I couldn’t believe my ears this morning when I received the call. In fact the agent who was calling me was surprised that the asset manager at the bank took our offer even though it was 20K less than the “highest and best” offer. The ironic thing is that the bank reps accepting offers on bank owned properties would rather not deal with their own lending institutions. Has lending gotten that difficult lately? Wouldn’t you think that the bank who owned the property would prefer that their own company get the loan???
A Tale of Two Offers
I will give you the quick scenario on the cash offer. The property was a 4 BR tri-level with a basement built in 1998 located in Southeast Aurora. ( Sterling Hills to be exact ) The property was in very good condition for a bank owned property with minor cosmetics needed. Our highest and best offer was 4K less than the asking price and the listing agent advised me there was a lot of action on the property. By the number of real estate agent business cards left over a 3 day period, I knew she was not lying. By the time we submitted our offer ( within 24 hours of viewing the property ) they had several offers and wanted our highest and best by 5 PM the next day. We submitted a strong offer from a paperwork standpoint. I had proof of funds that actually showed 200K in the account rather than some letter from a bank stating there was enough funds. Hint Hint ( When making cash offers, use a snapshot of an account with enough money in it rather than a letter from the bank stating that you have the money. It is more believable ) Our offer had 5 days for inspections and 5K earnest money plus a 21 day closing timeframe. I found that closing before the end of the month gets me an extra deal or two a year because the asset manager needs to close their quota to get their bonus. Sure enough, we received a call the next day saying we got the deal. The agent told me there were offers 20K higher but they liked our cash.
The Bank Decided to take Another Offer
More often than not I am on the losing side of multi-offer transactions. ( You would be too when going up against 4 or more offers and advising your client to make offers based on true value rather than hype ) Some people are willing to pay more than a property is worth just because it is bank owned. I am all for offering more than the asking price if the value is there to support it. In fact I had a young couple make an offer 10K over list price with 4K in closing costs. The property was in really good shape and could go FHA no problem. We had a full blown loan approval ( just needed an address ) rather than a pre-approval. We placed offers on 5 properties and went over asking price on each one but did not get a single property. I even knew most of the listing agents and followed up on our offers etc. In the end they got frustrated and quit searching for their Denver home.
The Moral of The Story
Life is not fair and that is especially true when dealing with bank owned properties in Denver. More often than not, people have to submit offers on several properties in order to get accepted on one. And good agents advise their clients on the real value of a property rather than over-bidding in order to make a commission.