When making an initial offer on a home it’s natural to try and establish a negotiating position, a baseline from which you are able to work depending on the sellers’ motivation. On bank owned homes, though, that’s not really an option.
There are exceptions, of course. In some of the higher price points (say above $200,000) it’s possible that you might be submitting the only offer on a property and might receive a traditional counter offer if the bank doesn’t like the terms that you have offered. But for lower price points, especially under $100,000 where most homes are receiving multiple offers, there almost certainly will not be a counter offer. Instead, the bank will ask all bidders for their “highest and best” offer.
That means exactly what it says … they want everyone to make their highest offer and, more likely than not, the bank will take the highest of the group. There are some mitigating factors – cash usually will be considered ahead of financing, for example – but the final price tag usually dictates success.
So what can a buyer do? Waiting for the next wave of foreclosures is a possibility though it’s not the cure many believe. Multiple offers were being submitted when there was three months of bank owned inventory just as they are now when there’s three weeks of REO inventory available. The Phoenix market can handle another 8,000 bank owned homes and you’d see little difference compared to what is happening now (except there may be only 6 offers per home and not 16.)
No, the best thing a buyer can do is determine their bottom line price – the number at which they won’t feel they overpaid if they do have the winning big and won’t be disappointed if someone outbids them. It’s a negotiation with oneself and, when dealing with bank owned homes in Phoenix, it’s the only negotiation that’s likely to take place.
[tags]Phoenix real estate[/tags]