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When Submitting an Offer on REO/Foreclosure Properties in Southern CA, Timing is the Key!

Call 562-888-0404 for more information about Buying or Selling Homes, Houses, and Real Estate in Southern CA, Long Beach CA. and Orange County CA

Seems like there are always questions surrounding the Buying or Selling of REO Properties, also known as Foreclosures!

In this Mail Bag question, the Listener is concerned about the period of time in making an offer? Wow, what a different world in Real Estate, in just a few years. Since 2007 the Market has been so depressed that no one would have asked if I have time? They would have asked How long can I wait?

 

How Many Days Do I Have To Submit an Offer on REO/Foreclosure After The House is Listed?

Eric: It can mean only one thing. It is time for Frank to talk. Frankapotamous?

Frank: Yep. Frankapotamous.

Eric: Alright, Frank’s topic today, how much do I have to have to get my offer in after an REO is listed? What?

Frank: How much time?

Eric: How much time. Thank you that is actually here and I missed it. The word is on my paper. How much time do I have to get my offer in after an REO/foreclosure is listed? So why are we asking that question right now Frank? Is there competition out there?

Frank: Right now the competition is fierce and you have to have your timing down.

Scott: So, you should drink Gatorade before you start.

Frank: Exactly.

Alissa: Eat those new chews that they’ve got out.

Frank: Hopefully your buyer’s agent is on top of this stuff especially if it is an REO. The way the REOs go, once the REO is listed . . .

Eric: Foreclosure.

Frank: . . . you can go ahead and send your offer in immediately. If you send it in right away, don’t expect to get a response for quite a while, because the standard procedure for the banks is that they let the property season or basically sit on the market for a few days.

Eric: Sizzle.

Frank: So, that the offers can build up. They don’t just send the first offer that comes in, then the next one and the next one.

Scott: Is there a standard period of time that they are letting it sit?

Frank: Usually 3-5 days or so just instead of sending in one by one they can send in all 6, 7 or 10 or whatever at the same time. So, they can hopefully counter everybody at the same time and cut the process time down.

Scott: So as long as you make that window there is no advantage or disadvantage to sending your offer on the first or the third day.

Frank: No, not really. When it comes down to it right now with the level of buyers out there, it just comes down to price and terms and that’s what they are looking for whether you are the first offer in or you are the last offer in, but you do want to try and be in that window time. You would want to be in the first to five days of getting your offer in. I would play the safe card and throw it in at least no later than 5 days after if possible.

Eric: Ok, let’s go with 5 days.

Frank: 5 days.

Eric: 5 is the new number. 5 is the new 30.

Frank: Even after a lot of times if a lot of offers are coming in the asset managers will ask the agents to put a deadline.

Eric: The asset managers are the people at the bank who control the sale.

Frank: There you go. They control the spice.

Eric: Just trying to help.

Frank: They control the universe.

Eric: These people out here they may not know these things Frank.

Frank: I can tell.

Scott: I think that is the second dune reference this show has had.

Eric: Frank had them both just so you know.

Frank: Basically when that drop date comes. They are pretty serious about that drop date, because they  want to get moving. They want to make their selection. Hopefully your agent is on top of that also and comes back and tells you Mr. & Mrs. Buyer we’ve got until Friday 12 pm to get our offer in. After that they are going to go ahead and usually be pretty strict with that drop date. Maybe not the 12pm but by midnight that day and the next day you send an offer in the portal could be closed and o more offers come in. The asset managers are pretty strict about it even if a better offer came in. they’ve got everything on the table and they start working on their decision. But, I would still spend that extra 10-15 -20 minutes to draft that property up  even if that offer has gone pending because nowadays buyers are falling out left and right and you want to be . . .

Eric: Is that something new? Is it increasing?

Frank: You know what I don’t know what to call it a phenomenon or whatever you want to call it.

Eric: The apocalypse.

Frank: There are a lot of buyers that for whatever reason are going in and having their inspections and actually backing out due to the inspections more nowadays than ever,

Eric: I find that funny, because you are buying a foreclosure which typically gets beat to crap.

Frank: Exactly.

Eric: Then, you have it inspected and the guy says, well the windows are broken and the paint is bad.

Frank: It is so hard to get your offer accepted and you are the one, the victorious one and then you just walk away from it. I’m hearing that those same buyers literally almost never get their offers accepted or it takes a very long time again and they wished they had taken their first opportunity but.  .  .

Eric: Is it a situation now where you really can’t be too picky?

Frank: You can’t be too picky.

Scott: Know what you are buying. If you are buying an REO/foreclosure it is not coming off of the showroom floor. It’s in Joe’s Dirt lot behind the gas station.

Alissa: You remember those lost and found boxes at school?

Eric: Yeah, where everybody’s jacket was?

