One of the last things I did late Wednesday evening before adjourning for the holiday was to enter a bid for a client on a bank owned property. In this case, the bid was entered electronically via the Internet, but it still requires meeting the client to sign the paper version of the offer and to collect the earnest money.
After the offer was entered into the system, the client was curious as to when we would know if the offer was accepted. I suggested that since the Thanksgiving holiday had commenced, we would likely get a response on Monday.
To my surprise, we got a response early Friday morning. That’s the good news. The bad news was that the counteroffer was nearly full price and required more earnest money and a close date no later that December 31.
This property has been on the market for over three months. It needs extensive repairs, and an FHA 203K will probably take at least 45 days to process, if not longer. And of course, there is a hefty per diem charge if my client does not close on time. So at this point it seems unlikely that we will move forward.
So kudos to the asset manager for being on the job and for getting us a fast response. However, I wish they had taken a little more time and thought about making a realistic counteroffer that would at least present the possibility of acceptance and consummation.
Instead, this property is likely to head to the auction block where it will probably garner half of the money my client offered.
And that just seems foolish to me!
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Richard, I've given up trying to figure out what these banks are lenders are thinking. Can you submit these comments to them electronically, maybe they'll listen?
Richard.....someone wanted to clear their desk before the end of the month.....onward and upward to the next one, Richard.....
My partner had one like that a few months ago. She then actually went to the auction with our clients and they got it for $20,000 less than their original offer. But then I think they had to pay some fees and it came out to being about the same.
Richard, it was obvious the bank didn't read the offer. Can you go back and explain the timing required with the FHA 203K loan? I hope it works out for you and your client.
Richard ~ Maybe a blessing in disguise, not such a good deal after all and you will find them something else that is better perhaps. I had a short sale turned down this year, offered close to asking price, highest bidder. The bank let it go to foreclosure instead and the home still sits empty. I don't get it. I found a better deal for my client a month later!
I would be curious as to how this asset manager describes his job duties and describes his abilities to carry them out. I wonder if the way that he handled the offer would bring a smile to the seller or if they would be looking for a new asset manager.
I just don't understand the way some of these banks work.
Richard,
The price side of the counter probably stems from poor BPOs. Many REOs do have a minimum for earnest money - but this should've been in the listing and/or bank addenda. If closing date was the only issue, I'd say resubmit with a note. Most asset managers would agree to a different timeframe.
Are you also the listing agent? If not, where is he/she in this process?
Gabe...
In many cases, such as this one, they are located many states away and don't have a feel for the property or the area. I wonder if the BPO mentioned that the CSX main line bordered this property, and that the driveway crosses the tracks with no signalling? THX
Barbara...
I understand the need to get this "off the books" but waiting for another offer isn't going to speed things up for them. Thanks my friend, have a great Saturday!
Tim...
It depends on the auction terms and the conditions ... most require a 10% deposit and that leaves a lot of people out. Thanks for the comment!
Richard in my experiences with the banks, a counter offer at almost full price is an indication that they want to work with the buyer, but the initial offer was too low. They counter a little off to indicate how far off you might be. It is probably worth another shot, only a higher offer, which may well get you a more realistic counter.
Richard, banks do not think. They think like sellers too much. Makes our job harder!
Hi Richard,
It sounds like the bank (asset manager) is putting its faith in the BPO, which may not have addressed the repair issue. Any chance of a reality check with the bank and another counter?
Richard -
I have been there. No fun at all. It makes you wonder where they find these "asset managers"?
Another example of an "automated response." There may be a person at the desk but the "mouse" does all the thinking!
Earlier this week one of our agents had an auction bid accepted, good news right? Nope, she had submitted an offer on the same property 10 days earlier that would have netted the sellers (bank) $5000 more dollars. Even worse, her commision went from 3% to 1%. Stimulus package my ***!
I never cease to be amazed at the crazy things that happen in "businesses".
Richard...Had a client make an offer on an REO back in September 90% of asking price the counter was full asking price (nearly 500K) and close in 30 days. The properties is currently listed for less than that offer and we are a full month beyond the proposed closing date...So how did that work out for the asset manager?
Richard, I am amazed at all of the properties I've seen not close during a short sale opportunity and then sell during foreclosure at 25-40 % less. Who knew banks didn't want to make money? I guess a loss on foreclosures is a better paper loss. However, they are missing the point that it devalues the rest of their mortgage home assets in the area! Michelle
It always amazes me how ridiculous this REO process has gotten. It would be better to get it off the books in early January than have you walk away and who knows when they'll get another offer. Good luck to your client.
That's the one thing about technology that irks me the most. If you could actually speak with a human and explain that time would not allow closing by the end of the year with the type of loan, maybe it would make a difference, but when you are just a bid price on a screen and the humans are left out of the equation, it lacks something.
Richard: That is a totally typical bank resposne. Is it any wonder they continue to flounder? Full price? From what you are describing, this is completely unrealistic.
Richard - Definitely disappointing news. The logic the banks use when looking at offers baffles me. You customer is better off moving on to the next property.
Richard, I too, hate it when people don't live in reality even if they get kudos for speedy responses.
Asset managers are a different breed and I have found that you never know which way they will be going when it comes to counteroffers. Sorry for the bad news my friend.
Richard...this makes me think that there is a friend of the asset manager that wants the property. Do a rediculous counter so it does go to auction and the friend picks up a real good deal.
Hi Richard: Your first mistake was in assuming that a Bank operates on logic and common sense! LOL
:)
Hi, Richard:
What a shame that the counter from the bank was silly. But I agree with some of the other folks, that maybe another, slightly higher, offer would do the trick, if your buyer is willing to go through the exercise. I would certainly include a comment about the poor location, too. That is, if there is any way to send it, which there probably isn't on the standard forms!
Cheers,
Robin
Michael...
We are trying to work this out ... but the closing date seems to be a major sticking point! Thanks, my friend.
June...
Make you wonder if there is less flak taken for a non-sale than a bad sale. Thanks so much for the comment.
Judi...
I really wonder what the parameters really are. I wonder if we have some here at AR? Thanks for jumping in!