"First Come, First . . . Wait??"

Can Bank-Sellers Be Choosers?

Days 0-7: No offers considered. 8-12: Offers considered on property ONLY from NSP buyers, municipalities, non-profit organizations & owner occupant. 13+: All offers considered from all buyers.

--Excerpt, foreclosure on MLS

With the caveat that I don't specialize in foreclosures, this is the 4th time in as many weeks that I've seen a variation of the language shown above ("NSP" refers to "Neighborhood Stabilization Program").

What's going on?

Typically used in conjunction with a deeply discounted price, the bank's strategy appears to be two-fold: 1) accumulate multiple offers; and 2) segment prospective offers by "more" and "less" preferred categories.

"First Come, First . . . Wait"

If so, it's going against the grain of how real estate is normally sold -- namely, "first come, first served."

Put it this way: a significant percentage of the time in real estate, the first Buyer is the best buyer.

In this case, however, the bank-owner is explicitly telling that Buyer -- at least if they show up in the first week -- that they need to cool their heels while other prospective Buyers (possibly) join the fun.

I can imagine at least a few such Buyers responding, "No, thanks."

At the very least, it's hard to imagine any sane Buyer submitting an offer before Day 7, when they risk having it shopped to other Buyers.

From the bank's perspective, the ultimate test of such a strategy is whether it actually increases what the property sells for.

I suppose if more foreclosures start popping up with this language . . . the banks think the answer is "yes."

P.S.: Is is kosher (legal) for the banks to define which Buyers they'll consider offers from -- and when?

As long as they're not discriminating against protected classes (race, religion, etc.), I would assume that they can.

"Non-Buyer's Remorse"

Coaching 1st-Time Buyers

Everyone knows what Buyer's remorse is: the feeling you get, after you've bought something, that you just made a horrible mistake.

So, what is non-Buyer's remorse?

The feeling you get when you find out that the house you were furiously deliberating about buying, instead sold to someone else.

I counsel first-time Buyers weighing a purchase decision to imagine how they'd take such news.

If they think their reaction would be indifference (or similar) . . . it's not the right house.

(I suppose the appropriate name for that sentiment would be "non-Buyer's non-remorse").

P.S.: Buyers should trust their gut on this one only if they already have done their homework and know the market.

And, this test doesn't apply to investors.

P.P.S.: It's been awhile, but my advice to Buyers in multiple offers is similar: 'the right price to offer is the price you can live with if you get the house . . . . and the price you can live with if you don't.'

Multiple Offers . . . in Progress

"Hmm, I Wonder Where That Lockbox Key Went??"

An interesting little contest is shaping up over a certain Twin Cities foreclosure that came on the market yesterday for 50% of its tax assessed value.

I am withholding the address because I have a client interested in buying it, but here's the background:

A saved search on my computer popped up the home 90 minutes after it hit the market yesterday morning.

Because the agent remarks indicated the home was "As is," and the price was tantalizingly low, I called the listing agent to make sure it didn't need hundreds of thousands of dollars in repairs.

"Negative," he said.

"But, it's already sold," he continued.

"The bank already signed an offer that came in the first 45 minutes it was on the market."

The Plot Thickens

Yowza.

With all the details involved in getting a Purchase Agreement executed, it's almost inevitable that there'll be at least one loose end -- especially if there's a bank involved, as is the case here -- that will give one party or the other an out.

And with instant, multiple offers, that's exactly what the bank wanted.

So late last night, I received an email from the listing agent indicating that the first, supposedly accepted offer wasn't in fact completely executed, and that all interested parties were invited to join the bidding.

Sand in the Gears

Once whoever took the keys and lockbox cover returns them, that is.

It turns out that the (vacant) home wasn't available to be shown almost all of yesterday because the lockbox keys (and cover) had been removed.

The agent's email publicly asks whoever took them to return them -- their identity isn't really much of mystery to the listing agent, who knows exactly who got in yesterday and who didn't (or soon will).

The listing agent's email continues that the bidding process for the property will be delayed until the key is returned, and that if it isn't promptly returned, the locks will be changed to accommodate agents whose showings were thwarted yesterday.

Nice to see a listing agent handling it this way: level playing field, open and transparent communication to all interested parties, etc.

