UGHHHHH! I just lost a bidding war.
So I had a buyer who was downright angry his offer was REJECTED by a seller. And, he had a point, as his offer was over $60,000 MORE than the contract the seller chose!
So, why did the seller not choose his?
While I was not representing the selling side, here’s a bit more to the story. The seller was a bank, the home had been foreclosed on and vacant for 2 years. The bank went with an all cash offer – and a 10 day closing timeline. And they were happy to do it and leave $61,000 on the table.
But why? It usually looks like this.
The cash investor says I will buy the house ASAP. All cash, no contingencies, no hassle, no headache. Here’s $250,000, we close in 10 days. Here’s $10,000 if I don’t follow through.
My buyers offer was pretty standard. Missouri is GREAT at protecting buyers and the bank knows that. So, the offer was to buy the house in 45 days. If the bank agrees to lend the money, and if it appraises. And after the buyer has it inspected, he might decide he wants a bunch of things fixed. Also the guy lending money needs to approve of the condition and appraise the value. Also, they may not lend the money at all. Who knows? Please take my offer for $311,000 and if I bail at the last minute, you can keep my $1,000 deposit.
So the bank does a risk/reward analysis and takes the cash, almost every single time. Foreclosed homes can be a great source of equity or a cause for great headaches. Keep in mind the cash investor is buying it blind. This means no inspections. This also means the plumbing might be crap, there could be hidden mold growing in the crawl space or attic. Maybe there is toxic Chinese drywall installed or the drains may have been filled with concrete by the past owner. The issues attached to an empty foreclosure can be enough to make someone glad they didn’t win the bid!
Not every real estate negotiation is a chess match. Sometimes one side has an advantage and a clear objective that doesn’t warrant further consideration. Bank owned properties often fall into this segment. There is nothing wrong with your agent or your offer, it’s simply an example of the truth behind the expression CASH is KING…especially in real estate.
Real Estate Advisor
Blondin Professional Real Estate