Put good offer in an Chase owned foreclosure... NO WORD!

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Put good offer in an Chase owned foreclosure... NO WORD!

Jessica Schwartz
Dubois, WY · Member since 2012 · 2 posts · 0 votes

We are very frustrated. Some background- we live in a small town in a rural area. There isn't a very hot market here, especially for people who live here year round. We put an offer in on a foreclosed house we have had our eye on for a few weeks, but were delayed because of having to go our of state last minute for a funeral, etc.

The morning we went in to place our offer, they dropped list price $10k to just over market value. We put our offer in for market value upon learning the list price had been reduced, which was only 2k below list price, and asked that they simply bring it up to code as there is a section of electrical that needs to be reburied, left over from the septic being replaced a couple years ago. Our bank won't finance until that is buried, and no bank would finance it like that.

This was last Wednesday. We gave a deadline of that Friday afternoon- never heard anything until we finally found out the lady who apparently is in charge of this or the listing, or however it works, was apparently out of the office because when the listing agent forwarded our offer, he got an automated response.

Apparently the list agent felt the bank was seriously considering it because it hadn't been outright rejected. A previous offer placed on the house for 30k below list price was immediately countered with list price (this was a few weeks ago) and then it never went anywhere.

We extended the offer until today, and we heard from our realtor that apparently the lady is back i nthe office, but not responding to the list agent's emails about our offer. Both realtors felt they were seriously considering it and likely to accept as it was a very fair offer and better than anything else they had received, and ours was the only one in the pot.

So what gives? Why no response at ALL?! Do we just kind of have to humor Chase for now? When should we expect to hear something? Are they possibly waiting to see if they get another offer in this week since they lowered the price? Are they just being jerks? We really want the house- we will never find another one in that area (which is perfect for us) and within our price range.

Is there a way to find out what department at Chase I could call and talk to someone?

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J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
14y

Your expectations are too high. A couple things to keep in mind:

- The asset manager doesn't care when you offer expires. My guess is that they've never even looked to see when an offer expires.

- There are 100 reasons why they may not have responded to you yet -- everything from they haven't gotten around to it to they're waiting to see if they get more offers to they aren't interested and don't feel like telling you it was rejected. That said, if your offer was only $2K below list, there's a good chance that they're not just flat-out rejecting it.

- It's unlikely the bank will officially "bring the house up to code." In fact, the contract addendum probably specifically forbids you to have any county inspectors look at the property until after closing, and the bank is certainly not going to ask for any inspections. Once they have something official from an inspector, they have to disclose it, and they don't like disclosing anything.

- The bank might make the repair, but again, it won't be anything official in terms of meeting code. It's more likely they won't make the repair, regardless of whether it means you won't be able to get a loan. More likely, if they make the repair, it then allows other potential buyers to get loans, so they're more likely to make the repair outside of your contract and then let you compete with other buyers again after the repair is made.

Given all that, your best option is to sit back, try to relax and wait for a response. You'll probably get one sooner rather than later, but it's possible it could take another couple weeks if they just lowered the price and are waiting for competing offers. Unfortunately, there's nothing you can do about it...

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  • J ScottPro Member
    Moderator
    Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
    14y

    Your expectations are too high. A couple things to keep in mind:

    - The asset manager doesn't care when you offer expires. My guess is that they've never even looked to see when an offer expires.

    - There are 100 reasons why they may not have responded to you yet -- everything from they haven't gotten around to it to they're waiting to see if they get more offers to they aren't interested and don't feel like telling you it was rejected. That said, if your offer was only $2K below list, there's a good chance that they're not just flat-out rejecting it.

    - It's unlikely the bank will officially "bring the house up to code." In fact, the contract addendum probably specifically forbids you to have any county inspectors look at the property until after closing, and the bank is certainly not going to ask for any inspections. Once they have something official from an inspector, they have to disclose it, and they don't like disclosing anything.

    - The bank might make the repair, but again, it won't be anything official in terms of meeting code. It's more likely they won't make the repair, regardless of whether it means you won't be able to get a loan. More likely, if they make the repair, it then allows other potential buyers to get loans, so they're more likely to make the repair outside of your contract and then let you compete with other buyers again after the repair is made.

    Given all that, your best option is to sit back, try to relax and wait for a response. You'll probably get one sooner rather than later, but it's possible it could take another couple weeks if they just lowered the price and are waiting for competing offers. Unfortunately, there's nothing you can do about it...

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    Welcome to the frustrating world of REOs. REOs will break your heart. My normal advice for someone wanting to buy a REO would be to look at 100, make 10 offers and hope to get one of those ten. Unfortunately, that doesn't work in your case.

    I agree with J Scott that the bank is not going to make the repairs you're requesting. In general REOs are not sold to people who are getting conventional financing for exactly this reason. They're usually bought by someone with cash or an investor who's getting a loan from a lender who doesn't care about this sort of stuff. The selling bank may very well not be accepting your offer because they know, in the end, you won't be able to get the loan.

    By far most of the REO offers I've made have received no response. No rejection, no acceptance, no counter, nothing. Now, I didn't particularly care, because I was writing 2-3 offers a week. Unfortunately, you don't have that luxury.

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  • Jessica Schwartz
    OP
    Dubois, WY · Member since 2012 · 2 posts · 0 votes
    14y

    Thanks for the input- we heard back with 5 minutes to spare and they countered with the list price and $2500 earnest money.

    I'm a little confused about this earnest money stuff. We have financing ready to go, so long as it passes inspection, and submitted proof of that. Why are they insisting on $2500 earnest money? I believe it goes towards closing costs, but are they really going to be such sticklers on this?? We have our approval for the USDA rural housing mortgage- the 100% financing, which includes financing closing costs.

    Is it worth countering with list price, and adding a note that our financing should include closing costs? OR just cut our losses and walk away

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  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    14y

    Earnest money is money you give them at the time the contract is signed (or, when the offer is made.) For a REO, they will typically want this to be a cashier's check, even if you wrote out a personal check that was sent with the offer.

    With REOs you typically have two contingencies. One is the inspection period. They will have some standard period, typically about 10 calendar days after everyone agrees to the offer. The second is your financing. There will be various loan related deadlines in the contract. As all these deadlines pass (both inspection and loan related), you lose the ability to withdraw from the contract and get your earnest money back. They want a nice big earnest money check so you're incented to make it to closing. If these deadlines pass and you don't withdraw before the deadline, they're keeping your earnest money. Don't expect any sympathy if this happens, they WILL keep your money.

    The EM will be credited to you at closing. So, if you're really getting 100% plus closing costs financing, then you would get back a check that time.

    They're not going to agree to no earnest money, even if you're getting 100% financing. Something like 1% would be pretty typical for a financed offer.

    Is it worth list price to you? Then counter at that price. If you want to put in a lower EM amount, give it a try. All they can do is say now or counter back again.

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