Home Buying in 97520>Question Details

sam, Home Buyer in Ashland, OR

How much does the asking price of a house (short sale) factor into the accepted sale by the bank?

Asked by sam, Ashland, OR Mon Jul 6, 2009

We placed an offer on a short sale that was excepted by the seller. The offer was all cash and about 80% of what he owes on the house. The house has been on the market for over 3 months with no offers. Our offer was about 180,000 less than his asking price. We checked previous sales and felt our offer is fair especially in this market. How important are the BPO appraisals? Seems after studying comps it seems to me its not the appraisals that are important but how much buyers are willing to pay.... What do you think chances are to make this deal happen? Appreciate you advice Thanks

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Thank you for your question. While the lender, or lenders, may accept less money than they're owed (i.e., the short sale) it comes down to a multitude of items lining up right. Once the seller accepts the offer it goes to the lender where they decide whether or not to release their interest in the loan. Even if the bank orders a brokers price opinion (BPO) and an appraisal which both validate the offered price, the short seller still has to provide an explanation as to why they're in a financial hardship and then prove it with a few years of tax returns and a couple months of bank statements. If the seller can't quantify why they need a "short sale" the bank(s) will not release their interest in the loan and the offer will fall apart even though you have a willing buyer and a willing seller. I advise clients to look at all the pieces of the puzzle prior to writing an offer. I would also suggest working with an agent who can be very persistent as banks make it difficult to reach their Loss Mitigation Departments for obvious reasons.
0 votes Thank Flag Link Wed Jan 28, 2015
Hopefully the short sale Listed price was factored off of recent sold comparable homes which is similar to the information pulled by a bank. so unless the listing agent has "cut" the price LOW just to get interest, The List price should be pretty close to what the bank will come up with as it's opinion of price. Hoe this helps!
0 votes Thank Flag Link Wed Jun 5, 2013
The issue of what the lender will accept on a short sale offer has little to do with what is owed or the asking price, and more to do the lender's perception of the current market value of the property. In this regard, much stake rightly or wrongly is placed in the BPO. The BPO is not an appraisal, and with some lenders paying $40 instead of $60-75 to do one, the quality and accuracy can be questionable. Also, in most cases the "bank" you are dealing with is the servicer and not the "investor" who owns the mortgage. It is hard to second guess the motivation of the owner of the mortgage since for them the house is an abstract thing.
0 votes Thank Flag Link Mon Apr 2, 2012
Unfortunately, it is hard to guess. Each bank is different. Another factor affecting the bank's decision is weather or not the current loan has mortgage insurance. BPO's are relied on by the banks to help them make their decision. It is possible there are other factors affecting their decision. Good luck in this process.
0 votes Thank Flag Link Mon Apr 2, 2012
"Accepted," not "excepted." Really!
0 votes Thank Flag Link Tue Jun 14, 2011
The BPO is important, but only one part of the puzzle. The bank is weighing how much they lose, by how much of benefit it is to close a property pre-foreclosure vs, psot-foreclosure for their bottom line. They take in the tax benefits to them obth ways. So it is not alwasy a question of how much you offer, as much as it is, how much they will lose.
0 votes Thank Flag Link Sun Oct 11, 2009
BPO and appraisals are two different things, both used by the lender to figure the end value for what they need and what it's worth. The asking price is just that a starting point on any thing listed. Still if there is a loan in the future an appraisal has to be done for that factor as well. One done for the seller, or lender in a short sale and one again, by the lender for the buyer if that is what he is going for. Or a guess by the buyer of what he thinks he can get it for then fix it up and resell it if he is willing throw his own cash into the deal. Either way a lender on a short sale, has to have some one else tell them what it's worth to accept a short sale, when they are in another state and have never seen the property themselves.
0 votes Thank Flag Link Mon Jul 6, 2009
Where is your buyers agent assisting you with all of your questions?

BPO's is provided by a professional real estate agent who have reviewed comp's in past 6 months compared that home to other "like homes" in given area. Bank has pictures, entire library of info. If your offer is $180K less that list price may not even receive a response.

Short sale must be approved by bank many factors come into play .

Good luck ! I recommend to any all of our clients best keep looking if you have a short sale or bank foreclosure till the keys are in hand title transferred in your name.

National Featured Realtor and Consultant, Mortgage Loan Officer, Credit Repair Lecturer
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Mon Jul 6, 2009
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