While setting expectations for a new client, I checked with the listing agent of a bank-owned property about the offer situation for the 3 bedroom/2 bath house in Hayward. I almost fell off my chair. He had already received 98 offers!
EDUCATING THE SELLER
Yes, we understand that in many cases, the banks set the list price. And that the strategy is to move the properties as quickly as possible. But aren't they at least informed or educated about the local markets? In recent months, there have been previously-unheard of stories of multiple offers in the 50s and 60s....but 98?
By listing the bank-owned property at incredibly low (and therefore artificial) price, the bank succeeds in:
- creating havoc among the buyers and their agents
- creating unnecessary work not only for the REO agents who must wade through these offers,
- challenging the buyer's agents who have to explain to buyers why their above-list-price offers are not even in the running
EDUCATING THE BUYERS
This is an opportunity to educate the buyers on what it will take to have an offer accepted (or at least considered or countered) --- besides offering a wad of cash at way above list price.
But how can we keep motivating the buyers?
How can we motivate the buyers agents?
I've run into competitive situations...but I can't fathom 98 offers --- and at last count, they were still coming!
Hi Pacita,
From north of the border this sounds completely irresponsible of the banks, those poor guys begging for money one day and carelessly giving it away the next. Obama should be looking into these practices.
We have the exact same trouble here...how can you even start to give buyers good advice when we are in a feeding frenzy? this is forcing me to take my buyers to short sales where I can develop a good relationship with a competent listing agent...at least that way we have a chance...just have to learn to roll with it!
Good Luck!
What can I say, except I hear your frustration loud and clear. We have been trying to stay away from short-sales - a daunting task. Luckily, my buyers have been patient and understanding, but I still don't think they get it - nor do I expect them to.
They look to us as their guidance councelor and we don't have answers for them. How does that make us look. I'm fed up with the banks and this so called "process", as well as listing agents of short sales who call themselves "experts on short-sales".
Good luck with everything and hang in there...you will prosper from this :-)
I don't feel that bad, the other day I submitted an offer on a reo , and they already had 10 offers. Within 48 hours they faxed a form over for my clients best and highest offer, Now we have between 24 hours and 2 weeks to find out who the bank will choose to work with. ( we're keeping our fingers crossed) Hope your deal works out!
Pacita,
This is what is happening everywhere. It's common to see 30 or more offers. It's frustrating and clients have a hard time understanding it all. Good luck to you.
Best regards,
Michael Caruso, Broker ABR ABRM CRB CRS GREEN GRI
2007 President, Orange County Association of Realtors
Pacita...
They are walking a tightrope that could snap at any moment. There also may be some MLS rules against listing below market price too!
Pacita - I wish there was some kind of violation for listing a property too low but sadly there is not. We're seeing the same thing down here in Ventura & Los Angeles counties too. It's insane but I have yet to hear about a property getting nearly 100 offers - 50's & 60's yes but 98!
Hi Pacita,
I've listed and sold several REO's that have received multiple offers because they were priced aggressively by the seller.
After about 10 strong, over list, non-contingent offers, I'll contact my asset manager and we'll mutually agree to work with those offers. Why waste the time of the other 80 parties? Can RES.NET even handle 100 offers on a property?
My advice is do your own BPO on the property to see what it's market value is. If the offers being presented are too much above that number, the buyer's will run into a roadblock when the property doesn't appraise. Who needs that headache? At that point you can tell your buyers it's time to move on.
Rudy
98 offers is beyond absurd. And then we get the calls from the buyers who see a home that is almost in their price range, and ask if there is room for negotiation in the price. It is so hard right now for the low end buyer.
98 offers. Who has the time and patience to wade thru all that paperwork. Our PA's here consist of 7 pages (not including addendums). Do the math. Who has the time for that. So much time wasted.
Al and Peggy ---- 98 offers is a lot by any standard.
Bob --- it is already hard to explain to buyers what it will take to get an offer accepted. And when they write above list price, there is another challenge of making sure the property appraises.
Nicole --- the latest thing from REO agents is requiring that buyers sign addendum saying that if property doesn't appraise for what the buyer offered, that the buyer is responsible for coming up with the difference.
Brenda --- it used to be that REOs require 7-10 days of market exposure before they even look at offers. That's no longer the case in many listings.
Michael --- perhaps if we blog about these situations, buyers will eventually "get it"
Richard --- I don't know of any MLS violations.....I'm sure they're going to sell this at above list price
Donne --- competing in a multiple offer situation is challenging enough. But this is beyond ridiculous.
Rudy --- maybe the REO agent who had this listing will also talk with his asset manager and begin listing at realistic prices. Or maybe he wants to brag that he got this many offers.
Carol --- as long as buyers are willing to hang in there beyond these challenging times, there is bound to be a property for them. I'm beginning to appreciate short sales now....
Robert --- our purchase agreement in CA is 8 pages, plus the advisories and addenda. Yep....who has time? The REO agents barely have enough time to answer calls and emails!
Hi Pacita: This is a mixed-bag situation with the banks. Some banks won't listen to the listing agent and go with the recommended price ....others do. So if an REO listing agent has a client that does listen, and that agents chooses to list substantially below market ... this is what happens. Banks will not typically list below ... banks tend to list a little higher than market ... at least from my experience in my market. We are in a challenging market ... no doubt about that!