Short Sale Pricing with the Bank

D

davenlei_IHB

New member
When an offer is accepted by the seller, it still needs approval by the bank on a short sale. How often does the bank come back and demand a higher price that the amount under contract? This is when the short sale is not a bank approved price yet but the sellers agent did not ridiculously lowball the asking to get a frenzy. The house is priced in the middle of the comps in the area. The house does need a bit of work (water leak in kitchen, visible dry rot in several places with possible termites, a few missing/damaged doors and an odd bathroom remodel).

Do you think the bank is going to get greedy or just realize they need to move the property before it gets in worse shape? BTW, the sellers agent seems to know how to manage short sales and is moving quick on this property.
 
[quote author="davenlei" date=1251078765]When an offer is accepted by the seller, it still needs approval by the bank on a short sale. How often does the bank come back and demand a higher price that the amount under contract? This is when the short sale is not a bank approved price yet but the sellers agent did not ridiculously lowball the asking to get a frenzy. The house is priced in the middle of the comps in the area. The house does need a bit of work (water leak in kitchen, visible dry rot in several places with possible termites, a few missing/damaged doors and an odd bathroom remodel).

Do you think the bank is going to get greedy or just realize they need to move the property before it gets in worse shape? BTW, the sellers agent seems to know how to manage short sales and is moving quick on this property.</blockquote>
It needs the approval by all the lenders (in the cases where there are more than one lenders). That's why the chances of short sale with multiple lenders getting approval is slim to none. Once the short sale package with several buyers' offers gets submitted it gets goes into a que to have an asset manager assigned. This process can take 4-8 weeks. Then once the asset manager is assigned, it may take another 2-8+ weeks before the asset manager will crack open the file and respond. It's anyone's guess on what comps these asset managers look at (if any) and how motivated they are get the short sale done. From what I've heard and experienced, the lender will typically either go with the strongest offer or they will send a counter for buyers to send their "best and final" offers and the winning bidder wins. Once the lender determines what price they would be willing to sell the property for, it becomes an approved short sale.
 
if the listing agent knows what he or she is doing they will only submit one offer to the bank. the bank with do a BPO(broker price opinion) which is a bastardization of a way to establish value. 80% of the time they wrong. then 99% of the lenders will accept 20% less than the BPO value. now this doesnt mean that the buyer will get the home at a 20% discount. this leaves wiggle room for commissions, back taxes, back HOA, etc... if the BPO is off you are screwed.
 
I was told by my agent that the sellers agent said my offer is the only one submitted to the bank so that is a plus. I did find out there is a heloc on the property with another bank so that is another hurdle to try to get past.
 
Question along the same lines! I have a situation where the short sale was approved for a different buyer. By the time the bank(s) got back to them with a "yes", that buyer had moved on. Imagine that, after months of waiting! So just before the bank approved the offer, we put a bid at just higher than what was approved. The listing agent had us rewrite our offer to lower it, match the terms and credits on the offer, and submit. The "sellers" signed it right away, and it went to the bank for approval. The listing agent said optimistically, we could get a response (hopefully positive - should be?!) within a week. Well, it's been 4 weeks now! What should I expect? Anything?! My agent tells us he really does expect good news, just that we have to wait this one out. In the meanwhile we are still looking and bidding others, but we do like this place...



THanks IHB! I've appreciated your posts and forums tremendously.
 
[quote author="HomeBeggar" date=1251329898]Question along the same lines! I have a situation where the short sale was approved for a different buyer. By the time the bank(s) got back to them with a "yes", that buyer had moved on. Imagine that, after months of waiting! So just before the bank approved the offer, we put a bid at just higher than what was approved. <span style="color: blue;"><strong>The listing agent had us rewrite our offer to lower it,</strong></span> match the terms and credits on the offer, and submit. The "sellers" signed it right away, and it went to the bank for approval. The listing agent said optimistically, we could get a response (hopefully positive - should be?!) within a week. Well, it's been 4 weeks now! What should I expect? Anything?! My agent tells us he really does expect good news, just that we have to wait this one out. In the meanwhile we are still looking and bidding others, but we do like this place...



