11-18-2010 04:47 PM
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?
11-18-2010 06:01 PM
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;
11-18-2010 08:53 PM
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.
11-18-2010 10:17 PM
I like the King Solomon approach - split the difference...$290k
If that is too high for the property then don't bother of course.
11-19-2010 09:25 AM
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.
11-19-2010 09:53 AM
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
11-19-2010 10:22 AM
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.
11-19-2010 04:58 PM - edited 11-19-2010 05:00 PM
This is my experience with a Chase bank.
List price $400k
Offer #1: $430k
Offer #2: $460k
Offer #3: $460k
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.
11-19-2010 07:38 PM
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...