REO Property: Offered for 45K ended up being bought by someone else for 30K...?

Question

Quick question. I offered 45K CASH on a property, and it ended up closing for 30K w/o me even receiving a highest and best...

Does this sound fishy to anyone else? Or is this simply a case of getting under contract and then asking for a repair credit? For me to not even get a highest and best seems odd though.
30K is way below any other comps in the area.

2021 Travis st. North Las Vegas

What possible situations could of occurred here?

Anson Young · Answer

as an reo agent, I can tell you a few things I think happened. 1. While the agent being in â€˜bedâ€™ with the winning investor is certainly likely, I donâ€™t think so in this case. For one, there is WAY too much heat on a property with 17 offers, thatâ€™s 17 agents/buyers/investors who can and will cause huge problems for the listing agent if something was against ethics or law. Believe me, on a $30-45k listing, we are usually paid a $1000-1500 minimum. Losing your license or paying big fines over $1-2k is NOT worth it for most agents. REO agents are under a microscope now that inventory is down and there are many investors clamoring over the same deals. 2. More likely, and this happens very often, is the winning buyer got it and knocked down the price on inspection. Some asset managers are smart, and will say â€œgo away, I have 16 other offers that will net me moreâ€, most are too dumb to know better and will grant the price reduction to get it closed ASAP. I have seen anywhere from $5k-50k knocked off during inspection, buyer simply says â€œdue to the enormous amount of issues with the property, we will take it as is for $xâ€. Even though they signed addenda that state AS IS WHERE IS, you might be surprised what people get away with. I donâ€™t suspect foul play, unless the agent is dumb as rocks (further comment withheld ïŠ) and likes to play with fire.

Don Konipol · Answer

Anything is possible. Price is only one issue. Seller must also consider likelyhood of closing, contingencies, how quickly buyer will close, holding costs, etc. Of course, "other reasons" sometimes pop up!

Brian Levredge · Answer

Agents are obligated to present all offers but that doesn't mean that they do. With 17 offers it's hard to imagine why it would go so low. Off the top of my head, I can offer two other reasons besides the other that I listed earlier. How clean was your offer. Did you have it loaded with contingencies? If you did, that would explain things to a degree. Another alternative is the type of REO. If it's a Fanny or Frauddie REO then the bidding is initially limited to people that will occupy it as a primary residence. I don't think this is likely because your agent should have known and told you if that was the case for this one. I wouldn't worry about it too much because this stuff happens all the time.

Brian Levredge · Answer

Sounds like the seller's agent spun it off to one of their investor/buyers, which isn't uncommon. Was the property actually on the market? How was your offer submitted, because to me, it sounds like your offer never made it to the asset manager and probably sat on the listing agent's desk.

Joe Delia · Answer

I don't know what he has to tell me. Doesn't mean I can't ask! :mrgreen:

Steve L. · Answer

Does the MLS you have access too show who the Buyer's agent was? There could be many possibilities, but agents are not required to disclose anything to you. How does it benefit them to give you all the details of the sale? Maybe it's an inside buyer, maybe they got a discount in escrow, maybe it was a bulk sale, maybe the property got damaged, maybe the property has code violations the Seller wouldn't pay for, etc. etc.

Joe Delia · Answer

Our offers are clean. Nothing crazy. I got the agents number. Calling tomorrow to just ask a few questions. No big deal, but just want to know.

Steve M. · Answer

Did it go to an owner occupant? I know HUD's will sell to Owner Occupants even if the investor bids 400 times the amount. They will always go with an owner occupant over an investor. I think this also holds true for certain types of REO's. FM's I believe have a 15 day window for owner occupants before they open up or even look at bids/offers from investors. Now, if it was another investor who got the bid accepted at $30k, its sounds like someone is in bed with someone else :) my $.02 cents!

Joe Delia · Answer

Yes. I've found other properties. I'm just curious to know what possible situation this could happen under. My offer was a typical closing costs for both sides. Yes, it was an REO. My offer was through an agent, so, possibly the agent could of got both sides of commission. Does he not have a responsibility to report all offers? Yes was on the market. Had over 17 offers on it, per my agent.

Curt Davis · Answer

Was this a bank owned home? If so the buyer could have given the selling agent both sides of the commission. Or the buyer has a history of always closing without issues. Yes, you should have had a highest and best offer but crazy things happen. You will find another one.