topic Re: Short Sale: Bank's counter offer significantly higher than asking & comparables in Bay Area

Short Sale: Bank's counter offer significantly higher than asking & comparables

nmar — Fri, 19 Nov 2010 00:47:29 GMT

I'm trying to buy a short sale. The sellers were allegedly working with their bank (Wells Fargo) to set the asking price, but I now suspect that wasn't true. Price history of the property:

Sellers bought it in '06 for $430,000
Asking price started out at $290,000... gradually made it down to $260,00
I offered $255,000; they accepted
Bank counter offered $325,000

Now, I realize the bank wants to get their money back but there is no way this place is worth $325,000 in this market. I think $260,000 is a very reasonable price. At 255,000 the property is on the low end of the comparables, but this place needs some work. I'm going to counter at $260,000 but is there any chance I'm going to get it? Is there anything else I should be doing to try to get it? According to the sellers' agent they're going into foreclosure in December, so I guess my back-up plan is to wait until it's a foreclosed property, but it seems like the bank will spend more than $70,000 in the foreclosure process than just selling it to me... but I'm getting the feeling they aren't that logical. Is there anything I can do if they come back with another insane counter (besides walk away and cry)?

Advice? Words of (en/dis)couragement?

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

lexa — Fri, 19 Nov 2010 02:01:31 GMT

i doubt it is $70K or even close to it...

nothing you can do if banks doesn't agree, it is their money...

just move on, like the rest of us. don't worry, there'll be other homes and ops;

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

Marcus76 — Fri, 19 Nov 2010 04:29:08 GMT

You can always laugh at the bank. Banks seem to think things are turning around or have turned around.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

Mike_ — Fri, 19 Nov 2010 04:53:06 GMT

they're countering 27% over your offer price.

the smart thing to do, is to allocate your time based on how likely you are to succeed.

there's pretty low chance of buying this house near your price, and so you should not spend huge amounts of time on it.

or better yet, move on. find another property.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

Dublin — Fri, 19 Nov 2010 06:17:10 GMT

I like the King Solomon approach - split the difference...$290k

If that is too high for the property then don't bother of course.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

gm4 — Fri, 19 Nov 2010 17:25:25 GMT

You called it a short sale meaning the bank does not own it yet, meaning if there is a second they can not affectively wipe them out if they refuse to come out.

It was listed with cooperation from ONE of the lenders on the property, it's your job to find out which one. the one not cooperating is the one holding the offer hostage.

My bet is on a second holder and not the first but I've seen the first be stupid many time...it's a guess at best but until the bank actually is in control of the property they have no control over price when more than one lender exists.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

buyandhold — Fri, 19 Nov 2010 17:53:31 GMT

Eventually lender becomes more negotiable but the time horizon maybe so long that it is not worth waiting for. Also when agents submit multiple offers on a short sale it NEVER works so if listing agent is submitting more than one offer move on to other million or so bank owned or soon to be properties

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

LuisSalas_SFR — Fri, 19 Nov 2010 18:22:09 GMT

Hello,

It is totally irrelevant what the current seller paid for the home. What matters is what is the current value.

The value of a home is a mix of objective data and with a subjective component, I always provide my sellers with a range.

As you said, the price you are willing to pay for this home is in the lower spectrum of the comps. Your rationale is that the home needs repairs. Do the other homes need repairs as well?

Cosmetic repairs (say you don't like the color of the carpet or the window coverings) should not be a factor on pricing a home.

The lenders will decide on a price based on comps they solicit from other Realtors (aka BPO, broker price opinion) or from a formal appraisal. Depending on the lender, they may accept an offer as low as 85% of the fair market value (that means, the price suggested by such BPOs or appraisals).

Problem is, sometimes this BPOs are made by people who are totally unfamiliar with the area. I had one done in my listing in Antioch by someone from Tracy, so unfamiliar that he did not even had a local lockbox key. So, if you believe that home is overpriced, the listing agents should work with the lender and provide them with comps. However, the lender probably will lean with what "their" guy told them.

If the lender is just servicing the loan, that is, sending the monthly mortgage statements, paying the taxes (if the seller had an escrow account), etc. but does not own the note, they will send their recommendation to the investors, who sometime make the wrong decisions, sometimes cannot be found at all. If the lenders had mortgage insurance, they they have a say on it, and can make demands or contributions from the seller.

I had short sales where the bank seemed to agree to the offer presented just to come back after a few weeks and change some of the terms stating that they were following investors wishes.

My suggestion: take a second look at the comps, were some of the SOLD homes short sales? In that case the price was established months before closing the deal. Depending on the size/price range of the house, the FMV may be going up a little. How does that home compare with what you've seen so far? Are you willing to wait a tad longer? Are you pressed to buy now?

You should know that Wells Fargo has a policy of not extending trustee sale dates.

Good Luck!

Luis Salas

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

GS-12 — Sat, 20 Nov 2010 01:00:11 GMT

This is my experience with a Chase bank.

List price $400k

Offer #1: $430k

Chase: $550k

Offer #2: $460k

Chase: $545k

Offer #3: $460k

Chase: $475k

I never answered them. The home still sits there.

The funny thing is the house had a chance of getting $530k if it weren't a short sale. But they choose to make people wait for 6+ months.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

adamck — Sat, 20 Nov 2010 03:38:46 GMT

The seller accepted my offer on a short sale 3 months ago. The offer was sent to the bank. Last week the bank informed it was going to get a BPO (broker price opinion.)

