Not only do unexpected changes happen during short sale negotiations, but surprises can await you at the closing. I just finished a deal where the seller fired his agent and attorney and introduced a whole new set of demands at the settlement table. Fortunately, a compromise was reached as my buyer had his moving truck waiting.
Short sales are classic examples of "The Peter Principle" - if it can go wrong, it will go wrong!
Short sales are extremely tedious and stressful. Nobody can understand until they actually go through it themselves.
I am sorry that you are going through all of this.
This does not sound right to me. I've been doing short sales for many years and never heard of something like this before.
It is not normal for a bank to change the price after they have had the offer for a while. Remember, it is called a short sale which means the bank is agreeing to take much less on the loan. I would need to know all of the facts here.
As for the seller assist, a lot of banks won't even allow it so 3% is a good thing. The seller still has the right to make decisions but as far as seller assist, they do not have that right. The bank has the right to accept offers and seller assist.
It is not true that the bank doesn't disclose their asking price until the offer has been made. I don't know where your Realtor got that from. This all sounds fishy to me.
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The process is confusing and grueling for all parties involved. I sense your frustration and I'd like to answer your question although you may not like my answer. I don't like my answer either. Please read on.
The original mortgage amount that the seller agred to pay is the amount of money the bank ultimately wants. If $300,000 is owed then the bank wants all $300,000. Not that I blame them entirely. It is the bank's choice if they will take less money than what is owed and exactly how much less is again still their choice. The seller of the home and the buyer do not set the price that the bank will take.
In your case the bank countered your offer price. The buyer and seller agreed to $184,900. That is all fine and good but the bank makes the final decision. The bank's counter offer was $212,000. That is what their valuation determined was a fair number for the home. Seller's assist is usually never allowed on a short sale. But, that the bank will allow 3% is a "gift" if you will. It may not feel fair but the bank is in the position to make these decisions.
Saying the bank would not disclose their asking price is not exactly an accurate statement. The bank's asking price is what is owed on the mortgage. The bank would not disclose the short sale price to you until they did their own assessment of their interest in the property. Once they came up with their price (no matter how ridiculous the final number appears to be) they disclosed it. $212,000.
So, to answer your question, is the bank allowed to ask for more money that the buyer was willing to pay, then YES is your answer. It does not matter what the seller thinks is a fair price. It does not matter what the buyer thinks is a fair price. The bank has the final say. What the bank can not do is ask for more than what is owed on the property. if $300,000 is owed they can not ask for $400,000.
We have written a lot about short sales. Please read some of the other articles for another perspective on short sales. Here is a link: http://activerain.com/blogs/thesomersteam/tags/short%20sales
Perhaps a new buyer is willing to pay $212,000. Now that you know the exact number the bank will take, you can target a new purchaser without the waiting and guessing. Much luck to you.
Actually, the process of "bait and switch" only applies when an item is advertised for a ridiculously low price and when you arrive to get it, you find that the product is gone (or never existed) and the only thing left are higher priced versions of the same thing.
No such situation actually exists in the sale of homes. The listing price is the "suggested price" for the home, but the "market price" (the price the home is sold for) is based solely on an agreement between the buyer and the seller and the market price in any situation can far exceed the listing price. In this case, unfortunately, since the seller is no longer in control of the home due to delinquent payments and the fact that the lender will not be paid full value on the loan, the "other seller" (the bank) has a right to say what price will be acceptable for them.
Had the bank not been involved in the sale, the $212K offer you recently received, would have been the same as if the buyer countered your offer of $185K with a price of $212K. Even here in California, for example, a short sale home can be listed at $500K, have multiple offers above asking price, and the buyer with the highest offer may still get a counter from the bank for a fee even higher than the offering price.
At this time, you have several of choices--1) Choose to purchase the home at $212K with only $5500 going toward closing costs; 2) walk away from the contract; or 3) Counter the bank's offer. Keep in mind, however, that if you counter, you're likely to be back in the same situation as before, with nothing happening and waiting for the bank to review their file again. Hopefully, the response to a counter will be shorter than to the initial offer.
Talk with your Realtor about the best strategy to, if you still wish, buy this home. Good luck!!
Grace Morioka, SRES, e-Pro
Area Pro Realty
Did the Bank approve this in Writing? Did you receive a Signed copy of the Written Approval?
If the Bank did not approve it, then there was no Contract.
The $184,900 List Price determined by the Seller and/or the Real Estate Agent was obviously "Short" of the amount needed to pay off the loan.
The Bank decided not to accept it.