Home Buying in Fremont>Question Details

Arkangel, Home Buyer in Fremont, CA

Buyer needs some help with Short Sale and 2nd Mortgage

Asked by Arkangel, Fremont, CA Mon Apr 23, 2012

I am the buyer

We put an offer on a property that has 2 loans, Primary with B of A and the Second with PNC

Bank of America has offered PNC 6k to release the lien and they are requesting 8k

The listing agent has asked if I would be willing to pay the rest to get the release and move on with the sale.

Has anyone had any experiences like this? I am waiting to hear back from my lender and also for clarification from the listing agent on how exactly this works and what ends up happening if the property does not appraise for the amount offered and the deal falls apart.

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Answers

19
Short sales can be very frustrating. The listing agent is asking you to increase your offer by $2k to make the deal work. Your options are:

walk away
pay the $2k
ask the 2 agents to each pay $1000
say no and ask the two lenders to work it out


Saying no could work and I would start there but it just drags out the whole thing, but if time is not important you might try it. Banks kick and scream like spoiled brats, but sometimes after they do they get down to working it out.
2 votes Thank Flag Link Mon Apr 23, 2012
Thanks Tim,
So this is not actually Cash I will be paying, I will be increasing the offer amount only correct?

If the house does not appraise for our offer, then it makes no difference if we increased our offer correct?
Flag Mon Apr 23, 2012
Not uncommon for the 2nd loan to ask for more than what the first loan is offering

Various ways to address
Just consider --- is this the house you really want; are you comfortable and convinced that you're getting a very good value at the price you're buying; would you have offered the difference of $2,000 more in sales price to make sure that you get the property?

Will refusing to contribute $2K cost you the sale? Will it cost you more if you walk away from this sale in terms of finding (and waiting) for something you like better and may cost more

You can contribute the $2K
Or you, the buyer and both agents can split the difference 4-ways to make is easier on everyone's pocket. If the buyer can't and doesn't have the money, then maybe you and the agents can split it 3 ways.

But I don't think it's fair to ask the agents to pay for all of it. Listing agents work so many hours on short sales that if one were to factor in the hourly wage based on how much they earn by the time the sale closes, it may shock you.
1 vote Thank Flag Link Mon Apr 23, 2012
Hi Arkangel,

When this happend to me and I was the listing agent we wrote an addendum that stated how much the offer was with x amount to be paid to chase for the the second. The bank approved it. If you are planning to just go ahead and pay the 2000.00 you could just add it into your closing costs and bring it with your down payment check that you bring to closing. You should have your agent try to negotiate it with the bank first though. Also as stated below you could try to get the listing agent and your agent to pay for some of it.....Dawn
1 vote Thank Flag Link Mon Apr 23, 2012
I forgot to mention if the house does not appraise make that the attention of both lien holders and get them to lower the price. Esspecially if you are FHA becuase that appraisal with be stuck with the house. Make sure your agent fights for you.
PS: and yes it would be cash up front out of pocket not put into the loan.
0 votes Thank Flag Link Mon Apr 23, 2012
You counter and say no. The problem that most agents over look is just because the second wants more money you still need to get the first to allow a cash contribution. Everything needs to be disclosed on the final HUD. If they try to get you to do it off the records that is lender fraud.
If you are in a binding contract with the seller you have a right to keep countering the banks until you have exhausted all avenues. Most agents just want to close the deal but proper channels need to take place.
Even if you agreed to pay the second you have to make sure the first will allow it. I will tell you this sort of thing happens all the time though.
0 votes Thank Flag Link Mon Apr 23, 2012
Arkangel,

Yes, this is becoming more and more commonplace nowadays with bank owned properties. The buyer can do this, but they cannot pay for past due taxes.

Ideally, if you can and the value will hold, you can add the difference to the purchase price and base the loan off of that. This only works if the appraised value will hold those additional funds. With only $2k as the difference, you should be okay.
0 votes Thank Flag Link Mon Apr 23, 2012
Yes he has GREAT things to say about you, I just sent you the email...
0 votes Thank Flag Link Mon Apr 23, 2012
Yes I remember Jessie and I helped him with ring court to. :-)
0 votes Thank Flag Link Mon Apr 23, 2012
sure my email is rivtwins@gmail.com
0 votes Thank Flag Link Mon Apr 23, 2012
Dawn,

Small world, I believe you were actually helping my Father In law here in Fremont with a possible SS at 4692 Wildwood Park Ct, if you don't mind I would rather move this to email to be in more direct contact?
0 votes Thank Flag Link Mon Apr 23, 2012
ok in Manteca how many bedrooms, bathrooms, what is the square footage and I really need the address as prices can change from area to area....Dawn
0 votes Thank Flag Link Mon Apr 23, 2012
Zillow is not a good place to check comps. They are not very accurate. You should have your agent do the comps for you they will be far more accurate. I would be happy to run some comps for you but I would need the address of the home....Dawn
0 votes Thank Flag Link Mon Apr 23, 2012
The home is in the Central Valley, Manteca to be exact
0 votes Thank Flag Link Mon Apr 23, 2012
Hi, Paticita is correct in regards to agents earning very little from a short sale, and if you did divide the time by the pay after taxes it would be close to or less than Minimun wage. So I agree it's more fair if all involved help bridge the gap.....As for you adding in the amount to your offer you would need the agents to make it clear to the bank in the addendum that the extra amout is for the second. Also if it does not appraise your loan contingency will apply (if you have not released it) and you will get your deposit back less any inspections you have had done on the property. since I do not know the particulars of the home price or area I cannot speak to weather your offer is high or low....But sales are up in march, and homes are getting multiple offers which is driving the prices up too. Also, Fremont is one of the most desirable cities in the east bay because of the good schools.....Good Luck, Dawn
0 votes Thank Flag Link Mon Apr 23, 2012
Another problem that we are having in agreeing to pay an extra 2k is that original asking price was 270K, at the time of the offer the home was valued at 285K per Zillow, We offered 295K, now per Zillow the value is $272k
0 votes Thank Flag Link Mon Apr 23, 2012
Thanks for the replies

I am still waiting to hear from my agent and my lender, in the mean time I was trying to educate myself to better understand what my options are


Just for clarification, this 2k would be reflected in the offer, not actually Cash out of my pocket, correct?


If that is the case then raising our offer becomes irrelevant if the home does not appraise for the amount we offered, correct?

Its probably also worth mentioning that we do not expect it to appraise for what we offered, since the offer was placed values have come down.
0 votes Thank Flag Link Mon Apr 23, 2012
Options-
Ask seller's agent to negotiate with the 2nd to accept the 6k.
Buyer or Seller Pay the 2K
Walk Away
0 votes Thank Flag Link Mon Apr 23, 2012
Hey Arkangel,

Tim Moore, below, has given you the best answer.

Thanks
0 votes Thank Flag Link Mon Apr 23, 2012
Arkangel:

What does your Agent advise you do?

Are you in a Dual Agency where the Listing Agent is representing you and the Seller?

-Steve
0 votes Thank Flag Link Mon Apr 23, 2012
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