Echoing this thread, is there anything I can predict or expect from this outcome? Aside from letting comps rule - the specific market has changed in three months - any tips tricks or experience to share?

If I find out I tied up with a seller that was way out of touch with what the bank would accept - ive learned a lesson and no big deal.

(how would the seller know what the bank would accept and dont they want to stall the foreclosure process by being in contract?)

Still, I'd like the property and its just within reach, so obviously I'd love to close...

thanks,

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

lysander — Sat, 20 Nov 2010 04:21:54 GMT

adamck wrote:
The seller accepted my offer on a short sale 3 months ago. The offer was sent to the bank. Last week the bank informed it was going to get a BPO (broker price opinion.)

Three months to get a BPO? Sounds to me like the seller is stalling. The BPO is usually ordered when the seller has submitted all of the required documentation. A motivated seller could have the documentation step done in a couple weeks max. The fact that it took three months is telling, in my opinion.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

adamck — Sat, 20 Nov 2010 05:09:08 GMT

Thank you.

I had another opportunity that I passed on and it would have been a nice life for awhile. I considered pulling the plug on this. I have been thinking of the seller this whole time too... and considered they might be in a bad spot if i pulled out after 2 months... property been off of mls the whole time.

the wachovia foreclosure date is 1/27.

i dig the ruse here. cant commend it, but somebody knew the newbie. not too cool. thanks for your insight.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

ptiemann — Sat, 20 Nov 2010 06:54:03 GMT

I wrote an offer on a short sale (1st and 2nd lien with CHASE) in April 2010, $380k.

I think in August they countered me $425k.

We let them know "did you see that the interior is trashed"?

[Yes, it took them 3-4 months to do a DRIVE-BY appraisal]

In October 2010 then they finally had looked inside. My offer is $385k now.

The funny thing is, in his most recent email someone from the seller's lender side wrote "WE KEEP ON RUSHING".

I wonder what they would consider "a relaxed, easy-going sale experience" if this is "rushing".

I expect the next email January 2011. The occupying seller is not cooperative. Showings only on Wednesdays 12pm - 1pm.

Good that I don't really care for the place. It's so bad, nobody dares to go after it. In April this neighborhood was selling $550k-$600k. Haven't really paid much attention since then.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

krissy98205 — Mon, 22 Nov 2010 15:52:59 GMT

We made an offer on a short sale, listing price was 160k, we offered 160,000 and to have them pay closing costs. Waited almost 2 months for the bank to come back at 184k. 24,000 higher, and the banks have our pre approval letter showing we are not qualified for that amount, nor would we pay it. The neighborhood had 1 comp, sold for 185k last July- The lender is wells fargo. This was our ideal house and we were really upset that they didn't take our offer, no homes have sold this whole year except that one. Not much of a comp to go by in my opinion. As hard as it was we just walked away knowing they weren't budging. I highly doubt we will go after any short sales again, and as first time home buyers this has been a nightmare from the beginning in our housing search. I wish you the best of luck! Hopefully you will find what you are looking for...

Re: Short Sale: Bank's counter offer significantly higher than asking & comparables

lysander — Wed, 24 Nov 2010 09:00:57 GMT

In general short sales aren't the place to find deals. The seller's lender won't let you pay less than the BPO and your lender won't let you pay more than the appraisal. So the BPO and appraisal bound what you are going to pay for a short sale, regardless of the listing price. Short sales often have low listing prices to attract multiple buyers so there is a queue of them to run through the wringer until one of them finally closes.

To find deals, assuming you're not an all-cash buyer, find sellers who have to sell: estates, divorces, relocations, etc.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

elt1 — Thu, 25 Nov 2010 20:05:07 GMT

A short sale is just a silent auction with no end. The bank will keep peddling your offer until the end--which might be an auction at the court house. The asking price is meaningless. Even if the bank accepts your offer the investors who own the loan can still change their mind.

First time buyers should stay away from short sales. Don't fall in love with a short sale property--you will be burned. A short sale only benefits the seller and is often just a ruse for the seller to stay on rent free. The short sale game is for pros who either make lots of low ball offers or wait to the very end and buy with inside contacts.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

nmar — Wed, 01 Dec 2010 22:14:11 GMT

In case any of you were wondering, you were all right: it didn't work out. Disappointing, but not unexpected.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

norcalnative — Mon, 06 Dec 2010 18:26:46 GMT

That sucks! Sorry the hear. Stick with REO or standard sellers ignore short sales 99% of the time they are a waste of time.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

sakidd1 — Sat, 11 Dec 2010 19:10:05 GMT

I consider short sales to be basically fake prices.

The agent can list it however low they want just to lure in a buyer.

Re: Short Sale: Bank's counter offer significantly higher than asking & comparable

lexa — Tue, 14 Dec 2010 01:47:38 GMT

sakidd1 wrote:
I consider short sales to be basically fake prices.

The agent can list it however low they want just to lure in a buyer.

i consider them fake sales entirely. Since a seller is out of money, there is no real accountability; sellers can do whatever they want (including changing their mind on a night before closing) and one can really do nothing to recover one's costs due to any seller's actions or no actions (i.e. omitted disclosures).

I think the most effective way to resolve underwater RE properties is to give "owners" some cash to transfer title to a mortgage holder servicer and move out while preserving home's condition (payable upon execution of both), and then sell it as REO.