Expert: liznarr - 1/7/2008

Question
I have a house that I have a offer in on. It is a pre-foreclosure. My offer has been submitted to the bank and is waiting for a decision. The relator has received another offer. The offer is greater than mine and they have submitted it to the bank. My understanding was that if my offer has been submitted to the bank that they can only submit it to the bank as a back up offer and the bank must wait until our offer has been accepted or rejected to look at there offer.

Answer
Hi Ryan,

Sorry to have to tell you that your understanding of multiple offers is not correct.  (:-(

Maybe you are thinking of COUNTER offers:  A seller should only counter one offer at a time.  For example, if this bank had made you a counter offer, it would have to either rescind its counter offer to you or wait to see if you accepted before responding to the second offer.  

In theory, if a Seller counters more than one offer at one time, both offers could possibly end up being accepted.  A Seller could then end up with two contracts of sale – and only one piece of property to sell.

The real estate rule is that all written offers must be presented to a Seller as quickly as possible, even if a Seller is currently looking at an offer received prior to a second being submitted.  If no counter offer was made prior to the second offer being received, the Seller can respond to whichever offer the Seller perceives as a better offer for the Seller.

What you can do is REVISE your offer if you wish to bid higher than the amount of the second offer if you really want the house.  Of course, the second bidders can do the same.  It’s important for you to act quickly if this is what you want to do.

The only person who benefits from multiple offers is a Seller.  As additional information for you, and so you can speak “Realtor” language, a BACK UP offer is an offer presented AFTER a property is already under a binding Contract of Sale.  Should the primary Contract fail for any reason, the back up offer would then automatically become primary.

If you really want this home, offer as high a price as you feel comfortable with paying and can afford, and accompany any revised offer with a pre-approval letter from your lender which will show that you are a well-qualified purchaser.

With a bank-owned property, there is no emotion involved as a Seller.  The bank will simply be looking at the best offer, which may not always necessarily the highest price.  Terms, closing date, closing costs or repairs a Purchaser might ask for, and as mentioned earlier … a well-qualified Purchaser … all come into play in the bank’s decision.

Good luck to you, and write again if you have additional questions.

Regards,
Elizabeth