Foreclosure property: Understanding the bidding process (if any) (fit in, sale)

[vauser]

Hey,
I am looking into buying a foreclosure property and would like to understand the process as we've never purchased such properties before.
* We are planning to bid for a little over the asking price.
* I understand the bank would wait a few days to try and maximize the offers they receive.
* Assuming, they get multiple offers, what would they do?
1. Would they simply go with the highest offer and that's that?
2. Would they communicate the highest offer to the other interested parties in the interest of maximizing their profits?
3. Would they do anything other than the above? If yes, what would that be?

Thanks folks!

[oneasterisk]

Originally Posted by vauser

Hey,
I am looking into buying a foreclosure property and would like to understand the process as we've never purchased such properties before.
* We are planning to bid for a little over the asking price.
* I understand the bank would wait a few days to try and maximize the offers they receive.
* Assuming, they get multiple offers, what would they do?
1. Would they simply go with the highest offer and that's that?
2. Would they communicate the highest offer to the other interested parties in the interest of maximizing their profits?
3. Would they do anything other than the above? If yes, what would that be?

Thanks folks!

I bought my first foreclosure back in April 09 and this is what I found. Listing agents are routinely listing the properties very low to get a lot of traffic into the property and drum up interest. There is no magic forumula on what to bid (List price - 10%, List price + 5% etc). Have your realtor pull up the comps and go by them. Sometimes it's tough because sometimes many of the latest comps were all foreclosure/shortsales and the last sale was the bank buying it back at auction .

What I've found is listing agent will have a deadline of when offers will be received. They'll take the best offer, and the best offer may not be the highest bid. The best offer could be a lower bid, but have less contingencies. In multiple offer situations, my realtor could not tell me what the best offer was, only that there were multiple offers and with that knowledge did I want to modify my offer.

I was outbid multiple times while I was going through the search and this was even when the offer was above list. Don't get frustrated and don't let your emotions cloud your judgement. By all means keep the inspection, financing and appraisal contingencies.

Good luck!

(I am not a realtor, just some random guy that went through the pain a few months ago...)

[vauser]

Thanks oneasterisk. Question I have is - would the bank get back to all the interest parties who wrote the contract or would they simply take the best one and move on?

[oneasterisk]

In the multiple bid situations I went through, you had one chance to submit your best offer. There were no counter offers. The only chance I had was to modify my offer once I learned that there were multiple offers. My realtor would later tell me that the bank went with a different offer

[vauser]

Thanks oneasterisk. I think we are in a similar situation except that the bank hasn't gotten back to us with that information. The selling agent made a mention of other offers, atleast one other one. I suppose this doesn't fit into the category you mention and we should most likely hear from the bank. Correct? Am I understanding you correctly?

[oneasterisk]

My agent actually gave me a form that I had to sign that said I had been informed that I was in a multiple offer scenario. I worked with a Prudential agent so I'm not sure if it's standard process or specific to that agency. Why don't you ask your agent how this bank handles the foreclosures. It's very possible that different banks have a different process. Heck, each listing agent may have a different process. Your best bet would be to have your agent speak to the LA to see how they are going to do it.

[vauser]

Thanks oneasterisk, appreciate it!

[GoHokiesGo]

I bought my house back over new years weekend(dec '08) as a foreclosure.

We bid on 5 other houses before finally getting ours, and it was a frustrating process. We found that nearly every offer was different actually. Some of them countered back and forth with us (only offer at the time); another we had a multiple bid situation and were told to submit our best and final offer, the following week the bank said ours was highest but they wanted to negotiate further; another we bid full price and heard nothing back, which was the case with the other foreclosures; On the house we finally got, we bid on the house within 4 hours of it being listed at full price, luckily the listing agent was buddies with my realtor and pushed our offer as the best.

So, I'd say you're experience will probably differ from house to house and it can be annoying! Just make sure you're happy with the house you bid on and dont get caught up bidding too high if you get caught in a bidding war.

[jaunespinoza]

I bought for 9600 below list last December. A condo in Summerlin, Nevada. The seller was Credit Suisse First Boston. The transaction was being handled by Wells Fargo Asset Management (I guess they really do sleep together). They said 45K, I said 33,400, they said 42 (it seemed like they were able to drop by 3000 for a cash offer), I said 35,400, they accepted on December 29, 2008. I bid on quite a few others and it was a royal pain in the ass. Persistence will prevail. They will come back and routinely ask for highest and best. I tell them I don't bid against myself. They make you sign away most of your rights, and tell you that it isn't really final, until it is really final. My unit had previously sold for 135K in April 2005, and a similar unit (without the pool view) sold for 150K.
BUt, what is more interesting to me is that Howard Hughes paid 25 cents per acre for the 25,000 acres that Summerlin is built on, in the 1950s. I'm working on a few in NoVa at the moment, and I expect there to be more foreclosures in 2010 than 2009, as there will be more this year than last.

[Tish Thompson]

Making the highest offer isn't necessarily going to get you under contract. What you want to be sure of is that your offer isn't impacting the seller's net....so you could "win" the contract by simply offering full price, but having no contingencies, and either conventional or 203K financing or cash.

The market is very competitive right now, and banks aren't going for offers that are contingency laden or that have financing that will cost them money. VA and FHA often have appraisal required repairs that buyers expect the banks to pay for...even though the contract clearly indicates with as is properties, the buyer has to make their own repairs. If you have to go with VA or FHA financing, make sure you include an addendum indicating that you'll make your own appraisal related repairs.

Originally Posted by vauser

Hey,
I am looking into buying a foreclosure property and would like to understand the process as we've never purchased such properties before.
* We are planning to bid for a little over the asking price.
* I understand the bank would wait a few days to try and maximize the offers they receive.
* Assuming, they get multiple offers, what would they do?
1. Would they simply go with the highest offer and that's that?
2. Would they communicate the highest offer to the other interested parties in the interest of maximizing their profits?
3. Would they do anything other than the above? If yes, what would that be?

Thanks folks!