Posts Tagged ‘Multiple Offers’

Not Getting A Response

Wednesday, May 26th, 2010

I hate this.  I really do.  All day long, phone call and emails from Realtors who do not want to show a property until they know if there are any offers on the home.  I get why they (or their client) don’t want to waste anybody’s time.  I also understand that in traditional sales, a seller often encourages telling buyers to make an offer because there are others on the table.   In traditional sales, this strategy works.  In bank foreclosures, it does not.  The buyer usually does not feel compelled to hurry and look at a property.  Instead, often lead by their Realtor, they cross the bank owned property off the list once they learn there are offers.

So bank sellers have learned that advising that there are multiple offers needs to be an orchestrated affair.  Therefore, at the seller’s request, we follow a step by step procedure as to acknowledging the existence of multiple offers.  Every email or call we receive asking if there are offers, placing us in a dilema.  If we answer based on our procedure, and the Realtor Code of Ethics, then we get to spend 10 minutes arguing about how supposedly “everybody else discloses this information.”   Not a great use of our time because we are only going to disclose when our seller tells us to. 

If you need a refreasher for the Realtor Code of Ethics (or if you are a buyer and your agent is saying bad things about the Wilmoth Group not responding to this question) here is the independent standard we are expected to uphold as part of being able to call ourselves a Realtor.

Standard of Practice 1-15 REALTORS®, in response to inquiries from buyers or cooperating brokers shall, with the sellers’ approval, disclose the existence of offers on the property. Where disclosure is authorized, REALTORS® shall also disclose, if asked, whether offers were obtained by the listing licensee, another licensee in the listing firm, or by a cooperating broker. (Adopted 1/03, Amended 1/09)) The answer is really simple…sorry, our Seller does not authorize us to discuss other offers or the existence of them.

So, if you do not hear back from us, this is why.  We respect our seller’s and their right to instruct us as to how to disclose the existence of other offers.  To those of you who try and trick us by calling with one question, and then really trying to find out about other offers, I know you will get a courteous response but the approach will not be appreciated. 

Can we stop needing to talk about this now?

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Multiple Offers On Bank REO Revisited

Tuesday, May 11th, 2010

Not a week goes by that I do not engage in a spirited discussion with an agent who expects me or our company to disclose if we have offers on a property.  Combined with the unlicensed public (who are given a pass on this topic because they are not licensed and trained so I would probably ask also) we spend a huge investment of time addressing this issue.

Just a brief bit of background.  In several places on our website for Realtor FAQ (referenced on every MLS/BLC sheet) we suggest agents visit www.BuyWilmothREO.com in order to prepare to show or write an offer on one of our listings.  I would also say that this data base of questions is an excellent education source for any agent wanting to sell foreclosures listed by ANY Realtor.  Specifically..the multiple offer issue is addressed as it relates to the Realtor Code of Ethics and why multiple offers should not be disclosed unless a seller authorizes the disclosure.  For some reason, the standard of practice has denigrated to a level that, in any other type of residential sale, would have the Professional Standards committees busy with hearings.  I would guess that most bank sellers either are not aware of the violation or just have to many other things on their platters to file complaints.   Yet, I have discussed this very topic with many Asset Managers and they all agree.  Information as to how many offers exist should only be revealed in a carefully orchestrated way so as to ensure the end result is a highest and best acceptance.  

The majority of the questions I receive on the existence of offers is so that a Realtor or buyer can avoid this process of the bank orchestrating a highest and best scenario.  That is fine and a small part of me understands.  The small part is the buyer perspective.  Not a clue why a Realtor would not want to make the effort if the property might be a good opportunity for their buyer. 

Yesterday, a slightly different argument was received.  Here is the discussion I had via email with a Realtor after I informed the Realtor that the seller does not authorize our release of information on status of other offers.  

In my 6 years of selling real estate, I’ve never had an agent tell me that they can’t disclose multiple offer situations. It’s in the sellers (in this case, the bank’s) best interest to always disclose multiple offers in order to get the highest and best offer. It’s my experience that in most cases buyers NEVER offer their highest and best, thus the reason for negotiations.

