Bidding On Bank-Owned Homes

In July, over half the offers we presented to listing agents in Southern California were on homes with at least one other offer.

To Angela Creech, our all-star agent in Orange County, this number seems low, “It feels like all my clients are trying to buy homes with other offers. Right now, pretty much every bank-owned property has multiple offers.”

Angela recently submitted offers on these two bank-owned homes:

Cypress

  • $327,000 home
  • 20 offers after 4 days on the market
  • Will probably sell for around $375,000

Irvine

  • $789,000 home
  • Multiple offers after 2 days on the market
  • Will probably sell for around $815,000

Tips For Bidding On A Bank-Owned Home

Anyone interested in a bank-owned home should follow Angela’s advice and show the sellers you’re serious and make your first offer your best. Specifically, you want to make an offer that is clean and competitive:

  1. Make a sizeable down-payment. If you can, put at least 20% down.
  2. Include an earnest deposit of 3%.
  3. Reduce inspection contingency periods from 17 to 10 days.
  4. Don’t ask for closing costs or put anything under “Items To Be Included.” Let the sellers keep their fridge, range and pretty set of patio furniture.

If you’re looking at bank-owned homes in Orange County, keep in mind that these properties are aggressively price to attract a lot of buyers. This works for the banks, bank-owned homes sell for at least the asking price, if not over it.

What are your experiences bidding on homes with multiple offers?

  • Reggie

    This page is an understatement of what the LA-OC market has been this summer(2009). I have been up against 40+ offers twice, I have been outbid 20-80k (under 400k props), you would be lucky if you get a courtesy communication from the listing agent that you did not get the home, listing agents playing the market and not updating to pending even after escrow, appraisers continuing to mark socal as a declining market, listing agents cutting inside deals? – one nice home that I saw near CA country club in N Whittier, had fallen out of escrow and the person showing it asked me to have the listing agent make the offer unless my realtor was a relative, next, the agent mysteriously could not receive my offers by email till the third time, we never heard from them again, another agent actually called my realtor and asked to reduce the offer by 50k.

  • CJ

    This is indeed what is going wrong with the market. This is a business and realtors are paid to get the best offer possible. And if you’re bidding and bidding – have your final price and don’t go over it. Let some sucker bid higher and overpay for the house. Realtors are playing tricks with the market. Look at the foreclosure statistics – more in July 2009 than in the past two years?? More then double July 2008. Let’s reign in some common sense – more foreclosures than ever – turbulent times with Wall Street speculators trying to paint a rosy recovery is happening, more foreclosures and thus inventory than ever, no signs of lower unemployment or increased production in the economy… if you buy now you are playing russian roulette unless you like the house and will settle for 5+ years. But don’t blame the game or get frustrated by it… just go and low ball as many sellers as you can, this is after all an investment (business decision) as much as it is an emaotional home purchase. Good luck to all and remeber to trust your gut !

  • Oliver

    AND Get the offer in quick. Some of these homes are going pending the first day they hit the market.

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