First Time Homebuyer Question

I received this email the other day and I wanted to answer it here because this is an issue that comes up often. Read on!

Dear Sacramento Real Estate Gal,

I thoroughly enjoyed reading your posts because it really helped point me, a first time homebuyer, in the right direction. I have a question for you that I'm hoping you would be able to help me out with.

I started looking at houses about 4 months ago and am working with a realtor (family friend) in the Contra Costa county. However, I live and am looking in the Alameda county and I'm not sure if he has my best interest at heart.

Here's the situation:

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.

-S.T.

Here's what I wrote back:

Hi, S.T.

I’m glad you’re enjoying the blog and I’m providing useful information to you and others. I really think in this situation it is not usually the agent’s fault. It is normal for you to worry – buying a home is very stressful and sometimes you can wonder if everyone is really on your side. But Realtors don’t get paid unless you buy a home, so we really have no reason to keep you from the home you want. The biggest error I think your agent may have made is not assuring you enough of being on the same page.

I think the person here that is at fault is perhaps the bank. I have been in situations where the bank keeps dropping the price so they can see multiple offers. Then they pick the best one and try to work with it. if it falls through, they don’t go back and look at the others because they never put anything in back up positions and assume the buyers have moved on anyway. Technically, your offer is only good for 3 days, so they assume you have moved on.

Your best recourse if you are really in love with the home is to resubmit your offer and let your agent know that even if your offer is not selected you would like to be kept in back up position. If not, tell him you would like to write as many offers as necessary (as many times the home comes back on the market) to get into escrow. Also, it would be a good idea to find out why the home is back on the market. If it was buyer financing, that might be okay, but if it was related to inspections, you would want to know and save yourself some time and money.

I wish you luck. I’m posting this on my blog since many buyers have this question. But I will not use your name to protect your identity.

Hope this helps you first time homebuyers looking at REOs right now!