If you’re in the market for a home in Phoenix you’ve undoubtedly noticed that buying a bank owned home is an excellent opportunity and investment. Once you find a home worth putting an offer on, don’t be surprised to get the “Highest and Best” response. These homes are in high demand and sell quickly so it makes sense there could be more than one buyer interested in the property… right???
Negotiations from a Bank’s Perspective
Lets sit on the other side of the table for a moment. You’re a bank and you have hundreds, even thousands of homes on the market to sell. You need to keep your costs down, streamline every transaction/sale while selling the home for the most money. As a bank you have two options.
Option #1: Negotiate in Good Faith
You’ll spend a week negotiating back and forth with the buyer and each deal will be uniquely complicated by the buyer’s list of emotional needs and wants.
Option #2: Bluff (Multiple Counter Offer)
This option surfaced with experience… You tell the buyer you have multiple offers and you need their highest and best offer. Instantly the buyer concedes to the highest amount they are willing to pay and they keep the contract simple because they want it to be accepted. You’ve got to admit this option definitely makes sense, at least from the bank’s perspective.
Here is what we’re seeing, banks and investors are starting to respond too frequently with a request for the buyer’s “highest and best offer”. We’re seeing this response on homes that have been on the market for way too long and are significantly over priced… homes in situations where the likelihood of multiple offers is slim to none.
As the buyer’s broker I want to call BS and demand to see the other offer. However, as a home buyer you want the home and you don’t want to do anything to jeopardize losing the opportunity to purchase the home. At the end of the day, I can ask for the details of the other offer but the likelihood of getting any details from the listing agent is slim to none… gee, wonder why?
Responding to a Multiple Counter Offer
First, step back and take a deep breath. Don’t make any decisions until you’ve had some time to set the emotions aside and think it through logically. All too often buyers will dramatically increase their offer to secure their position as the best offer, so they “win” the home… but what if there isn’t another buyer?
80% of the time my buyers stick to their original offer terms and they end up with an accepted offer.
That being said, if your original offer was an unrealistic low ball with countless clauses that complicate the contract, I’d suggest reviewing the contract with your agent. Remember, simple is good when it comes to buying bank owned homes, just don’t fall prey to their sneaky tactics.
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