Why aren’t I winning any of the bids I have put in?
Sure you have been looking at Metro Detroit foreclosures. You have bidding on them but you haven’t gotten any of them. There are supposed to be deals out there. Banks are wanting to dump all those foreclosures aren’t they? The banks are desparate to get rid of them right? So you have been putting in anywhere from 25 – 50% below the list price offers. And you are only bidding on the nice foreclosures you don’t want any dumps. You have a pre-approval letter from your bank. You have the 3% down. You aren’t asking for much. You just want 6% closing costs and to close in 2 months. You want the bank to pay for all the closing costs.
Well here are the problems as the bank sees it.
- Cash is King. A cash offer will be accepted over your offer.
- An offer that has a bigger downpayment if everything else is the same will beat yours because the bank feels the offer is more likely to go thru.
- An offer that doesn’t ask for the bank to pay sellers concessions will win over yours. When the bank has to give up money to pay for your closing costs any offer that is similar and doesn’t ask for sellers concessions will beat yours.
Banks want offers that have a high probability of closing. A Cash offer will always close where offers with mortgages sometimes don’t.
Banks want clean offers. Not offers that have inspections contingencies, or long move in dates. Cash offers close quicker which means less money for the bank to pay for utilities and taxes.
Banks don’t want to give up more money to pay for your closing costs. If you are asking for closing costs it means you don’t have much money. It means the deal is shakey. They would rather go with somebody that can pay for the costs.
So basically your offer says bad news to the bank.
- a mortgage offer is worse than a fast sure to close cash deal
- closing in 2 months says more costs to the bank they have to pay more utilities and taxes on the property
- low downpayment means there might be a possibility of not closing
- no closing costs means the bank is going to get less money
So you are asking for 4 concessions from the bank on top of a low offer on a nicely maintained foreclosure. It is very unlikely you will ever get an offer accepted. You have to back up and ask for less. Last year I one of my home buyers was working with another agent. He was doing the same thing. He was asking for it all. As soon as we quit asking for a long closing date and asked for less closing costs he finally got a Livonia home at a great price.
The bottom line is that there are other Metro Detroit home buyers out there that recognize the good real estate deals. If the Metro Detroit foreclosure is a good deal at list price don’t bid too low or somebody else is going to win the house. Recognize all the concessions you are asking for. Realize how weak or how strong your offer is. The stronger the offer the more likely you are to win the bid over other offers.