My response:

Just to clarify, I did not say we would not disclose if there are multiple offers.  Different banks handle this a multiple of different ways. In the right situation, they can orchestrate to get the “highest and best” offer.  Unfortunately, with the plethora of foreclosure properties today, and the demand, it is not working in the way you expect.  Just like your buyer, many are using the fact that there are offers to not even look at the home.  Therefore, it is not at all in the sellers interest to disclose until they are ready to ask for highest and best offers.  This is the only way to keep buyers looking (after the first offer is received).
 
The other side fact is I have seen buyers walk away from even looking just because there are offers..when the offers we had were total trash.  Seems to me it is in everybody’s best interest to take a look at the property and decide if you are interested.
We also have a FAQ that describes the common Multiple Offer disclosure scenario  to help an Agent prepare their buyer.   Final note: I think buyers need to be prepared for this process.  If it gives them a bad taste, it may not be appropriate for them to be shown foreclosure properties.   There is a very high percentage in the current market that receive multiple offers before one is accepted.  It may be like looking for a needle in a hay stack to try and find one that is not affected. 

 

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So You Want To Buy A Foreclosure?

Thursday, May 6th, 2010

Did somebody (late night television?) convince you that now is the time to get in on the greatest investment opportunity since gold?  Well, just like gold, there is/was an opportunity.  The question now is has the ship already sailed?

The reason for this question lies in the unreasonable returns potential buyers of foreclosures are seeking.  Even owner occupant buyers have it in their heads that they can purchase a foreclosure and immediately see 20% appreciation.  There are several problems with this line of thinking.

The market does not lie. 

There are some big questions about the future.

My comment on “the market does not lie” is based in the reality that when a home is priced below market we see multiple offers.  Makes sense.  More than one person sees the value versus the list price.  What ensues though is a process called “highest and best” that usually ends up with the winning offer getting the home very close to what we believed originally to be the correct value.  The market does not lie.  That is what is so great about “free markets”.  Real estate sales are very much a free-supply/demand market.

The future is a question because nobody, and I mean nobody, has their arms around the amount of foreclosure inventory that is in existence or is still to occur.  You may have heard of the shadow inventory of foreclosures?  This is a reference to the large number of homeowners who are either not making payments, being given modifications that may ultimately default, trying for a short sale, or are just struggling-in addition to the existing defaulted inventory of homes.   Many homes in default and vacant have not been foreclosed on.  The more of these homes that hit the market, the more there is a moderating force on home values.  I continue to see homes sell for a value far below other traditional sales on the same street.  One foreclosure sale can be overlooked as to value.  Several foreclosures, defaults, possible defaults and the market may not ignore.  Remember value, as objectively determined by reviewing recent comparable sales, is not the same thing as what the market will pay.  Uncertainty still is a big factor in what the market will pay.

If you want to buy a foreclosure..time to learn all about the many ways homes become a foreclosure.   CNNMoney.com published an article this week that covers the three ways a home in default can be purchased.  All are relevant and the article is worth your time to review.   It use to be that 90% of default homes were sold in the REO stage (my estimate).  Today we see an increasing percentage occuring in Pre-Foreclosure.  These are usually called short sales because the mortgage is more than the market will pay.  Sheriff sales are very tough and very risky.  Better know what you are doing and have ample cash before trying that game.

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Posted in Buyers, Foreclosure, Modifications, Shadow Inventory, Short Sales | 1 Comment »

Multiple Offer Procedures Changed

Tuesday, January 12th, 2010

Due to the number of properties that are now receiving multiple offers, it has become impossible for us to keep the MLS Realtor Comments timely with regard to the status when a property moves into a multiple offer status.  Subsequently, we are no longer publishing this information in the MLS. 

I understand the buyers and their agents like to know how many, if any, additional offers there are on a property.  First, our sellers do not authorize this type of disclosure until the time they give permission.  Each bank has different procedures for handling and now we are going to handle all offers in a uniform process.