Real Estate "Whodunit"

Ditching the lockbox key is actually pretty rare (If I had any doubts about the screaming deal this home represents -- I don't now).

It's also more likely to backfire on the agent pulling it; clearly, it's already seriously annoyed the listing agent, which is never a good thing.

It's also eminently traceable, given how well-documented showing requests are today (100% computer-driven).

By contrast, in my first week of law school school in 1987, when a certain dusty treatise that everyone needed for a research project disappeared . . . it wasn't so easy to trace.

Want to find out what happens to "the home with the missing keys" next?

Stay tuned . . . .

South Bryn Mawr Multiple Offers?

Blast from the Past

In a sluggish market, the sale -- just posted on MLS on Friday -- caught my eye: a South Bryn Mawr Colonial listed for $424,900 sold for almost $50k above that. After two months on the market!

That didn't compute, for 3 reasons: 1) there's a lot of inventory in Bryn Mawr at that price point at the moment; 2) the house -- with 3 Bedrooms and only 1,700 square feet -- didn't appear to be dramatically underpriced; and 3) it had already been on the market for two months.

As I've written before, multiple offers usually occur either right away, or, after way too much market time (and accompanying price reductions), to the point where the home is substantially undervalued, and can actually enjoy a price "bounce," courtesy of multiple offers.

Neither of those scenarios applied here.

The explanation?

Clerical error, confirmed by the listing agent (and corrected this am).

In fact, the home sold for just a little under the $424,900 asking price.

Realtor Rumors & Tall Tales

"It Was THIS Big! No, It Was THIS Big!"

First, stipulate that Realtors as a group are a talkative bunch.

Then, consider that listing agents (at least good ones) hold any sales details very close to the vest -- at least until closing.

The result is an active rumor mill surrounding the status and disposition of a great many real estate properties.

All of the foregoing came to mind as I heard increasingly fantastic stories about a Fern Hill home that sold a few weeks ago (it is currently Pending, or under contract but not yet closed).

First, I heard that there were two offers above the asking price.

Then, I heard that the number of offers was four.

Then, I heard that all of the offers were cash, and that several were well above the asking price.

Where does the truth lie?

Until closing, only the home owner and their Realtor know for sure (sort of like that Miss Clairol commercial from the '70's).

Broker Open "Buzz" or . ..

Who's That Woman on the Cell Phone in Front of the Broker Open?

I noticed the woman on the cell phone in front of the broker open as I was looking for a parking space.

Hmm, I thought -- must be a hot new listing if the agent is on the phone to a client even before she can get back to her office (if you ever see three agents on their cell phones in front of a broker open, the house is probably going to sell, quickly, in multiple offers).

Why outside?

It's probably obvious, but it's not such a great idea to be overheard telling your client, "Cancel your appointments this afternoon! You've got to see this place -- it's a steal!"

Unfortunately for the owner in this case, that's not what was going on.

The person on the cell phone was a loan officer who was co-hosting the broker open, and couldn't get good cell phone reception inside.

The OTHER Reason Sellers Love Multiple Offers

Inspection Contingency Leverage

The main reason home Sellers love multiple offers is because it bumps their price -- if not over asking, then usually pretty close.

But there's a secondary reason Sellers love multiple offers: it can result in the Buyer pulling their punches during the Inspection phase of the deal.

Inspection Issues

Once the Buyer and Seller have agreed to terms, the next step typically is for the Buyer to inspect the home.

The standard for any Seller concessions is actually pretty clear-cut: usually, it's limited to a material item (depends on the deal, but typically at least a couple hundred dollars) that couldn't have been discovered beforehand.

So, a forced air furnace with a cracked heat exchanger (or what looks like one) is in bounds; the dated Kitchen isn't.

Looking Over Their Shoulder

Not all inspection issues are black-and-white, however, and how aggressively a particular Buyer pushes -- and how accommodating the Seller is likely to be -- can often turn on who has more leverage.

A Seller with a back-up offer (or several) in hand . . . has more leverage than their Buyer.

Unless.

It's not unheard of for some Buyers in multiple offer situations to make a preemptively high winning bid -- then try to use the Inspection negotiation to recoup at least some of it.

Keeping Other Agents "In the Loop"

"Enabling" Non-Committal Buyers?

