Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Looked at a few short sale properties and had a few I didn't act soon enough to make an offer on.
I do understand sometimes a listing agent may already have a buyer lined up before they put it on the MLS and as soon as they made it into the system they change the status to pending sale in a matter of minutes or hours.
Sometimes I inquired and was told there is a contract on it already but would be happy to accept backup offers.
I typically do not submit backup offers, I don't see the point. A short sale may take months and a backup to that? I would just tell the agent to keep my number, if the deal falls apart, to call me.
Only that recently some of those deal DID fall apart, and I wasn't informed. I saw some of these properties being listed again, called, and again, pending sale within minutes.
In discussing this with a few friends, one of them told me I should be submitting backup offers to tie them up. I said some of these I haven't even seen in person, simply looked at a few pictures and have no idea if I would be seriously interested. She said, no matter, do it anyways.
Her reasoning.
- There is a high likelihood these short sale would fall apart, many people simply could not qualify for loans nowadays.
- The price means nothing, the bank may drag it's feet the buyer lost patience and walked.
- Write up a backup offer that is ridiculously low, a price you would buy it without seeing it based on it's location, heck, offer a price on how much the land itself is worth. Put in say 1 week acceptance period. When the deal falls apart, the agent would be forced to contact you, your backup offer already have expired and now you have the foot in the door. Go see the property then if interested, put in a serious offer.
- The second or third time around on a deal, there is a much higher chance there is knowledge on the bank's bottom number, as well as inspection reports or BPO to go on.
She said I ought to be doing backup offers left and right, knowing some deals will fall apart and fall on my lap. It is basically of zero risk. She said this is being done all the time by many.
So it's basically making offers on something that you don't know if you really want. Is it true that EVERYONE is doing it?
The backup offer is definitely a strategy. That's another thing that complicates the short sale process. It's a changing world, short sales have no consistency. It doesn't hurt to put the backup in. If you like the house, submit an offer. The biggest thing is patience. If you can't get a traditional sale, then you must play the waiting game.
Looked at a few short sale properties and had a few I didn't act soon enough to make an offer on.
I do understand sometimes a listing agent may already have a buyer lined up before they put it on the MLS and as soon as they made it into the system they change the status to pending sale in a matter of minutes or hours.
Sometimes I inquired and was told there is a contract on it already but would be happy to accept backup offers.
I typically do not submit backup offers, I don't see the point. A short sale may take months and a backup to that? I would just tell the agent to keep my number, if the deal falls apart, to call me.
Only that recently some of those deal DID fall apart, and I wasn't informed. I saw some of these properties being listed again, called, and again, pending sale within minutes.
In discussing this with a few friends, one of them told me I should be submitting backup offers to tie them up. I said some of these I haven't even seen in person, simply looked at a few pictures and have no idea if I would be seriously interested. She said, no matter, do it anyways.
Her reasoning.
- There is a high likelihood these short sale would fall apart, many people simply could not qualify for loans nowadays.
- The price means nothing, the bank may drag it's feet the buyer lost patience and walked.
- Write up a backup offer that is ridiculously low, a price you would buy it without seeing it based on it's location, heck, offer a price on how much the land itself is worth. Put in say 1 week acceptance period. When the deal falls apart, the agent would be forced to contact you, your backup offer already have expired and now you have the foot in the door. Go see the property then if interested, put in a serious offer.
- The second or third time around on a deal, there is a much higher chance there is knowledge on the bank's bottom number, as well as inspection reports or BPO to go on.
She said I ought to be doing backup offers left and right, knowing some deals will fall apart and fall on my lap. It is basically of zero risk. She said this is being done all the time by many.
So it's basically making offers on something that you don't know if you really want. Is it true that EVERYONE is doing it?
Where does your friend come up with the idea that the agent has to contact you if you have a back up offer and the offer falls through?
I don't believe that is the case.
Where does your friend come up with the idea that the agent has to contact you if you have a back up offer and the offer falls through?
I don't believe that is the case.