We are not going to try and figure out for anybody considering making an offer if we already have offers.  It is just not practical.  I can tell you we have no offers, and by the time you tell your buyer, we could have three.  Then, I have had the experience of the agent coming back and saying “you told me there were no offers”.  I’d like to respond..”did you think time was going to stand still while you and your buyer tried to figure out your offer?”  No, I am too polite for that.

Did I mention the part about the seller not authorizing us to disclose the existence or status of other offers?

So, when your email is ignored, or you receive a simple reference to our FAQ when you ask, be warned.  Apparently this status of other offers is expected by all parties now before proceeding with one of their own.  You will need to communicate to your buyer that they will find out when they actually submit an offer.  What a great way to get them to sign the Purchase Agreement!

See also:

Are there any offers?

Multiple Offers

Multiple Offer Forms

 

 

 

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Are You Really Prepared To Buy A Bank-Owned (REO) Home? “Can You Stomach Competing With Multiple Offers?”

Thursday, September 10th, 2009

Thumbnail image for REO House.jpg

In the last eighteen months trying to pick up a “deal” has made all home buyers explore the world of purchasing a bank owned foreclosure.  While there are opportunities to be found, most conventional buyers are not prepared for the process.  I am writing a series of posts to discuss some of the issues commonly found that are not normally experienced when buying a home for sale by a non-corporate seller.

Due to either the increased amount of foreclosure, the predominance of bad information available from the late night shucksters, or just the honest desire to buy low, most multiple listing services are currently recording sales of bank home sales amounting to 30% to 60% of all sales!  This is an incredible number!  I remember a few years ago when a number of us thought the Indianapolis Board of Realtors should give REO Brokers a voice because our listings represented 25% of all sales.  Today, the same board acknowledges this number is approximately 35%.

This high degree of interest in bank owned REO properties means most homes placed on the market end up receiving multiple offers.  It may not be when they first are listed, but when the price is adjusted to market the offers fly in.   When this occurs most banks automatically tell us to set aside all the offers received, and place a deadline on receipt from these same buyers for their “highest and best” (H&B) offer.

This request often starts a series of phone calls that cause buyers agents to feel frustrated with our lack of response.  Most buyers want to know “where do I need to be with this H & B offer in order to get the house?”  Incredibly, many Realtors actually believe that my company, the listing brokerage representing the sellers best interest, have a duty to speculate and provide this answer!  In some cases, I do think the ethics part of their brain gets overruled by a desire to make their buyer happy and get an answer to this question. 

We won’t answer that question!

As I have coached all of our buyer agents, and buyers I have worked with through the years, you have to approach H & B accepting that the issue does not just involve price.  Terms such as financing, inspection contingencies, time to close, and requested concessions, will all play into the entire fabric of what makes for the HIGHEST and BEST offer.  So, STOP worrying about anybody but yourself!  Try and take the emotion out of the process (I know it is easier said than done) and look at YOUR own situation.

Respond to a H & B request with the offer that you know you would not, or could not, go any higher in order to obtain this property.  The offer that if you learn somebody else gets the property, and you learn the terms, you would not say “I would of made that offer”!

We are not going to jeopordize our seller’s position by revealing the amount they need out of the transaction or any terms they will not accept.  If we have terms to share they will be shared with all parties.  As a buyer, don’t ask your buyers agent to go on a hunt to find out information.   It places them in a spot where they are forced to look foolish, or unethical.  Your agent needs to help you find that sweet spot that truly allows you to sleep at night knowing you offered the most you would for this property.

If the game of Highest and Best is not one you like the sounds of, then buying bank owned REO properties may not be right for you.  Remember, out of these situations often arise the opportunity you are seeking.  It is part of the ticket for admission.

Finally..this tip.  Yes, often H & B situations end up with an over list price accepted offer.  So, don’t let the list price weigh too heavily in making your offer.

Other posts in the series ”Are You Really Prepared To Buy A Bank-Owned (REO) Home?”

As-Is Means As-Is

Offer Responses Can Take Time

 

 

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