The recent experience of a bidding war with a bank owned property (REO) has brought to my attention the fact that as much as we write about short sales, forecloures, and bank owned properties, we're just not getting the word out to our clients.
With that in mind, here are some important facts that we need to know; that we need to pass along to our buyers; that the general public needs to know prior to becoming involved with a REO purchase.
- Writng an offer on a property with your Realtor(r) does not constitute a contract! You must have signatures from both the seller and the buyer on the contract for it to be binding.
- A verbal counter offer is excellent to have, but not binding. It must be followed up with that all important contract, signed by both parties.
- Very Important: Until the bank returns your offer with their counter, and they will always counter using their documents, you are not under contract, and
- They have the right to accept any other offer that is submitted
And this is how the bidding war begins. The bank is now holding two offers, that are just about identical, which is just a coincidence, we hope. They can't decide which one to accept, so they issue a "Highest and Best" request.
"Highest and Best" request is a one-time shot for you to obtain this property. So, give it your best offer. Here's what you need to do:
- Clean up your offer by
b. Removing all seller concessions
c. Tightening up your closing date
d. Changing your finanacing to conventional, (it's easier to fund)
e. And bringing your very best monetary offer
- Then, wait to hear back from the bank
If you have done everything in your power to make your bid your "Highest and Best," you might just get the home! However, if your offer was beaten by another, it's sad to say, but your desire for the home just wasn't as great as the desire of the other party.
Here's cute little video about the bank owned purchase process...
Marianne Snygg, GRI, ABR, ASP
ERA Herman Group Real Estate
Colorado Springs and Monument Real Estate