Huh??? Seller reserves the right to make multiple counters on a REO... - Posted by Vic

Real Estate Investing Apartments
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Posted by Vic on June 16, 2000 at 08:52:35:

Jim,

I suppose I never really considered doing it this way. But I tell you what, I really, really like the concept.

I suppose the part that was making me skeptical was the fact that it was in writing. I guess with the proper wording that that wouldn’t be a problem, even in writing.

The thing I like most about this is that it reverses things & gives the seller the upper hand in counters.

Man, the more I think about this the more impressed I am with this concept. Will definitely keep it in mind on future deals. Nothing like being in complete control.

Vic

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Huh??? Seller reserves the right to make multiple counters on a REO… - Posted by Vic

Posted by Vic on June 14, 2000 at 11:58:22:

So, I’m sitting here going through the MLS & I run across a REO property. In the description, it says that the seller (the bank) reserves the right to counter multiple offers. Can someone who is familiar with REO’s explain to me how this would work? Would they counter all offers at the same price & accept the first that agrees to their terms? or would they somehow counter different offers at different prices? How do they get away with something like this?

Vic

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Re: Seller reserves the right to make multiple counters - Posted by JPiper

Posted by JPiper on June 14, 2000 at 14:23:34:

Personally I like the technique, and have used it with a small variation.

First, I didn?t have it all set out in the listing information?.because it would be difficult to predict when multiple offers might occur.

But when confronted with multiple offers the way I handled it is this:

  1. Inform each buyer (or their agent) that they are in a multiple offer situation. Gotta tell you one thing?if the buyer (or their agent) was not motivated before?.they suddenly become VERY motivated. Who likes to lose something?

  2. Inform each buyer (or their agent) that the way you will be handling is that you are verbally counter-offering each party with a deadline for their response by a specified time and date. Your counter-offer is the same to each party.

  3. Inform that you will pick the best counter-offer at the specified time. Naturally if the offers are equal in price you will pick based on some other criteria?.perhaps earnest money, length of closing, contingencies, etc.

  4. I also inform them that in past multiple offer situations that at times the winning buyer is one who offered more than the listing price.

I have found that this technique tends to produce maximum motivation, and maximum offers. Personally I think it?s a better technique for the seller than to counteroffer only one of the offers?.it fosters more competition.

JPiper

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I just did this Monday… - Posted by HR

Posted by HR on June 16, 2000 at 07:43:10:

Hey Jim,

I agree with your comments 100%. I just did this process this past Sunday and Monday, and it worked like a charm.

I’m selling a duplex with a list price of $114,500. My wife is a realtor (but buys and sells only for us), we had it on lockbox, and we got lots of traffic last weekend. It’s a nice house; fmv is probably around 110k and I want to sell for around 107-110k.

Preapproved couple comes thru and loves it. Offers 100k Sunday at like 9am. Realtor tells my wife she tried to get them to make a higher offer, but they are first time buyers and (her words exactly) “they expect a counter offer.” Ahhhh, that tells me they want to negotiate a little. All right!; bring it on!

My wife informs them that there are multiple parties looking at the house (not multiple offers yet, but we made it sound that way), and that we needed a 24 hour time frame to think about it. This would take us to 1pm Monday. Come noon on Monday, my wife called the other realtor back and said the other parties won’t be able to look at it till after work at 5pm, I’m giving them till 6pm to make an offer, and we will get back to all interested groups by 7pm. If this cancels their offer, so be it, because “It’s my husbands house, he’s the one really negotiating here, I’m just on title and list and sell it for him (man I love that good cop, bad cop stuff), yada yada, and my husband says that if this kills your offer because it expires, he says so be it because he is confident one of these other offers will be much higher and is also preapproved.”

That other realtor went ballistic on my poor wife. “That’s no way to handle a legitimate offer!” Yada yada (why not?). Well, within the hour, they call back with a revised offer of 110k, we haggle a bit more, and I sell 110k, no stove or window ac units in one side, preapproved buyers, done deal. Now it’s just a matter of passing inspections.

I anticipate someone asking… Is this legal, saying there are multiple offers if there are not? Sure. I had multiple offers. I could call about 100 re friends and I’d have 100 offers in my fax machine in 10 minutes. Get real.

I’ve never told my preaproved buyer to walk before, but it worked so well this time that I may try it again! I wanted to ask for them to pay seller’s closing costs, too, but since they are buying FHA, this would have been impractical. My wife talked me out of that one, thank goodness. Sometimes the old negotiating adreline gets going and it’s hard to stop… anyway, I agree 100%.

HR

Ps. Particulars on the deal: purchase price 34k, rehabbed 35k, rented for a year 5k rental income profit, selling 110k. Next!

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Great Concept, But… - Posted by Vic

Posted by Vic on June 15, 2000 at 14:04:19:

… I wonder if they are countering verbally or in writing. I was under the impression it was in writing.

If it is in writing, how would they get away with it or could they get away with it?

I can see it now, 2 people agree to the bank’s counter offer in writing, they sign the offer & send it back to the seller (bank). Both think they just bought a property. Seller calls one & says - “no, sorry we sold it to someone else just 20 mins. ago”. Hmmm…this sounds like trouble.

Seems to me that you would have a good cause of action against someone that sold a property twice & did so in writing both times.

Now if it’s oral, I agree there wouldn’t be much of a case, but in writing, that’s a whole nother ball game.

If somehow, it can be done using written counters, could someone please clue me in, cuz I’d love to try to employ that concept.

Vic

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bank won, I lost - Posted by Steve GA

Posted by Steve GA on June 14, 2000 at 19:38:02:

Same thing happened TO me in a REO offer. Bank informed me that there were multi-offers, and me, mr. smart investor, refused to play their little game. I lost a nice 159k home to another offer only $500 higher than my 92k offer. I was willing to pay 105k for it in a counter offer situation. some days ya gotta play, or lose out…

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Re: Seller reserves the right to make multiple counters - Posted by Rob FL

Posted by Rob FL on June 14, 2000 at 17:35:00:

This is a very good technique, I have done this before as well. One thing most people don’t realize is that a verbal counter-offer is only as good as the paper it is not written on. That way you won’t accidentally get stuck selling the property to 2 different buyers.

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Also known as: “Highest and Best” (NT) - Posted by Dan (NY)

Posted by Dan (NY) on June 14, 2000 at 16:30:11:

NT

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Hal, Congratulations!!! Sounds like a really sweet deal!!! (nt) - Posted by Vic

Posted by Vic on June 16, 2000 at 08:54:50:

nt

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Re: Great Concept, But… - Posted by JPiper

Posted by JPiper on June 15, 2000 at 21:04:09:

Vic:

This isn’t particularly complicated…I’m sure the bank’s attorneys have it all figured out.

In their original counteroffer to you they could condition it upon their unilateral right to cancel the contract within a specified period of time due to the receipt of a better offer. I suspect if they chose to have it in writing their attorneys would have this written in the appropriate language.Just guessing of course.

Not sure what you mean by “getting away with”. Is this condition really so much different than other conditions by either buyer or seller in a contract? Clearly, if you didn’t like this particular condition then you would not accept the counteroffer. OR, you obviously have the option of making a better offer, better counteroffer than you feel any competitors would make.

I understand this is not what you normally see…but that doesn’t make it any less valid. Have you ever made an offer to a seller conditioned on finding an acceptable buyer?

We’re used to seeing lots of conditions in an offer from the buyer…so why not conditions on the part of the seller?

JPiper

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Vic, go to the NOREIA website and get my number and call me; I want to get something to you. (nt) - Posted by HR

Posted by HR on June 16, 2000 at 16:59:56:

nt