One of the things that invariably happens in the course of representing a Seller is the Listing agent gets a request from a Buyer's agent to "be kept in the loop."

Translation: 'let me know if someone else is about to buy the home, so my client at least knows about it.'

Some Listing agents will agree to do that, because they figure competition will help their Seller's price.

Other Listing agents decline, because they figure it lets an indecisive Buyer lurk, non-committally, in the background (note to Buyers: waiting until you have competition virtually guarantees that you'll pay more).

Enabling Non-Committal Buyers?

I handle the request on case-by-case basis.

If the agent's client is showing serious interest, and there are three second showings scheduled in the next day, I'll typically share that, to let the Buyer's agent know that time (potentially) is of the essence.

If instead my vibe is that the Buyer's agent (and Buyer) just want to hover, I'll decline.

The only parties I promise to regularly update are . . . my Sellers.

Last Minute Multiples

"Jilting" Buyer #1 for Buyer #2

Topic A at this morning's Exceptional Properties meeting was how to handle a deal that's been verbally signed off on, when another, significantly stronger offer materializes before all the necessary signatures are in place.

The scenario's relevant because, in today's slower market for upper bracket homes, by the time an offer eventually comes in, several other Buyers are likely familiar with the home and mulling an offer, too.

Hearing that another Buyer has jumped first can then become a catalyst for one or more others to do the same.

So, does the Seller switch to Buyer #2 or not?

It's up to them.

Legally, they have every right to, because until there's a written contract . . . there isn't. A verbal agreement to sell real estate in Minnesota and virtually everywhere else simply isn't enforceable.

That doesn't mean Buyer #1 won't be upset (and likely take it out on the Listing Agent, who actually has a legal duty to relay Buyer #2's offer).

However, all parties to a real estate deal need to know, well before negotiation begins, that it's not done till it's fully executed (that is, signed).

Once there's agreement on all the terms, everyone needs to be available to promptly sign to make that happen.

P.S.: signed offers are a two-way street: more than one Buyer has been known to change their mind and balk at signing a Purchase Agreement that they verbally committed to.

The Low-End is HOT!

No "Extra Innings" -- Promise

Where: 38xx 37th Ave. South, in Minneapolis' Longfellow neighborhood

When: listed yesterday (Aug. 3)

What: 2 BR, 1 BA home built in 1914.

Who: listed by Kathleen Doyle, Edina Realty City Lakes

How much: $91,900

Want an indication of how intense Buyer activity is at the lower end of the Twin Cities housing market at the moment?

This modest, 1914 Longfellow home -- all of 2 Bedrooms and 912 square feet, asking $91,900 -- has already elicited multiple offers, in less than 24 hours on the market. Another 20-30 Buyers are planning to see it today.

The listing agent, Kathleen Doyle (612-802-9066), who's out of my office, is advising everyone that all offers are due by tomorrow (Wed.) at 5 p.m.

P.S.: And no, it's not a foreclosure -- it's an estate sale. If Kathleen's handling it, you'll get a prompt response, and if your offer is the best -- you'll actually get it, no games or "extra innings"! Imagine . . .

Home Showcase: 53XX Xerxes Ave. South (Minneapolis)

Where: Minneapolis' Fulton neighborhood in SW Minneapolis (one block north of the Minnehaha Creek)

What: 2 BR/1 BA; 1,080 FSF. Year built: 1924

When: on market yesterday (June 8)

How much: $124,900

Who: listed with Coldwell Banker Burnet

It's never a good sign for prospective Buyers when you arrive at a showing to find several parties milling around in front, waiting for their Realtors, to tour a just-listed home (conversely, it's always a very good sign for the listing agent).

And that was in addition to the two groups already looking around inside.

Yet that's exactly the scene I encountered this morning when I showed up to screen the home pictured above for a client.

So what's all the commotion about?

While the home is anything but sexy -- 2 BR, 1 Bath, extremely dated -- the price more than makes up for it. In fact, at $124,900, it's easily $50,000 less than similar, nearby homes (and $114k under the assessed tax value!), even without a garage.

How much do you want to bet that that gap closes -- or disappears completely -- once the inevitable multiple offer feeding frenzy takes hold?