Los Angeles

[LuckyBuy]

I recently made an offer on a short sale home. It was accepted and I'm waiting on their bank.  The question i have is in the offer I made I offered 10,000 more than what was listed because we wanted the property and the property is less than what it sold before, the bank is going to assess the property and so is my lender, if the value of the property drops or if the banks find the assesed value less than what I offered or was listed will they give me a lower price? 

[Matt Keebler]

Welcome to the ZipRealty community!  Thank you for posting in the forums.

I will contact one of the local agents to see if they are able to answer this question for you.

Matt Keebler

Client Care Specialist

ZipRealty, Inc

1.800.CALL.ZIP

team@ziprealty.com

[Matt Keebler]

Welcome to the ZipRealty community!  Thank you for posting in the forums.

I will contact one of the local agents to see if they are able to answer this question for you.

Matt Keebler

Client Care Specialist

ZipRealty, Inc

1.800.CALL.ZIP

team@ziprealty.com

[Matt Keebler]

Welcome to the ZipRealty community!  Thank you for posting in the forums.

I will contact one of the local agents to see if they are able to answer this question for you.

Matt Keebler

Client Care Specialist

ZipRealty, Inc

1.800.CALL.ZIP

team@ziprealty.com

[Matt Keebler]

Welcome to the ZipRealty community!  Thank you for posting in the forums.

I will contact one of the local agents to see if they are able to answer this question for you.

Matt Keebler

Client Care Specialist

ZipRealty, Inc

1.800.CALL.ZIP

team@ziprealty.com

[Matt Keebler]

Welcome to the ZipRealty community!  Thank you for posting in the forums.

I will contact one of the local agents to see if they are able to answer this question for you.

Matt Keebler

Client Care Specialist

ZipRealty, Inc

1.800.CALL.ZIP

team@ziprealty.com

[Candy Havlock]

Here is what is going to happen.  The bank is not a fool so they will take your offered price or the value may come in at your offered price.  When a short sale is put on the market you are relying on the listing agent that they priced it at market value and sometimes they don't.  They either want offers so they can submit their package to the bank and get the approval started or they don't know how to do  a market value.  It all depends on their experience in doing comps.  There is also the agent that does what they call a BPO which is a broker price opinion.  The bank hires a 2nd agent to go out and do a value but this agent will be experienced and must show documentation of other homes in the area that match your home.  This agent usually only has 72 hours to return their report to the bank.  The value may come in higher than you offered also and the bank is going to counter with the higher price which you can accept or not accept.  If it comes in higher make sure to talk to your lender to make sure you qualify before accepting their counter but they only allow 24-48 hours for your decision.  You also want to make sure you can close your loan quickly and the lender has everything they need because the bank may come back with a very short closing date.

I hope this helps you.  Short sales are quite fine tuned now and I am sure you will have a successful closing if all the parts fall into place correctly.

[Len Taylor]

No, the short sale lender is not likely to offer you a lower price if their report shows a lower number than your offer amount.

As you know, the list price does not necessarily reflect the value of the property. And, the short-sale lender is unlikely to put any weight on the fact that you offered more than the list price.

You, and the short-sale lender, and your lender will independently look at recent information in order to determine an opinion of the value. This "comparable sales" information that each party reviews is usually similar though: similar properties (i.e. +/- 15% of sq ft); Sold within the last 3 (or 6 months); in the surrounding area (up to 1-mile radius). Of course, dollar adjustments should be made for any significant differences in the comparable properties (i.e. superior/inferior location, size, lot size, condition, upgrades, views, etc.).

1. You will have an opinion of how much the property is worth to you based upon your home-shopping experiences so far, and the information that your agent provided to you.
2. The short sale lender will hire someone to submit a report to them so that they are aware of the approximate market value of the property (an opinion).
3. If you and the short-sale lender are in agreement on a sale price after the short-sale approval process is completed, your lender will obtain a very-detailed appraisal report. Your loan-approval terms will be based upon the purchase price or appraised value - whichever is less. If your lender's appraisal report (which you have a right to receive a copy of if you paid for it) is lower than your purchase price, you can potentially use it in an attempt to renegotiate a lower price with the Seller and short-sale lender if you want. Generally, you are protected from "overpaying" because offers are usually contingent upon an appraisal value being equal to, or higher than your purchase price. But note that an appraisal report is also a professional opinion of the value.

As you can see, everyone needs to be "on the same page" in the end in order to have a successful transaction. But, it is your purchase, and your opinion matters most!

[LuckyBuy]

wow thank you all very much.  They were asking for 310,000 we offered 320,000 and were accepted by the owner and agent but the bank that owns the house (short sale) has not responded.  I know that once it does they will come back and accept our loan or counter offer but if the house gets appraised at 300,000 will our lender allow the 320,000 purchase price or will they negotiate with the bank to accept a 300,000 offer?

[Len Taylor]

A short sale is typically a "pre-foreclosure" situation. So, the bank does not own the house. The seller with whom you negotiated the purchase is still the owner. And, the owner needs their bank's consent in order to sell the home and pay off the bank less than the amount owed ("short pay/short sale").

If the appraised value is lower than the final purchase price, your real estate agent (upon your request) can work on your behalf to renegotiate a lower price. Your lender will base their loan-approval decision on the appraised value or the price, whichever is less; so, they won't necessarily care, or directly tell you how much you can pay for a home, however, dependent upon your financial ability (i.e. amount of down payment), you many need to renegotiate the price in order to obtain a loan approval (versus it possibly being optional if you have a larger-than-the-minimum down payment).

Have you considered posing your questions and concerns directly to your agent? He/she will gladly help you each step of the way; it's part of the job!

[LuckyBuy]

Once again thank you very much

[Connie Barnes]

On the question of will the bank holding the loan lower your offer if the value came under your offer, simple no. They are trying to make as much as they can since they are already losing. Not only on what is owed to the bank, but with all the costs they are absorbing. They pay ALL seller costs also in a Short Sale.

Now for your lenders appraisal. If they appraisal comes under your offer price, the bank will only finance for the appraised value. They won't finance more for what the property is worth. Unless it's a 105% or more loan. But you don't see those anymore.

[LuckyBuy]

Everyone here is so helpful.  In my offer I did agree to pay for all the closing costs.  I believe my lender will pay some of the closing costs too but at this point Im unsure.  Do I need to ask and should I ask for their bank to pay for the closing costs or is it too late already?

[Len Taylor]

Yes, a buyer has normal costs. And, the seller's normal costs are significantly higher (i.e. 6-7% of the price). In the case of a short sale, the seller's mortgage company will have to pay them.

When a buyer asks a seller to also pay the buyer's normal closing costs, the seller will usually want a selling price to compensate for that credit. If there are multiple offers on a property, asking the seller for a concession (credit toward your closing costs) can weaken your offer - and sometimes mean the difference between being the winning bidder or not.

If/when the Seller obtains the short-sale approval(s), the proposed terms of your purchase might change. At that time, you can discuss with your agent the possibility of renegotiating for your closing costs to be paid - depending on the short-sale-approval terms and whether other buyers are still interested in purchasing that property. Generally, in a short-sale situation, the seller can continue to consider other offers besides yours ("back-up offers").

For now, I recommend that you obtain a written estimate of your closing costs (from your lender), and ask your real estate agent whether the Seller has back-up buyers - so that you know where you stand presently.