Can a agent call a bidding war on a bank own prop.

REO's (bank owned) will frequently list a bit lower than FMV to generate interest and a bidding war. Yes, the bank can do this or instruct the agent to do this. They want the most amount of money for their property. When submitting offers, they'll often come back and state "submit your highest and best offer".

Welcome to the world of REO's!

- Tom

This happens all the time. Usually the highest and best is accompanied by "multiple offers". Sometimes this is true (more than not) sometimes it's not.
We really don't care! We know what our max offer is and usually make this our first offer when submitting an offer on a REO. Since competition is very stiff and inventory is decreasing we don't start with a low offer and then come up if needed (bottom market strategy) We offer what we can pay and on to the next.
So we have made our best offer, if someone else pays more than us, so be it and good luck to them.
We track these properties to make sure they close. Just because a higher offer is accepted does not mean the deal will actually close. We see this ALL the time. A property goes under contract, the investor offered to much or has no buyer and the deal gets put back on the market. Follow up is key when working REOs.

Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC

I believe that even in a bidding war, all offers need to be presented to the client, in this case the bank. The listing agent does not chose which offer to submit. Even though the lender wants the highest offer, price is not the only consideration.

Suppose there are two offers. One is 10% above list price subject to getting bank approval for 95% bank financing versus an offer at list price with 20% down that is submitted with a pre-approval letter. If the lender is highly motivated to sell the property, they very well may consider the second, lower priced offer to be a better deal.

Realtors must present ALL offers to their client. Realtors cannot pick and choose which offers to submit. Even the low ball offers MUST be submitted to the client per Standards of Practice 1-7, unless the seller/landlord has given other written instruction to the Broker. Realtors abide by a Code of Ethics and Standards of Practice.

Keep in mind a Real Estate Agent or Non Realtor and a Realtor are not one in the same. Real Estate Agents or Non Realtors are not bound by the Code of Ethics and Standards of Practice that Realtors must abide by, set forth by the National Association of Realtors. This is why you should ALWAYS ask your Agent are they a Realtor and a member of the National Association of Realtors. If they are not, I would suggest you find one who is. The difference in the education and experience alone can save you a world of headaches and finances.

Below is Article 1-7 as copied from our website at realtor.org.

Happy investing DG Family !!!

Standard of Practice 1-7 When acting as listing brokers, REALTORS® shall continue to submit to the seller/landlord all offers and counter-offers until closing or execution of a lease unless the seller/landlord has waived this obligation in writing. REALTORS® shall not be obligated to continue to market the property after an offer has been accepted by the seller/landlord. REALTORS® shall recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contract or lease. (Amended 1/93)

But, it wasn't on a bank reo. It had to do with a property owned by the city. The listing agent came back after my original offer & said there were "multiple offers" and all highest/best offers were needed by a certain day, even though I gave 'em 3 days to respond to the 1st offer. I went a little higher on the offer after that. What happened? I was outbid a couple grand by a $124k cash offer, and a 3 day closing. No one had looked at this diamond in a few months, except me. We felt like we worked hard on that potential deal, too. That's what you get, in an upswing market. Lesson learned? You bet! Could I have gone higher? Yes. Had I known they meant what they said with "highest and best offer", I woulda jumped up a few grand.

Next!

I am working with someone and I was told the listing agent does this and other sneaky things all the time. And it seems he is playing games with the investor I am working with. I would make sure you actually see the rejection letter also from the bank. As some don't even submit your offer.

they will sometimes try to persuade you to not submit an offer because other more attractive offers (from their perspective) have already been submitted. If you want your offer submitted you need to insist they submit it.