So I'm putting in an offer today on a home that just went on the market 4 days ago in an area with a ton of REOs (this is a home for myself). The agent for Wells Fargo has stated that there is another offer on the home already as well. I'm offering full price, but the seller pays closing costs (including the FHA funding fee of 1.5%).

I know that banks work methodically when dealing with offers on REOs. What is more important to the bank? Bottom line payment for the house (offer - closing costs), down payment, whether or not the buyer uses the bank's lending branch, etc.?

I'm trying to put together the best possible offer here but it's hard because I've never done an offer like this. Any help is appreciated.

The bank compares what it would "net" from each offer. If there are multiple offers, the bank may contact each potential buyer and ask each to submit their "highest and best" offer. The bank could also counter each offer differently. The bank could also just accept an individual offer that it thinks has the highest chance of closing and not respond to any other offers.

Every bank is different all you can do is submit the offer and see what happens.

Certain lenders price agrressively to move there assetts. Wells Fargo is one of them. good luck

All you can tell your buyer is to submit the offer that if they didn't get it they could walk away with no reservations and move on to the next.It's not worth quiveling over a few thousand if it meets there needs.

If this is for an investment numbers is all that matters and emotions don't play into it.

I think this IS the Buyer. He's been carefully researching FHA 3% DP loans here for a couple months now.

LOL, good eye Vermont! I am the buyer/agent here. My offer is in at the asking price. I couldn't afford much more than that, so my reasoning is if they don't accept the offer then it wasn't meant to be.

I'm told we may get an answer by the end of the day. But noon Saturday there were 3 other offers so I'm not holding my breath.

Teke, don't hold your breath on getting an answer by the end of day. I work for a wall street bank, and as you may know, most loans and collaterals end up on wall street. Typically banks make their decisions on offers in 2 to 3 months. REO's take a long time to process.

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and to answer your original question, 100% banks only care about the bottom line in case of REO properties. Only thing that matters is how much money the bank will recover from the failed loan and how fast they will recoup the losses, meaning they'll take the offer that's paying all cash for a quick close

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Wells is pretty quick to respond in my experience & quite reasonable.

Thanks for the info. I still haven't heard anything, so I figure I won't for the rest of the night. This is my first home, and I never realized the amount of butterflies you get waiting for an answer on your offer. I can't imagine what it must of felt like when it was a feeding frenzy back in 2005.

If you offered their asking price, chances are you will get it. Most of the other offers are going to be way below their asking price form investors who bid low on REO's all the time in hopes of picking them up well under market value. Good luck!!!

Well they just did the whole "Last and final offer" request a few minutes ago. I'm keeping my offer steady. Do agents ever try to use this as a bluff to get more money out of buyers? Their reasoning is that they have multiple offers that are similar, but of course I have no idea how similar they are.

You should have went up 100 to maybe 1,000 dollars.

What happens with investors is they never pay over asking. If it's still a good deal others might have offered asking as well and by upping it a few hundred you might beat everyone out.

Definitely you do not want to get into a bidding war and go way over asking! Too many other properties out there for that.

Thanks for the advice. I went up $700, should get a response by tomorrow afternoon, could be today. Since I've been giving a play-by-play up to this point I'll let you know how it goes.

This process has given me the confidence to finally jump into real estate and start working with clients. I'll probably be doing that shortly.

I can only talk about my own listings with Wells but we are in multiple offers on most of them. The bank is listing them priced very competitievely & generating a lot of multiple offer situations.

There is more to it than the price you are offering, the seller is looking at the total net to the bank, so the amount of seller concessions is a factor as well, ie are you asking for closing costs, repairs, etc?

Despite the need for a lot of things that were pilfered from the house (such as doorknobs, cabinet knobs, towel racks, inlaid surround speakers, stove and a destroyed toilet) we're only asking for 11K in closing costs.

I have never had a bank take 2-3 months to respond to an offer on an REO. Many of my REO clients respond in a day or less. If you were talking about a short sale, then I could agree with that, but an REO? Have any of the REO agents here ever experienced anything like that?

OHAgent, it depends on the market. I personally see more properties on the West Coast in Calfornia, where properties have suffered 20% to 30% fade on mid to high 6 figure properties, banks are not going to take a 60c handle if they think they can wait out for a better price. Assuming you're in state of Ohio, prices there are a little lower, might be easier for the banks to take a hit.

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I'm in CA & banks are taking $100-150K haricuts every day of the week right now.

