Expert: Karyn Foley - 1/27/2009

Question
I have found a house that I'm really interested in.  I saw this house almost 2 months ago and put an offer in at the beginning of December.  At the time, list price was $325k.  My realtor told me that the selling agent had 27 other offers and that I'd have to offer above asking price if I wanted to be competitive.  So I put in an offer of $350k.  After I put in my offer, the selling agent told my realtor that the bank had picked someone to work with.  In the meantime, I kept checking up on the house and noticed the house went active again at the end of December.  So I asked my realtor to contact the selling agent to find out what was going on.  The selling agent told my realtor that the house was back on the market and so far he's gotten another 15 offers.  So my realtor re-submitted my offer, but I have not heard anything since then.  Then a couple days ago, I checked up on the same house listing again and noticed that the asking price had dropped to $309k.

So now I'm confused.  First of all, I offered above the asking price and it wasn't good enough for the selling agent.  Then he said the bank had a pending sale, but then the house went back onto the market.  So I resubmitted the same offer and I didn't hear anything back.  Now the selling agent has lowered the asking price.  I can understand that the selling agent is trying to look for the highest bidder, but why then would they drop the price on the house?  This also leads me to wonder if my realtor is doing all he can to help me out.

If you have any suggestions, insight, or ideas, I would greatly appreciate it.

Answer
Dear Sara:  You are obviously bidding on a short sale, where the lender either is taking back the house from the owner in default, or has already taken it back and lender owns it and is selling it through the lender's choice of agent.  Either way, it is a problem situation as the lender is unemotional and probably does not care who he picks as the buyer, as there is always another one that comes along.  Historically, it is listed at market value or under market value in order to attract as many bidders as possible.  The lender waits until there are many offers and tries to pick one that in his estimation is the best buyer.  The best buyer means the one who is most likely to close the transaction.  It may mean the most money,, but it is usually a combination of the most money offered, the largest down payment, the most credible pre-approval letter, and the offer with the least amount of contingencies.  It could mean many discouraging attempts amounting to absolutely nothing.  I would give your agent one more, last chance, knowing that probably the lender knows that the market is dropping not increasing as time goes by.  Have your offer submitted again, and make certain it is the best in price as it could be, that it is accompanied by a pre-approval letter from a lender of repute, and that you come up with the best down payment that you can.  Make certain that your agent keeps in touch with the listing agent and gives you progress reports when and if received.  Do not pin your hopes on just that one home,  Sometimes the best and most reasonable thing to do is to find a home that is well priced and is not in danger of being foreclosed or owned by a bank.  This way you can expect negotiations to take place, and there will be more give and take.  After my own clients have a round or two with similar situations such as yours, they find a flexible seller and deal with him/her and end up with a good home with less work that needs to be done than a home owned by a bank, and with a better experience all around.  There are really few steals to be had, usually it is a steal by perception only.  Try another agent if you wish, and try to find one in whom you have confidence and who communicates with all parties.  Good luck, Karyn Foley