Because a backup contract IS a contract.
It is the same as a regular contract that the sellers and buyers both sign, the only difference is there is an additional rider that states it is a backup offer and it will not kick in until the primary offer is released.
It is the same as a regular contract that the sellers and buyers both sign, the only difference is there is an additional rider that states it is a backup offer and it will not kick in until the primary offer is released.
Do your friend have a copy of your offer signed by the seller where he agrees to your price and terms? It is a called a backup offer and not a back up contract for a reason. The seller doesn't sign the back up offer because he's already agreed to a contract, if the contract falls through then he considers the back up offer(or offers) and then decides if he wants to negotiate accept or forget the whole thing.
I have never heard of a seller accepting a second offer while having already accepted a first one.
Perfectly legitimate in NC, and I suspect in some other states, too. Seller and Buyer contract that the back up buyer will become primary should the existing primary contract be terminated.
Perfectly legitimate in NC, and I suspect in some other states, too. Seller and Buyer contract that the back up buyer will become primary should the existing primary contract be terminated.
That's a lot of money you're tying up if you do that on multiple properties. In Texas, earnest money has to be deposited as soon as you execute, even if it's a back up contract. It's held, interest free, by the title company. You do that on 5 properties with an average $2500 earnest money deposit on each, do you have that kind of money?
Also, I don't understand the logic of the low price. The seller still has to negotiate, and why would they turn in a low contract if they know it's not going to be accepted. Plus, it's not all up to the seller. The agent would know about what type of price the bank will accept, and they're not going to execute a back up that isn't realistic to getting accepted by the bank.
Do your friend have a copy of your offer signed by the seller where he agrees to your price and terms? It is a called a backup offer and not a back up contract for a reason. The seller doesn't sign the back up offer because he's already agreed to a contract, if the contract falls through then he considers the back up offer(or offers) and then decides if he wants to negotiate accept or forget the whole thing.
I have never heard of a seller accepting a second offer while having already accepted a first one.
The seller can accepting a second offer.
Standard operating procedure here you write up a standard contract with a special backup addendum. The contract does not execute until the first offer is null and void. So if the first offer falls through, it never becomes binding.
That's a lot of money you're tying up if you do that on multiple properties. In Texas, earnest money has to be deposited as soon as you execute, even if it's a back up contract. It's held, interest free, by the title company. You do that on 5 properties with an average $2500 earnest money deposit on each, do you have that kind of money?
There is no money tied up at all.
This is probably vary by location.
I am located in Miami. There are short sales EVERYWHERE. Last two offers for short sale I put in involves no deposit at all. The reason being so many offers are falling apart due to buyers not qualifying for loans or they walked after a long and frustrating wait, so agents typically tell buyers to offer nothing.
So on the offer sheet for the short sale you put in say a deposit of say $5000 due to the escrow within 3 days of "Effective Date", and in the additional terms you amend the definition of ED to "The Effective Date shall be the date by which BUYER has received from SELLER written approval of the short sale from SELLER's lender. The Closing Date shall occur within 30 business days of the Effective Date."
No one really puts down any deposit, unless you have a multiple offer situation then yes I have seen someone put in all cash offers with 50-100% deposit.
Quote:
Originally Posted by FalconheadWest
Also, I don't understand the logic of the low price. The seller still has to negotiate, and why would they turn in a low contract if they know it's not going to be accepted. Plus, it's not all up to the seller. The agent would know about what type of price the bank will accept, and they're not going to execute a back up that isn't realistic to getting accepted by the bank.
For the most part, the sellers do not care how much you offer, they are simply rubber stamping the offers. Especially for those who are in strategic defaults and wants to stay at that home for free mortgage free they drag out the process for as long as they can, so another offer serves up to the bank will just tie up more time. There are sellers here that pulls all kinds of crap to milk this thing. Some even wait till the bank is just about to foreclose then they declare bankcruptcy, now the house is subject to approval by the bankcruptcy court, and the seller gets to stay even longer at the home.
It's a total mess.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
