I have been going through this a lot lately with many of my Michigan home buyers. They are bidding on Metro Detroit foreclosures that have been priced very reasonably. In fact many of them have been priced below market for the great condition they were in.
The home buyers have been notified that there are multiple offers on the property. The bank and the listing agent want "highest and best offer". What that means is that the home buyer has one chance to put in an offer. They can raise their offer or they can stay with the offer they have.
The question I always get is "what should I bid" "Should I raise my bid or should I stick where I am at". This is a tricky question. You are bidding blind. You have no clue on how badly the other buyers want the house.
Remember I can't determine what price will win the house. It depends on what you bid and what the others bid. We don't know what the other home buyers are bidding on this foreclosure. All I can do is give you the comps to help you make a good decision. It is a question that you and your spouse must answer.
First ask your agent to pull comps again. Here are some of the questions to put a good winning bid in on that foreclosure:
- What is the true value of the house? If you really want the home then you should put a bid in that is close to the true value of the home.
- Do you really want the home? Then sometimes you have to pay for it. A full priced offer or above list price offer might be in order.
- if you want a deal... then you might want to stand pat if you think you have a fair offer.
- Are you limited by payment concerns? this is the real world. I don't want you to bury yourself in a house payment. If you have a determined a house payment based on a budget then think hard before you go over that payment.
Winning the highest and best boils down to who wants the house the worst. Who is willing to pay the highest price. The bottom line is how bad do you want the home and how high are you willing to go to get the home. Even in this Metro Detroit buyers market foreclosures are sometimes going over list price.
Here are a few of the questions I ask people is to put in all in perspective. Is this the nicest house you have seen? How would you feel if you lost the house? How much is the second nicest home that you have seen? If you lost this home and had to buy the 2nd best home how would you feel?
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Russ Ravary your Metro Detroit realtor
A majority of my REO and Foreclosure properties go for above asking. It really depends upon how the property is priced. Some asset managers price properties above the market value so that they have some wiggle room to negotiate, others price them 10% below market value and expect to receive above asking.
Todd Kevitch
BPO Realty LLC
Boynton Beach foreclosures
Boca Raton foreclosures
Lake Worth foreclosures
West Palm Beach foreclosures
Hey, Russ, those are the questions we ask our buyers. You need to know if this is the house. Multiple offers are not uncommon now that prices are getting so much better. If the buyer qualifies for the home in the first place, which we have to assume. how much do they want it? The cleanest and best offer usually wins. Give them your best advice and I guess pick up the pieces when then lose one or two. They probably will get it by the third one (one would hope).
Recently many offers that we have been submitting for buyers have been in a multiple offer situation. I really depends on the buyer as you say. Some time back our buyer got a bank owned house for over 50K above asking price - never seen that before. And it appraised (even in this tough market) for over 75K above that. The buyers where so happy. ~Rita
We are now seeing REOs coming in well under market and then getting multiple offers quickly.
Hi Russ, Thanks for posting about foreclosures. I have been looking into them lately and your info is very helpful.
Russ, I don't envy Realtors having to deal with that issue. Buyer then want to blame you if they don't get the house.
I have seen more property being priced right then going to multiple offers, we get some and lose some, the name of the game is to keep submitting offers.