Alissa: I went to a private school so I had to wear certain things on church day and all that and I would forget all the time, so I would go to lost and found and find a sweater. It was gross.

Frank: It is rack shopping, ok.  There’s a button missing. The stitching is all wrong.

Eric: Are you talking Nordstrom rack Frank? Was that a Nordstrom rack?

Frank: Shhh. I’m not naming names. I am not bringing up corporate names.

Eric: Frank how do you go from zombie and dune reference to Nordstrom rack?

Frank: I’m just saying going in know you are getting a discount on the properties because there are faults with the properties. Instead of . . . honestly, I am seeing it happen more and more where buyers are backing out because of the home inspection. But, the home inspector’s job is to scare the bee-Jesus out of you in the first place to see if you are going to move forward.

Scott: Now, you just said in your experience that you are getting a deal in the home. My experinec I don’t think you are getting a deal there is so much competition out there. You are paying what the house is worth.

Eric: I think they set the market.

Scott: Whether it was an equity sale . . . exactly, they set the market and that is what homes cost.

Alissa: I think that last year, the last year and a half, before this year is when people started getting built in 2011.

Scott: If inventory picks up, it might be different.

Frank: I think that people are getting such good deals because the price point at which the property is going to market is such a good price that it is actually probably below market but it is attracting more buyers and driving it right back to market anyway.

Scott: Ok, so offers are driving it up to market not the other.

Eric: But, still by the time a foreclosure is selling nowadays it is setting the market anyway for equity sales, for short sales, for everything else.

Scott: I think we had a segment. We either had a segment or I definitely wrote an article about this listing price is not sales price. So, what it is listed for is not what it sells for.

Frank: The price point of the REOs like I have mentioned before because the banks are making a strict business un-stubborn strict business decision even short sale  . . .

Eric: It is because they are cold.

Frank:  . . . aren’t making the best decisions there because they will counter you higher than what the listing agent wants you to sell it for because that is more than likely market and the  bank  will still counter higher.

Scott: So, they demand a return price.

Frank: The conventional seller will usually sell by emotion and feels that this house is where they were raised and it is worth more because of that. The bank is strictly numbers and right now they are coming in lower than the numbers to generate the interest which is multiple offers on property.

Scott: The interest is driving up the price.

Frank: But spend that extra time get that offer in. You never know. I’ve had at least three properties in the past 4-5 months where the person who eventually got the property sent their offer in after the deadline as a backup as a waiting in line buyer while that property was pending. The previous buyer fell out. Their offer was already there I recognize it, I called them, and they were someone on the tail end so they were still kind of fresh. I asked them if they were still interested and they ended up getting the property, because they were still onboard. They were one of the last on the tail end so they really weren’t waiting a long time.

Scott: Bought a couple of extra bottles of spic and span and moved right in.

Frank: There you go. It’s hard enough to get your offer accepted right now, if you do move forward really.

Eric: Is that how you break it down? Did you break it down?

Frank: Wow, talent. I am feeling the awesomeness in this room.

Eric: We know what we are doing. So, basically, you’re breaking it down. You just broke it down.

Alissa: I think he broke it down. If your offer is accepted, take it. Run with it.

Eric: Scott, did he break it down?

Frank: I think we went in different directions with this question.

Eric: Quick question for the next segment.

Frank: Yeah.

Eric: You’ve got a bunch of listings right now and they are all foreclosures in that 5 day period where you want to get that offer in. How many offers are you averaging on one of your houses?

Frank: At least five offers or more.

Eric: What was the most that you’ve seen?

Frank: I had one that had 33 offers in 10 days.

Alissa: Wow. That’s what I’m hearing.

Eric: Man.

Scott: Did the original offer back out after it got the inspection?

Frank: No, the original offer got the property and moved forward and got the property and moved forward ahead of time. They had a pretty good lender.

Scott: Wow, it was based on the lender on that one?

Eric: Economics is supposed to drive markets like real estate and financial markets, but I’m telling you that I believe that emotion drives the real estate market more than economics. Because I think people get caught up in the whole foreclosure thing but you are really buying a house at about the same price as you are buying a traditional equity sale. It’s all busted up but you are still buying it at all the same price. It’s the whole auction mentality. Oh, I’m in I’ve got a deal or I’m getting a deal.

Scott: It is not busted up, it is previously owned.

Eric: Yeah, but it is not certified previously owned.

Scott: I think it is previously owned.

Eric: It’s crazy and I love it but it’s one of those things where people get all emotional and crazy about buying houses instead of just using their brain.

Alissa: There is a lot of misinformation out there and they kind of get wrapped up in it and they create a buzz.

Call 562-888-0404 for more information about Buying or Selling Homes, Houses, and Real Estate in Southern CA, Long Beach CA. and Orange County CA

 

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