Los Angeles

[dipr]

I have made offers on some places, but the agent says "bank wants all best offers now", but bank will not tell us what the highest bid is.

that is ridiculous and pointless, let us do our bidding and THEN the bank can accept one.

[Adam-la]

It kind of sounds like they are asking you to make your bid.  This is a pretty straight forward system.  You want to buy a property, they want to sell one. 

Banks are motivated sellers. Use this to your advantage. 

If you want the property, put in an offer that will beat others.  If you are not so interested in it and want to lowball an offer, you can do that as well.  just don't be surprised if they don't accept your offer. 

[dipr]

"put in an offer that will beat others."

that is the problem right there.  how are we supposed to know how much others are willing to pay?

[Adam-la]

If that is what you are looking for then the venue you should be at is the county courthouse.  Once the property is on the market, the sales process is no longer an open outcry auction. 

With a bit of work, you can pretty easily figure out what others will bid on a property but the key is to ignore all the others and bid what you think it is worth.  If you change your mind, use your contingencies to negotiate a better deal or walk away. 

Most homes sell within a pretty narrow band of recent comparable sales.  The owners don't want to sell for less than nearby, recent sales and the buyers (you) don't want to pay more so the result is 'usually' a gradual increase or decrease over many months. 

[REINVESTOR]

I agree. I submitted an offer and bank replied that there where other offers and to go ahead and submit best and final offer. i stuck to guns and did not go higher. I come to find out that the bank did not accept any offer and just this past week they reduced the price by $12,000. I dont get it..

[Adam-la]

Was your offer more or less than the current price?

[BillR]

The hope is you overbid.  

If you know you can revise your bid, you're incentived to make a reasonable (but lower) offer, not your top range.

[dipr]

thanks for replies, maybe the banks make more money like this.  i thought they will make more if they just reveal the offers and then put a solid deadline.  that would be at least two 'rounds' of bidding for them.  

[buyerinwaiting]

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Adam-la wrote:

If that is what you are looking for then the venue you should be at is the county courthouse.  Once the property is on the market, the sales process is no longer an open outcry auction. 

With a bit of work, you can pretty easily figure out what others will bid on a property but the key is to ignore all the others and bid what you think it is worth.  

How?

[Adam-la]

Well, here is how I go about it. 

1) decide if this is a property I want to buy (or at least invest 2 hours of time to research)

2) determine who else will want to buy it.  Am I competing with investors, flippers, home-buyers, move up buyers, foreign cash buyers, etc.  if there are glaring condition/habitability problems this weeds out most normal home buyers

3) find the recent comps in the 1 mile radius.  I look at price per square foot, overall condition, number of bedrooms and baths, size of lot and anything that makes this more (or less) attractive than the comparable

4) Based on 3, you'll know where investors are at, you can extrapolate if well under market and needing work what the flippers will pay and if the house is in fixed shape, what 1st time or move up buyers will pay. 

5) Then I figure out what I think it's worth to me. (this is very subjective)

6) I make my (personal) offers with as few contingencies and short time lines (no appraisal, 7 day inspection).  I know the appraisal value based on the work in item 3 and I rarely offer above recent comps. 

Then you wait and see what the bank does.  Also keep in mind that you have a huge opportunity AFTER they accept your offer to renegotiate the price based on condition.  If the place is a dump, use it to bring the price down. If they don't want your offer, figure out why.  Might be your offer is so far below asking price they don't want to waste their time. 

if you are trying to buy bank owned properties, it's pretty easy to spot their patterns and take advantage of it.