Home Buying in San Jose>Question Details

Cmarshall, Home Buyer in Fowlerville, MI

I just put in a offer on ashort sale with WF, today I found out the seller owes $227,000 I offered $125,900 and thouht with the market I was actually

Asked by Cmarshall, Fowlerville, MI Wed May 19, 2010

being generous, When I looked for comps and the agent looked we couldn't find anything for their listing price of $149,900 if the homes were that much they sat on much more land than this. Can I really expect the bank to that big of hit? This house has sat on the market now 6 months and mine is the first offer after lowering their price 3 times.

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9
Good Day,

Lots of good replies.

We are in strange times for sure. The banks appear to be attempting to increase property values, with the help of the appraisal guidelines. They end up sitting on a lot of property. We are just the little guys, who funded TARP via our taxes. The banks now have over 1T in cash, and a lot of property, so for them # Whats not to like#.

As realtors, we are also wondering about the Grey Market. There are a ton of homes, Millions, that have been foreclosed. that are not on the market. So where are they? Could it be the same answere as above?

Regards,
Blaine Rabe
REMAX
904-874-0814
1 vote Thank Flag Link Thu May 20, 2010
Pam's answer is right and also Charlie has a good point. The loan amount has no bearing on the value of a home in today's market. If it won't appraise for the purchase price, then the buyer can't get a loan unless they are willing to pay the difference above the appraisal and contract price in cash.

That said, there are situations in banks where it sometimes appears they would rather foreclose on the home than sell it. The Servicer sometimes make more money if it forecloses or they are afraid of a lawsuit from the investor, so they won't negotiate below the loan amount.

Wells Fargo is one of the best to deal with and if there isn't a second or third mortgage or PMI, then you should be able to have a successful negotation.
Web Reference: http://teamalters.com
1 vote Thank Flag Link Wed May 19, 2010
Hi,

Some great answers. Unfortunately none of us can think like a bank. Much of what happens with short sales defies reason. Remember there are three possible approvals that you will need to deal with; the first mortgage holder, the second mortgage holder and in the end the PMI insurance holder. Your agent should find out who holds what and then proceed from there. The process could take awhile.
All the best
Charlie
Web Reference: http://jaxhomesinfo.com
1 vote Thank Flag Link Wed May 19, 2010
It doesn't matter what the owner owes. It depends on what the BPO or appraisal comes back at. The agent or appraiser will see what has sold in the past 4 months as well as what is currently on the market now. If there are comparable sales to justify your offer price and the BPO or appraisal reflects that, then there shouldn't be a problem.
Web Reference: http://www.pamgraham.com
1 vote Thank Flag Link Wed May 19, 2010
Cmarshall,

You ask a really good question. It sounds like you did a lot of research prior to making an offer and your offer probably reflects the actual market conditions for this property. Well Fargo will have an appraisal or BPO (broker's price opinion) completed for this property as part of their short sale process to determine the market value of the home. WF knows that your bank will not qualify you for a mortgage for more than the appraised value of the property, so WF won't be able to force you to pay more than fair market value.

With that said, WF may opt to foreclose on the property instead of granting the short sale because it may net more through a foreclosure then the short sale (especially if WF is going to have to write off $101,100). This has happened to me with a couple of short sale buyers I represented. The banks that held the liens calculated they could net more from a foreclosure than from the short sale so decided to opt for foreclosure.

It seems counter intuitive to think that if you have a buyer, like yourself, that is willing to purchase a distressed property now that if would be better for a bank to foreclose on the property then sell it as a foreclosure, but I've had a couple of negotiators tell me that their banks run numbers for both scenarios and chose to go the route that yields the most to their bottom line.

I wish you luck on your short sale.

Scott Sullivan
Realtor
Prudential Network Realty
3535 Highway 17, Suite 10
Fleming Island, FL 32003

C: 904-327-5676
O: 904-269-1716
ScottSullivan1@mac.com
0 votes Thank Flag Link Fri May 21, 2010
Good luck on your offer. The price of a short sale property has nothing to do with what the seller owes on the property OR what they paid for it. What matters is that the property will appraise. Fair market value is determined with talking a look at recent sold properties that are comparable in the area (within a mile). If your contract price meets the appraisal value, you should be good to go.

Keep positive thoughts and again, Good Luck!

Debbie Albert, PA
Coldwell Banker Residential
Web Reference: http://www.ronanddebbie.net
0 votes Thank Flag Link Thu May 20, 2010
Short sales are supposed to be selling for around current market value or maybe a little below. Sounds like you did your research. Wells Fargo has considerably reduced the amount of time it takes to get an answer from them. Lately I have been seeing less than 30 days and they want you to sign their addendum. Then about one to two weeks later they disclose what their bottom line would be on the home. I also noticed they are countering back to the buyers. Hope all the information you got here helps somewhat. Noone can tell what will happen you just have to wait on the bank and that is the hard part. Make sure your Realtor follows up every week or at least every other week. Good Luck
0 votes Thank Flag Link Wed May 19, 2010
Dear C Marshall,

Until you get a contract signed by the Seller your offer will not be submitted to Wells Fargo for approval.

The Seller has 100% control over who will get the house so make sure you stay on good terms with the owner and listing agent.

It's possible there is a "middleman" investor that is working in conjunction with the listing agent and seller and they have already submitted a low ball contract to the lender. Once the lender approves the low price they then attempt to "flip" it to the next buyer for the highest possible price. That may be why the price is higher than market. Also I've seen overpriced short sales where the owner wants to draw out the process so they can live "rent free" for as long as possible.

So keep looking for a house until you get written approval from alll lienholders on a short sale. The best deals are bank-owned foreclosed homes (not short sales with ficticious asking prices) and you need to write your offer the same day they come on the market if you have any hope of getting one of the best deals.
0 votes Thank Flag Link Wed May 19, 2010
good afternoon....great question..no one knows but the bank what they will take...if the mortgage had pmi coverage, they may not take a hit or not as bad of one...if you feel you would be getting a deal at that price...you're probably going to just sit and wait..good luck on your deal...best regards..
bob mcclure-
first preferred mortgage-
southfield, michigan...
0 votes Thank Flag Link Wed May 19, 2010
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