2-3 months? HA! I am located in the foreclosure capital of the world - Las Vegas, and I have never seen a bank take more than 10 days to respond to an offer on an REO!

If you offered full price on a home that had multiple offers here in Vegas, you probably wouldn't get the home. Most REO properties are selling for over list price. List price is irrelevant anyway. The banks price their homes according to a liquidation appraisal they have done prior to listing the home. They are priced to get multiple offers and create a bidding war.

You are also asking for $11,000 in costs too along with an FHA loan. Banks look at what they will net and they also know that FHA loans take longer to close.

New twist in the bidding, one buyer has backed out of the deal while the other is looking for a government grant. So our chances are much better now.

Still awaiting word.

Banks are not going to deal with government grant for REO loans, if you're paying cash and your offer is decent, you should take it down. But like I said, REOs and short sales always drag on. These other experts disagree with me. Hopefully you prove me wrong Teke.

Got a call today from the bank's agent. They pulled a power move and offered the home at $12K more than the original list price and what we're offering. So I basically told her our "Final and Best" offer was our final and best offer. Then she went on to say that if we offered 3K more we'd most likely be assured the deal is done. I told her our offer stands at list price. I'm about ready to walk away from the deal at this point.

I told her the value of homes in the area is dropping by the week and she seemed to understand this. She told me that she had told the bank we're offering a good price but they still wanted to come back with this. I also told her that if we don't hear a definitive answer before the end of the day we're going to go look at some homes this weekend and we may pull our offer if we find something better.

Just curios if in the case your offer is accepted, are they going to pay your commission, too? I had bought a house for ourselves in 2004(bank owned), and they said they're not paying Buyer's Agent commission because I am the Buyer. I said"okay, remove my commssion but I won't bid higher than asking price minus commission which means if house is listed for $206,000, I offer only $2000,000 as-is, no closing cost, no repairs(excellent condition of house)because 3% of commission is $6,000. They took it, and we got a house. Good luck to you!

They are paying my commission. I don't understand the reasoning in this philosophy of not paying commission if the buyer is also the agent. If I decide to walk they're going to pay commission anyway, might as well pay it to me and let's dfo the offer right now. I tend to take these things too personal I guess, but I see it as the bank saying, "we're willing to pay anyone in the world commssion except you".

It's BANK mentality. Direct from an assett managers mouth that I talke to once (The reason we don't pay the buyers commission if you are the buyer is you directly benefit from getting the house at a great price)

It's a power play from the bank. Personally if I am buying for investment I don't care I just lowball the offer and make it up there. Sometimes If I give the listing broker all the commission then they will push my offer more.

It's not right but sometimes listing brokers only push there double-end deals and if it's a great price I will make plenty on the rental or resale so it's a non-issue for me. Whatever I can do to beat out the competition WITHOUT paying more money.

Just got a call form the agent, the bank has accepted our offer. The agent said she had to sell them on our offer price. So now comes escrow.

CONGRATS!! Stick to your guns and make the AM's sweat!

Buyer's market.

I think that depends on the seller and on exactly what the buyer is doing. I had 2 REO sales in the past month in which the buyer was getting a grant from the state. Both closed on time with no problems.

I'm sorry. I don't care where you are located, where the house is located, how big the loss is or anything else. There is no way they are taking 2-3 months to respond to an offer on an REO. A short sale, maybe, but not an REO.

Congrats. You probably got lucky that the other offers dropped off. You received a response in a reasonable amount of time too.

Did the bank send you their addendums to sign now? Do you have your contract stamped/signed by the bank accepting the offer or was it just verbal so far?

Verbal so far, so I guess anything could happen. They accepted the offer late Friday, around 5 EST. So I would expect to be receiving the documents to sign early tomorrow morning.

will you be allowed to do an inspection on the house Teke or are you buying as is? I think you said you're buying the property to live in yourself. Hopefully there aren't any missing pipes!

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Yes, we are allowed to have an inspection and will be getting one pretty soon. I just sent off the signed counter offer which stated we have 7 days to void the contract due to findings of an inspection once it is fully ratified.

Those things aren't mutually exclusive. My REOs (except VA) have inspection contingencies and they are also being sold as-is.

Right, same here. The house is being sold as is, but on the bank's counter offer it states that we have 7 days to void the contract due to findings from a professional inspection.

For the bank is important how much will they "net". Less contgengences, the better. If you want to mach the price, add the contribution to it. So just make your best offer. Good luck!

We got the ratified offer yesterday so I guess it truly is in escrow now. Thanks for your advice everyone.