Britt Grothe…, Home Buyer in

Short sale. 6mo later we get a counter offer from the bank on the short sale house we are interested in.

Asked by Britt Grotheet, Mon Apr 1, 2013

The listing price for this abandoned home in Anne Arundel County is $370,000. Our agent has determined the fair market value to be around $250,000-$260,000. Our offer was $200,000. Their counter was $340,000. We would go as high as $230,000 to get the house. In your experience are we just to far apart? Home has been in default close to 2 years. On the market a year. It had already had the foreclosure postponed 2x. 3rd and final foreclosure date is mid-April. What does your experience tell you? Thanks!

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Britt Grotheet’s answer
UPDATE!
Hi All! You guys have been so helpful I just thought for anyone interested I would provide and update. If you read above you will see that the bank countered our $200,000 offer with $340,000. In response to that we came up to $210,000 and they came all the way down to $272,000! (Keep in mind our realtor determined the fair market value to be around $250,000-$260,000, so they are getting closer)
We still said, NO to $272,000 and were about to walk when... The bank then asked that we provide them with a cost assessment from our licensed contractor as to what we believed needed to be done to the home to make it livable and if it seemed reasonable they would order another BPO done.
No problem for us as we have already had 3 contractors and 1 architect take a look at it. Our contractor estimate $130,000....house is an old summer cottage...so the $130,000 includes new sidiing (one side of the house is down to Tyvek only), new roof, some foundation work, electrical upgrade and many many other things to get the house up to code...but NOT new kitchen or baths.
The bank ordered the new BPO and came back with $250,000. HA!!! We felt so vindicated! We had done our research and felt we knew the value. So, we went up to $220,000 and now we wait!!!
I believe the bank wants to net out at $225,000 so our offer is probably still to low for them AND, truthfully...$250,000 is probably fair...BUT we want that new kitchen and new baths and we need to but an addition on to make it big enough for our family so we probably can't go any higher price than where we are.
They have (obviously) postponed the forecloser (for the 3rd X!) and a new (4th) forecloser date is set for May. My guess and our realtors guess is the house will foreclose if they don't take our offer....which is a bummer...banks!!!
I don't know how you guys deal with all this Short Sale baloney!
I'll let you know if by a long shot we get it...in the meantime we keep looking.
Thanks - Britt
0 votes Thank Flag Link Mon Apr 22, 2013
BEST ANSWER
There usually interior and exteior BPO's done. The bank does not look at time in default per say. They look at what is owed on the house verses what they are going to net. The investor of the loan has the final decission as to what they will accept. If they countered at $340,000 that is based on what the investor will accept. Sometimes they will take an offer, but they will want it to be very, very close to the counter. It is my opinion that your offer of $230,000 counter will be rejected again. The figures are just too far off. The investors have guidelines that they have to adhear to also in accepting an offer. Plus you are dealing with a second that has to accept what ever the first has agreed to release to them if any. Good luck, I hope you find a home that will suit your needs soon.
PS Comps should be from the last 3 months, The market has begun to shift and the banks prefer the comps to be in the last 3 months and no short sales where possible.
0 votes Thank Flag Link Mon Apr 1, 2013
We have 4 solid comps from the last 4 months (2 in Dec and 1 in Jan and one in Feb). But our agent said (as you did) that once the bank has the BPO it is very hard to change their minds. The only hope he has given us (and its minimal at best) is that the investor is a "private investor". Not sure what that means but he said sometimes you get a little more human interaction and/or back and forth with a private investor. Also we can close 30 days earlier than what was proposed by the seller.
Just waiting and waiting now...
Flag Mon Apr 1, 2013
We haven't actually wasted the last 6 mo as we have continued to look...just haven't found anything we like as much as the possibility of this home.
Also, we made our offer at the beginning of Oct. but the file was closed for several months due to inactivity on the sellers part (he was trying to file bankruptcy but did not qualify). The file was reopened and assigned to a new agent in early Feb. In a sense it has taken 2 months from the time the seller got his act together.
There was a BPO done back in Nov but based on what Jackie Kremer is saying I am guessing a new BPO was done in Feb or March when the file was re-opened.
There are 2 loans both with Wells Fargo the first is around $480,000 and the second is around $10,000...can't remember how I know this:). Total $490,000 owed. Listed $370,000. (FMV $250,000-270,000)Our offer $200,000. Banks counter $340,000. Our best and final $230,000. Our agent is presenting today. I'll let you know how it goes.
One more thing....does the bank take into consideration the length of time the home has been in default (almost 2 years).
Also, if you look at the comps from the last 6 months $300,000+ gets you a clean, move in ready home. This home needs a new roof, new siding, an electrical upgrade some foundation repair...not to mention the seller started to gut the kitchen. Home was never winterized and has broken windows...essentially a tear down. Makes you wonder if the people doing the BPO's actually get into the home.
I guess that's 2 more things!
Thanks for all the feedback...even if it isn't what I want to hear:)
0 votes Thank Flag Link Mon Apr 1, 2013
The issue is your Agent is $140,000 off in valuation. You can bet the Bank had more than one BPO done on this home before responding to your offer. You may have just wasted 6 months and NOW it's a different housing market.

Greg Myers
RE/MAX Realty Group
0 votes Thank Flag Link Mon Apr 1, 2013
The offer was too low for the investor to accept. Bpo's are usually done every 30 days. If the most recent one still had the price $100000 higher then yoru offer the bank will not accept that kind of loss. If and when it goes to foreclosure it could take a while depending how far along the process already is. The bank will either list it with a realtor or put it on an auction site. This too will depend on the type of investor. There is really no way of knowing how long at this point. Talk to your relator about current value and if it doesn't make sense for you, move on.
0 votes Thank Flag Link Mon Apr 1, 2013
We were told the bank did its own BPO. I figure our offer was to low. Or rather their price it so high!! So basically you're saying , $100,000 difference it to big a gap to bridge.
We had 3 separate contractors out to look at it. One said it was a tear down and the other 2 gave us numbers around 150,000 - 170,000 to make it habitable again. I don't think even an investor with deep pockets would pay $300,000 for the property as other new builds in the community go for $450,000-500,000.....at least in the last year. We are the only offer in a year on the market and 1 of 3 people to look at it. I guess it is doomed for foreclosure then.
How would we keep tabs on it after they foreclose? We would want to purchase it as quickly as possible. Doesn't it sometimes take awhile for the banks to get properties back on the market?
0 votes Thank Flag Link Mon Apr 1, 2013
Experience would dictate your offer is too low atleast based upon your Realtors market analysis. It is really hard to determine how the banks or investors come up with their numbers sometimes. You could make a last ditch effort by making your highest and best offer, and see what happens. Or just wait until it is re listed as a foreclosure in the future.
0 votes Thank Flag Link Mon Apr 1, 2013
I would find out if the bank has done it's own appraisal/BPO on the home which is the normal way they determine value. If they did and the appraisal came in more than $100k under your offer, it has been my experience that banks will not negotiate that low. If both the listing agent and the bank came up with a value over $300k they would have no incentive to accept an offer in the $230k range which would put them (after expenses closer to a net of $200).
0 votes Thank Flag Link Mon Apr 1, 2013
The pricing is set not only by the market but also by the investors who own the loan, the type of financing and balance owed by the owner on the note. There may be more then one loan also. The banks also use BPO's to determine value. All of this is taken into consideration when the bank considers a short sale and its price.
0 votes Thank Flag Link Mon Apr 1, 2013
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