Foreclosure in Davenport>Question Details

Stacy Lamb, Other/Just Looking in Rockford, IL

2mo into a SS offer in FL. I was told "Now the issue is the bank is req. cash from the seller at closing, but seller does not have $ to

Asked by Stacy Lamb, Rockford, IL Thu Feb 16, 2012

cooperate." It is my opinion that this is there way to get me to offer more$ .... which they did suggest to make this go through. Though I did not get a formal decline or counter offer.

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This is typical today... This most likely is coming from the MI company and not the servicer (Bank). What most buyers and some Realtors may not understand is, there is a lot of negotiating going on behind the scenes between the servicer, MI company, and if involved - Fannie Mae or Freddie Mac as well as the investors, they all must agree in order for the possibility of the seller to receive a waiver of deficiency from all involved. It's not really directed at you to come up on your offer, but that is possibly a viable solution to move forward, it all depends on what the home is worth in today’s market place and whether or not it's worth it to you to increase your offer price. The price of a short sale listing should be priced correctly for its local market, however, there is really no set value in this volatile market because it continues to be influenced by actual foreclosures and other short sales that close escrow at different prices, but it has dropped so low, it has nowhere to go but up, especially in certain markets like Davenport which in some subdivisions the values have come up as much as 37% from their individual neighborhood bottom only to fluxgate downward some again. This is all influenced by this distressed market, foreclosures became scarce in the last 12 months in Davenport causing the increase in values there, however, the second foreclosure wave is coming back as expected this year which will have another negative impact on the recovery values. At some point this will stabilize and begin a steady normal increase.
1 vote Thank Flag Link Thu Feb 16, 2012
Stacey, In a short sale the seller can put any price they wan t on the home but in the end the bank makes the decision. They come up with the price they will accept for the short sale. The difference they asked for can either be paid by the buyer or seller or both. The seller can also counter the decision by the bank but this very seldom works. Sellers do short sales because they cannot afford the property and thus are not usually willing to pay anything more at closing. They are not trying to get you to offer more, the price the bank came up with is the price the property has to bring in order to do the short sale.. If the money the bank is asking because their is mortgage insurance on the property the seller would have to pay it to do the sale, if it is just an amount higher because they see the home worth more, they price could be raised and the buyer could pay the difference. There are a lot of scenarios that can happen in short sales, yours is just one of them Good Luck!
1 vote Thank Flag Link Thu Feb 16, 2012
Happens all the time. Unfortunately, the bank can do this.
Either you have to come up with the difference or move on to something else.
What does your agent say?
1 vote Thank Flag Link Thu Feb 16, 2012
The SS approval has the amount the seller needs to bring to closing. If the seller doesn't have funds, buyer can bring the difference on a cashier's check to cover for the seller. Be sure that everything is written on the first lien holder's approval letter.
1 vote Thank Flag Link Thu Feb 16, 2012
I was told it was a "bank approved sale" at that amount and we could close quickly. I thought I did my research beforehand and was under the impression the bank had approved the sale at that price. Hmmm
1 vote Thank Flag Link Thu Feb 16, 2012
short sales can have bumps in the road and are not for a person that is in a rush. Just remember that putting your offer in is just the start of a long negotiation process where things like, hoa fees, MI payoffs and the appraised price can have an influance on the outcome. What I do with my investors in come up with a strategy where we have several offers in on several different shorts and hope that at least one of then will eventually close. There are several times in the process that you can back out of a short sale so if you approach with the correct expectations and mindset then it can be a good way yo purchase real estate at a discount. Having said that, more and more , banks are wanting the market price which makes it less attractive to go through all the hassel of a short sale. Please let me know if I can help you further

407 832 4888
0 votes Thank Flag Link Sat May 26, 2012
Many good answers. Short Sales arn't fun and can be disappointing. However, know that just because a bank asks for something that dosnt mean that is the end all be all. They may still have options.
Web Reference: http://www.ShawnAndDee.com
0 votes Thank Flag Link Fri Feb 17, 2012
Hi Stacy,

Even if a sale was previously approved at a certain price, the banks (or PMI company) can change their mind.

Also an inexperienced listing agent and/or title company may not correctly compute the property taxes for prorations, or HOA lien or other liens so the net amount may be less for every month the short sale drags on.

You do have to be careful, though, especially if you are paying ALL CASH because short sale "flippers" (fraud) will target buyers with all cash.

Do you know who the actual investors are that own the first mortgage (not the "servicer" that merely collects the payments for the true owner) and 2nd mortgage? Also do you know if the current owner purchased with less than 20% down. If so there is a PMI company, too, that may have to approve the sale. If the first is with Fannie Mae then they may have the ability to approve the short sale without the PMI company hold up the sale. This is a recent change and I actually had a Short Sale listing that the PMI company was requiring my seller to sign a $60k promissory note. Now that Fannie Mae doesn't have to get Radian (PMI) approval, the sale is now approved without the PN.

You may also suggest to your Realtor that you will split the cost 3 ways with the listing agent and your agent--if it's not too much money.

Good luck!
Alma Kee
http://www.SoldOnTampa.com
0 votes Thank Flag Link Thu Feb 16, 2012
STACY WELCOME TO THE WORLD OF SHORT SALES. I HAVE 14 PENDING RIGHT NOW AS TWO OF THE SHORT SALES I HAD UNDER CONTRACT NEVER WORKED OUT. THE SELLERS LENDER (S) ARE NOT OBLIGATED TO SELL YOU HAVE AGREED TO THE TERMS YOU AND THE SELLER AGREED TO. THE SELLER HAS A DEBT TO THE LENDER AND THE LENDER IS SAYING TO THE BORROWER WE WILL RELEASE YOU FROM LIABILITY IF THATS THE CASE FOR SUCH AMOUNT. I LET BUYERS KNOW THIS UPFRONT. AS IT CAN BE DEVESTATING TO COME MONTHS AFTER A OFFER AND ALL THE HOPES ARE AT A HIGH. HOPEFULLY THE LISTING AGENT HAS DONE ALL THERE HOMEWORK AND PRESENTED A TRUE PICTURE OF THE NET COUNTING ALL THE COSTS FOR CLEAN TITLE. ONCE A LENDER AGREES TO APPROVE A SHORT SALE AND THEY HAVE A NUMBER IN MIND ITS HARD TO CHANGE THAT NUMBER. INSTANCES THIS WILL TAKE PLACE IS HOA DUES,SECOND MORTGAGES,CONTRACTOR LIENS, TAXES,ECT.... KENNY FELIX SFR EXIT REALTY COZY HOMES IN DAVENPORT FL.
0 votes Thank Flag Link Thu Feb 16, 2012
Welcome to the world of Short-Sales. What you describe happens very frequently. Remember that the advertized price on a short-sales has not been prenegotiated or preapporved by the bank in most cases. (I'm hoping your agent told you all this before you placed the offer).

The bank will next ask the seller to sign a note to pay (the amount in question) back over several years, if the seller declines:
A. you can come up with the difference or
B. Time wasted, contract gets broken and home goes back on market....NOW with an actualized price of how much the bank really wants for the house.

Good luck.....maybe is a good time to start looking at foreclosures or traditional sales.

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Tony Vega
Charles Rutenberg Realty of Kissimmee/Davenport
0 votes Thank Flag Link Thu Feb 16, 2012
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