Investor offer stand a chance after higher offer being submitted to lender?

Question

Hello fellow investors! 
This is my first post on the forum. I have been reading a lot and found that there are many great contributors, so I've decided to join!

I am a realtor, but it is time to put the investor hat.

I have several short sales working as listing agent. I have offers from end buyers on all of them and I am doing the negotiations myself.

Well, on one of them the buyer decided to walk away after waiting 2 months for bank's assignment of a negotiator. (FHA loan)
Now that there is no buyer, I would like to step in and do the option contract and put an offer on it to submit to the bank. 
The lender has not even assigned a negotiator and has not requested a BPO either. They do still have the short sale package in their system including the buyer's offer, HUD 1, etc... but they haven't looked at it yet and it's been 2 months. 
I have not called to let them know that the buyer walked away.

Obviously the offer I would make as an investor is a lot lower than the one they have in their system so I am a bit worried about the potential of the deal.

My questions are the following:

1) Should I call to let them know the buyer walked and to withdraw the initial offer? This is CHASE Keep in mind they haven't even assigned a negotiator. We are still at zero I would say.

2) Will the fact that they already have a higher offer in their system and they know that a buyer was already willing to offer that much, make it a lot harder for them to approve a low ball offer I will make as an investor?

The good thing is that I already know what an end buyer would buy this home for and I can adjust my offer to be lower than that but not too low for them to close the file for insufficient offer.

What are your thoughts on this?

I would appreciate any insight!

Thanks

Corry Taie · Answer

I am usually embarrassed with my first offer, & let me tell you why. If you're not embarrassed by your first offer, you offered too much. If the bank accepts your first offer, you offered TOO MUCH. If you go too high & they counter you (which they will) you wont have room to negotiate.

Account Closed · Answer

Working for a rehab lender I can say I see wayyyy too many investors bid too high on their projects.  They make their money on the purchase price.  When we work with an investor and they come to us with a purchase contact that seems too high for the area we get concerned.

Also, as someone that sells REO properties, on the lender sied, I can say that we typically go with the higher offer, unless the lower offer is cash as that makes us think twice.  In addition, my experience with Chase is that they are very slow in the REO department and it sometimes takes them up to 6 months to make a decision.

Nick J. · Answer

Steve, the answer to this question:

James Ward · Answer

Great post Corry.

When you make your 1st offer on any short sale that you have control of the negotiations it should be low.  Get debate over this point has gone on here on BP, but it is always funny to me that the very ones that advacate offering low numbers are the investors that are always here and answering questions.

We always make very low offers at first.

Steve Norton · Answer

this is great info! thanks..

Steve Norton · Answer

you are funny! :)

well if you offer 50% of FMV as your first offer.. then yes I'd want them to accept it. :)

Nick J. · Answer

hell ya, right as I was submitting my offer :wink:

Exactly who do you work for again? This statement is the Realtor side of your brain needing a kick in the shins. Don't worry about hurting their feelings, trust me, they don't care about yours!

that investor was/is a cheeseball, I doubt that you ever closed a deal with that 'investor' or that, that 'investor' ever closed any of his own deals.

It doesn't matter what you offer, what matters is getting a BPO done, influencing the BPO to get a low price and then working it down from there.

50% of FMV.  Remember, you're in this game to make money, not be concerned with what the bank thinks, they obviously don't know what they are doing do they?

Of course, I'm not eluding to that you will get it for 50% FMV but the absolute worst thing you would ever want to happen to you is have your first offer accepted!!!!!

Can you think of the one and only reason why you don't want your first offer accepted?

Steve Norton · Answer

Hey Nick thanks for the reply!

Would you suggest I call them to withdraw the offer that is in their queue?

Also, I don't want to low ball them TOO much as I know from experience with dealing with another investor that banks sometimes close the files for insufficient offer but they make you wait until the negotiator has been assigned, so I don't want to lose 2 months to get it closed and then submit another and wait another 2 months.. you know?

The home owners owes 199k on it and the offer from buyer was at 170k. What would you offer? I was thinking 150k. Thoughts?
thanks

Nick J. · Answer

use that to your advantage, tell them that the buyer realized they were offering too much and that the market dropped even more while they were waiting approval.

submit your offer(please remember to keep you investor hat on at this point, don't think like a Realtor, you will screw yourself royally) and negotiate yourself.

Don't worry about the previous offer, make your offer seem like the obvious choice for them.

Again, I can't stress enough to PLEASE, PLEASE don't submit an offer just below theirs, submit an offer you can make money with, it's going to be hard for your Realtor brain to shut up while your investor brain is analyzing the offer price, just know that unless you feel uncomfortable with your offer, you're offering too much.

Good luck!!! I'm routing for ya

Investor offer stand a chance after higher offer being submitted to lender?

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