the details of all offers.
2) Has the home been on the market long? If it’s a new listing then the odds of multiple offers is greater.
Questions for your agent:
1) When is the deadline for making the offer? Make your offer as close to the deadline as possible. make sure that the agent has time to fax the offer to the seller. meet the agent in their office so you can submit the offer as close as possible to the deadline. This helps reduce the possibility of others finding out what your offer amount is. Don’t tell your agent the amount until you are ready to sign. Tell him your are trying to choose the amount, and will let him know when you meet. Make the appointment to met with him as soon as you find out the deadline. Be there on time.
2) may we see the signature page of the other offers? this lets you know how many offers. (This may not be allowed )
Be prepared. Have at the very least a pre approval letter from your lender.
Also be prepared for the possibility of not having the highest bid.
If there are multiple buyers the price will most likely be at least listing price if the property is in as excellent condition as you say.
Last years appraisal doesn’t mean much in today’s market. There are areas that housing prices have dropped by double digit percentages. Also refinance appraisals are often higher than buy appraisals.
If I were bidding I would submit an offer in the neighborhood of $90007. this would give you equity of $10000. If you are a first time home buyer and qualify $18000 if you pay the refund on the principal.
December 24th, 2009 at 10:31 pm
This is not uncommon with lenders that have multiple offers on the home. It is very likely that all the other offers, lowball or otherwise, received notice to bring their best offer to the table.
If you were my client and you really wanted the house, I would suggest a slight bid over asking price and a very clean offer (not a lot of contingencies). Of course, you should have a contingency that you get to approve a home inspection. I would suggest a price of $87,400, a few hundred over asking.
I despise bidding wars. Stressful! Excellent luck to you.