THanks IHB! I've appreciated your posts and forums tremendously.</blockquote>


This happens quite a bit. The two main reasons for short sales failing are that the home does not come in at value or that the buyers have moved on by the time the bank gets back to everyone.

Sounds like you are already aware of this, though, as you are bidding on other places.



The part in blue above is proof that corruption is still alive and well in the industry, and is also why the banks do not trust any of the realtors.



-IR2
 
[quote author="IrvineRealtor" date=1251331505][quote author="HomeBeggar" date=1251329898]Question along the same lines! I have a situation where the short sale was approved for a different buyer. By the time the bank(s) got back to them with a "yes", that buyer had moved on. Imagine that, after months of waiting! So just before the bank approved the offer, we put a bid at just higher than what was approved. <span style="color: blue;"><strong>The listing agent had us rewrite our offer to lower it,</strong></span> match the terms and credits on the offer, and submit. The "sellers" signed it right away, and it went to the bank for approval. The listing agent said optimistically, we could get a response (hopefully positive - should be?!) within a week. Well, it's been 4 weeks now! What should I expect? Anything?! My agent tells us he really does expect good news, just that we have to wait this one out. In the meanwhile we are still looking and bidding others, but we do like this place...



THanks IHB! I've appreciated your posts and forums tremendously.</blockquote>


This happens quite a bit. The two main reasons for short sales failing are that the home does not come in at value or that the buyers have moved on by the time the bank gets back to everyone.

Sounds like you are already aware of this, though, as you are bidding on other places.



The part in blue above is proof that corruption is still alive and well in the industry, and is also why the banks do not trust any of the realtors.



-IR2</blockquote>


No doubt. I wish I could just track or somehow know what to expect in this case. Argg!
 
[quote author="IrvineRealtor" date=1251331505][quote author="HomeBeggar" date=1251329898]Question along the same lines! I have a situation where the short sale was approved for a different buyer. By the time the bank(s) got back to them with a "yes", that buyer had moved on. Imagine that, after months of waiting! So just before the bank approved the offer, we put a bid at just higher than what was approved. <span style="color: blue;"><strong>The listing agent had us rewrite our offer to lower it,</strong></span> match the terms and credits on the offer, and submit. The "sellers" signed it right away, and it went to the bank for approval. The listing agent said optimistically, we could get a response (hopefully positive - should be?!) within a week. Well, it's been 4 weeks now! What should I expect? Anything?! My agent tells us he really does expect good news, just that we have to wait this one out. In the meanwhile we are still looking and bidding others, but we do like this place...



THanks IHB! I've appreciated your posts and forums tremendously.</blockquote>


This happens quite a bit. The two main reasons for short sales failing are that the home does not come in at value or that the buyers have moved on by the time the bank gets back to everyone.

Sounds like you are already aware of this, though, as you are bidding on other places.



The part in blue above is proof that corruption is still alive and well in the industry, and is also why the banks do not trust any of the realtors.



-IR2</blockquote>


Maybe the point in blue was done to speed things along? That is, since the price and conditions were already approved, a change in the person making the offer requires less review on the bank's end and less time than a change in the terms, even if those new terms were favorable towards the bank, therefore increasing the likelyhood of sale.



That is, let's say it takes four months starting from scratch but only one month if not. The chances of the buyer (HomeBeggar in this case) moving on in four months is much more than if the wait was only one month.
 
[quote author="Geotpf" date=1251339959][quote author="IrvineRealtor" date=1251331505][quote author="HomeBeggar" date=1251329898]Question along the same lines! I have a situation where the short sale was approved for a different buyer. By the time the bank(s) got back to them with a "yes", that buyer had moved on. Imagine that, after months of waiting! So just before the bank approved the offer, we put a bid at just higher than what was approved. <span style="color: blue;"><strong>The listing agent had us rewrite our offer to lower it,</strong></span> match the terms and credits on the offer, and submit. The "sellers" signed it right away, and it went to the bank for approval. The listing agent said optimistically, we could get a response (hopefully positive - should be?!) within a week. Well, it's been 4 weeks now! What should I expect? Anything?! My agent tells us he really does expect good news, just that we have to wait this one out. In the meanwhile we are still looking and bidding others, but we do like this place...



