How much is too much

Question

Hi,

We have bids in on 2 different SS properties. There are several others that have come up recently that we might be interested in.

The bids we have placed are pretty much our best and final bid so counter offers will most likely not be accepted by us.

My question is how many bids is safe? Should we only bid based on what we know for sure we can handle?

Since they are short sales there is time involved and we don't really want to miss a deal if it comes along but don't want to overextend ourselves either.

Thanks

Rick

Richard Mann · Answer

@Monica Breckenridge - Got it, thanks!

Monica Breckenridge · Answer

I always take back up offers on my short sale. The problem is most owner occ buyers arent going to wait during the short sale process in back up. So by the time the short sale is approved and the buyer walks, the back up offer is usually already moved on. With every offer you make you should have full intention to purchase each of them. The contract states you have to be working in good faith. So you in good faith want to purchase that property and want to go through with the offer.

Richard Mann · Answer

@J Scott - Thank you for the explanation, I understand better now. @Monica Breckenridge and @J Scott - Just to be sure then, for short sale properties one should be prepared to follow through on all offers submitted to help ensure the homeowner does not end up in foreclosure, if of course you care about the homeowner (which I do). I would assume then if the properties being bid on are REO's there would be no real issue with multiple offers in that situation, correct? I would also assume that making multiple bids on normal MLS properties would pose no issue either since there are no legal ramifications for the owner. Thanks again for the input.

David T. · Answer

The last time I stepped in to pick up a dropped short sale with bank approval on the price, it took over four months to close.

J Scott · Answer

It's not that simple for short sales. The bank will only consider one offer at a time, and if that offer gets pulled and a new offer gets put in its place, the bank will essentially start the process over in most cases. This means that the seller is closer to foreclosure and is more likely to get foreclosed upon at some point in the future.

Richard Mann · Answer

@Monica Breckenridge - Thanks Monica, I certainly understand your point and I am one who wants always to do the right thing for myself as well as others. True integrity is a rare attribute in the world and one of the reasons I asked the question. Please correct me if I am wrong, but don't most Realtors try to have a backup offer in place so if the original one falls through there is another one to fall back on?

Monica Breckenridge · Answer

Here is the problem with this strategy. When you back out of contracts that raises red flags to that listing agent. And if they have more deals then they may not accept the next offer since the history is backing out. It just gives you a bad reputation with the listing agents. I will strongly advise my sellers not to accept certain offers if I know there was a history of this. The problem is it puts the seller at risk of losing their house to foreclosure. I understand the investor position that they don't know which offer will get accepted. But if you write the offers you should be prepared to close on all of them if they get accepted. There are many different exit strategies. Wholesale if you don't have the money available. You can fix and flip, or buy as a rental. Just make sure you stay committed to the properties you submit offers on so you don't get a bad rep.

Richard Mann · Answer

@Mark Ferguson - Thanks Mark, appreciate the information. Good to have a goto guy in my own state. @Brandon Turner - Thanks Brandon, I wasn't sure and want to do it right the first time.

Mark Ferguson · Answer

Hi Richard, In Colorado the short sale addendum protects the buyer until written acceptance by the bank. I would put in as many offers as you want. You can always back out before acceptance and get your earnest money back. Once you get one or two accepted by the bank, then you could rescind your offers on the other ones if you don't have the funds to buy them as well.

Brandon Turner · Answer

Hey @Richard Mann - I think you should put as many bids in as possible. I mean, worst case - if they all get accepted (besides that being a sign you offered too much!) you can always back out as long as you have the right clauses in there (like an inspection clause)