Expert: Russel Ray - 6/28/2008

Question
QUESTION: We made an offer on a home that is up for quick sale through a bank. How long can they take in letting us know if our offer was accepted ?
If this makes any difference, the sale is in Texas.

ANSWER: Hey, Donna.

Native Texan here. Born in Kingsville and graduated from Texas A&M.

"Quick sale" might be a misnomer. Banks and mortgage companies right now are way overworked trying to work with those in financial trouble and get rid of properties that they already own. Here in San Diego it's taking a couple of weeks for banks and mortgage companies to get to any one purchase offer. In many cases, there are multiple offers on properties here again, so they try to make sure that they have all the offers on any one property so that they can take the highest bid.

There are a few companies here that are running months behind. By the time the bank got to the purchase offer, the prospective buyers had become frustrated with the lack of a response, went and found another home, made an offer on it, closed escrow, and moved in.

All purchase offers have a date by which the other party has to perform, typically 24-72 hours. So even though you signed the purchase offer, and the bank might sign it three months later and send it back to you, you don't have to honor it since the date to perform has long since passed.

If you're in a big city or working with a big bank, you might be wise to keep looking. If you're in a small city or working with a smaller neighborhood bank, you might have more success. It all depends, though, on just how many problem loans they are trying to work with, and how many properties they already own.

Hope that helps.

---------- FOLLOW-UP ----------

QUESTION: Thanks. That clears things up somewhat. I don't think we have the most stellar realtor, as she does not seem too informed on this matter. As for the size of the area, I'm not sure what constitutes this. The city is Temple, so I suppose it would classify as a small city.
It's also been bank "owned" for at least 4mos., that I know of, they have dropped the price over $20,000 during that time, and supposedly there are 9 bidders currently.
(we couldn't make an offer any earlier due to waiting for our own home in NY to close.)
Our offer was $8,000 more than the current asking price, which happens to still be $14,000 less than the appraisal.

So we will check Mon. w/realtor see just what is going on, with the time frame. In all honesty they still have time, we only just made the offer late Fri.

ETA: I am starting a PA program through Texas A&M in Sept.

Answer
Hey, Donna.

This market caught a lot of Realtors off guard, especially those with less than 10 years experience, because they were coasting along on cruise control in a seller's market and had never been through a downturn, especially one like this.

Temple has a lot of military living there, just like San Diego where I am, so maybe you should classify it as a "small fortress" rather than a "small city." LOL There's probably a lot of mortgage companies and banks from Dallas, Houston, San Antonio, and Austin doing business there, though, since it is so centrally located.

If it's only been bank-owned for four months, it might not be high on their list of priorities. There are banks here that are still sitting on properties for almost two years now. The properties are vacant and just sitting there losing value through the market downtown and deterioration due to lack of maintenance. Those are their priorities in trying to get rid of. So if there are nine other offers, and there probably are since lieing about that is fraudulent and misrepresentation on the part of the bank and/or Realtors, you might have some waiting to do, especially when coupled with the fact that it's a fairly new bank-owned property in their eyes.

All of that, of course, will depend on the specific bank or mortgage company. The larger ones are hiring specialists to work through the REO properties, so they are in the process of catching up. The smaller ones might have fewer properties but also might have fewer people to handle those properties. It's a real mess right now, but an excellent time to buy.

Best wishes.