THanks IHB! I've appreciated your posts and forums tremendously.</blockquote>


This happens quite a bit. The two main reasons for short sales failing are that the home does not come in at value or that the buyers have moved on by the time the bank gets back to everyone.

Sounds like you are already aware of this, though, as you are bidding on other places.



The part in blue above is proof that corruption is still alive and well in the industry, and is also why the banks do not trust any of the realtors.



-IR2</blockquote>






Maybe the point in blue was done to speed things along? That is, since the price and conditions were already approved, a change in the person making the offer requires less review on the bank's end and less time than a change in the terms, even if those new terms were favorable towards the bank, therefore increasing the likelyhood of sale.



That is, let's say it takes four months starting from scratch but only one month if not. The chances of the buyer (HomeBeggar in this case) moving on in four months is much more than if the wait was only one month.</blockquote>


In your opinion, whose decision should it be to make that recommendation? The agent's or the bank's?
 
That's a tough one to answer, practically, since the realtor (just my theory) could be acting on the bank's best interests in that decision. Making it simpler for everyone and finding a bidder (me) to accept the terms they already previously accepted and to move the sale along may be in both parties' (listing agent and bank) best interest, and if countered that it is not, I think, is a very subjective argument. I could mention the fact that making a sale happen moves the whole process along, relieves the taxpayer burden from interest for supporting an unsold home, gets a "freeloader" out of a stagnant home, and so forth.



For all I know, the bank may have instructed the agent to do what happened. All know is what my agent told me; to write a bid at accepted terms sans the same bidder, obviously.



So, perhaps your blue highlight is a little presumptuous, but it may also have good experience behind it. There's always the other side...
 
Update on my short sale purchase attempt:



As of week 6, the 2nd came back and verbally approved. So, they were to get 10% of their mortgage covered from the 1st. The selling agent opened escrow and said they will write approvals within a week or so.



Coming up on the end of week 9 and we are still getting updates with little progress. But at least this is the story as of today: The 2nd bank negotiator was just sitting on too many short sales, this one was stalled. Now the Field Manager at the 2nd bank has the file and just asked the seller for new docs (the docs being kind of old by now). They were to hand the new signed docs over last night to the bank(s, I presume).



How's this all sound?! What a wait! I wonder if at this stage the bank(s) might ask for something like helping to pay HOA back fees, or something that to me would just make me sigh deeply and end this attempt?
 
Hey Homebeggar,



I feel your pain. Just hang in there.

I will give an update on my situation as well. I cancelled the offer I had on the property I spoke about. Found out it was a slab leak and extensive mold. If anyone wants to know the address in Aliso to avoid it or try to press for a firesale deal, PM me. In addition to the two banks, the owner filed BK after moving to another state so the property will be stuck forever and will probably go to FC when all is said and done.

I did get into escrow on another short sale with only one bank which is not BofA thankfully. So hopefully this goes smoother and faster. The wife is tired of short sales and is only looking at the overpriced equity sellers now.
 
We had made an offer on a short sale last year January of 2008 and found out 6 months later that it was approved and ready to open escrow. We didn't expect to ever get that house so we moved on.



Short sales take a while. Its a very slow process but if everything works out its worth the wait.



We are currently in the 45th day of escrow on a short sale we put an offer on in June 2009. Just be patient. We are supposed to close tomorrow but who knows what will happen at this point. Hang in there!
 
You mean for davenlei? Either way, yeah I suppose. Their agent did say we're the only ones she opened escrow with. That'd be fun :coolmad: The home is in Eastside CM, so not davenlei's debacle.
 
Regarding short sales - does a potential buyer, with a valid written offer, have the ability to talk to the bank holding the note on the property? Is there a federal or CA state law prohibiting it? If the seller and buyer talk to the bank together, sans REA's, is there anything, legally, preventing that ability?



If anyone has any CA RE laws that they can reference, I'd really appreciate any help I can get.
 
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