Over the past few weeks we lost a few bids on Columbus OH homes for sale, because the selling agent was able to get higher offers on these houses after we submitted our contract. Most of the homes I am talking about were either Fannie Mae owned or other bank-owned properties. In each instance, the selling broker used the same trick to jack up the price.
Do you want to learn this secret trick that Fannie Mae brokers use to get premium offers on their listings?
It is called “Best And Highest”. It’s a great way to produce more potential buyers for a home and create competition among them.
Experienced Columbus real estate agents know that the only way to eliminate low ball bids on bank-owned properties is to create competition. Buyers pay more in an auction, because they get caught up in a competitive environment. The same happens when a broker asks for your Best and Highest Offer.
Initially, most of these homes for sale are listed well below market value. Other Columbus real estate agents spot these properties as good deals, because they are priced so low. As most buyers want a “good deal” contracts will be submitted, and the listing broker starts collecting offers for a week or 10 days.
Once there are 2 or 3 offers, the broker will change the listing and set a deadline for submitting a Best and Highest Offer. Existing bidders are invited to improve their offers. The listing essentially changed to an auction and competition is running high.
Most potential buyers will reconsider their initial purchase offer and add a few thousand bucks to win the contract. New buyers may join the race to win the coveted property.
This method has been very effective and has become standard operating procedure for Fannie Mae. Sometimes, it yields purchase contracts way above asking price.
If you are the buyer, you need to be aware of this trick. When you see that the listing agent of a bank-owned property starts collecting offers, you know what’s coming. And you can be prepared.
Don’t get caught up in the competition! Decide right at the beginning how much the house for sale is worth for you and stick to that number. You may lose a few deals that way, but you certainly won’t pay more than you can afford or more than the house is worth.
HUD homes are now sold in a similar fashion. Take a look at this example below. HUD is lowering the price substantially, after a property was on the market for around 60 days. It is a bidding war in the making.
Yesterday HUD reduced the list price of this FHA-insured, New Albany condo by 54%. Now it is listed for only $41K (down from $89K), which is way below market and may spark a lot of interest from owner occupant buyers.
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Posted by: Susanne Novak, ABR, FIS, GRI
Columbus Real Estate Agent helping First Time Buyers.
(614) 975-9650