Home Buying in 60622>Question Details

Estatebuyeri…, Home Buyer in 60622

If the seller is an Estate and the agent listed at a certain price, how is it that the Bank can say "no" and raise the sale price?

Asked by Estatebuyerinbowie, 60622 Sun Jul 17, 2011

I made an offer at the listed "short sale" price by the Remax agent and after 2-mos. the response given me is that the bank won't accept my offer!? I've now offered $10K above the listed price and the agent went back "to check with the bank" who is now asking for $50K above the agents listed price. Something doesn't "feel right". Help!

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If the bank is asking for $50,000 more, the bank believes that the listed price was too low and the home is worth more. And since they're taking a loss even with a $50,000 increase, they are calling the shots. About all you could do is provide proof that the home is not worth $50,000 more thank the asking price. Otherwise you need to walk away.

Personally, I think too many short sales are priced artificially low which inevitably will cause the lender that owns the mortgage to reject the deal. Which is why short sales are often a waste of time.
0 votes Thank Flag Link Sun Jul 17, 2011
In a short sale, the Bank wants to get as close to the Fair Market Value as possible. They calculate the FMV by doing an appraisal or a CMA (known as a BPO). The bottom line is that the Bank has evidence that the property is worth $50K more than the listing price. As a buyer, it's your job to have your agent do a CMA and figure out the value of the home. If your CMA says that the property is worth $50K, and the Bank is asking for $100K, does this seem like a good deal to you?

Listing agents on short sales list properties one of two ways: below market value to generate interest or at market value. It's possible that even when a listing agent does everything right, the bank may still want more money.

Attorney Ranj Mohip is a Chicago real estate attorney. The information in this answer is general information and is not intended as legal advice. Further, answering this question or otherwise contributing as a member of Trulia.com does not create an attorney-client relationship. Remember--consult the best real estate attorney in Chicago or in your respective area. Contact us at http://www.ranjmohip.com for more information.
2 votes Thank Flag Link Mon Jul 18, 2011
The asking price was never set by the bank, they have allowed this sale to allow the owner now seller to get out from under the debt by selling the property before the bank decides to just foreclose on it. the asking price is only a teaser price, and if you do not like this then complain to your local senator or state representative and as for the government to regulate the way short sales are done!
0 votes Thank Flag Link Tue Jul 26, 2011
First of all, If it took two month to get and answer it was propably a short sale. A short sales means that the bank is accepting less than is owed on the property. Therefore, they get to say how much they are willing to accept.
0 votes Thank Flag Link Mon Jul 18, 2011
Wow, lot's of good replies here.

In a nut shell the bank wants fair market value. Your options are: ask your buyers agent to provide comps to justify your offer; walk away if the comps justify the banks offer or buy at the banks price.

Listing prices alone are not always a good gauge for fair market value. Sometimes the listing agent will start at one price point and continue to adjust until he/she receives an offer. If the bank comes back with a higher asking price the listing agent should provide the comps and statistics.

They should show the bank how long it's been on market, number of price reductions (listing history), what has expired to show that this is what may happen to them and finally advocate on behalf of their seller client.

In the end, the bank will decide which way to go regardless, but at the very least the above should be done on your behalf.
0 votes Thank Flag Link Mon Jul 18, 2011
Dear Estate Buyer, The Banks are looking for as close to market value on short sales. That is the bottom line. If the Listing Agent didn't start out at a market value where the property should have been listed, and then could show the market history that there were no offers after the property was put in the MLS, the type of marketing the Listing Agent did as well as the showing history for the property, then that would give the Estate some leverage with the bank as well as the bank understanding that the right efforts were made.

Know that there are hundreds of investors for each bank and some are international investors that do not understand our marketplace.

The file also can be noted as designated (where the loan service/bank (without the investors total review) approve the selling price and then the non-designated file which means that the entire process has to go through proper channels and then over to the investor and we wait for a couple of weeks for there response.

It doesn't appear that anything might be shady but the fact of the matter lies with the responsibility of the listing agent understanding the entire short sale process and selling that property beginning with a true market value. BPO's pretty much are out of the picture as the bank has other avenues in which to find the value. However, if the listing agent hasn't submitted a damage report to the bank with photos including estimates, that does hinder a true market value.

I hope I haven't lost you but it pretty much boils down to where the listing price started and slow gradual reduction over every three weeks.

The flip side could be that maybe it isn't the bank but the seller needing more money from you so the estate doesn't have to put any money out. That also is a possibility..

Keep us posted as to the updates.

Barb Van Stensel
Keller Williams Lincoln Square
2156 W. Montrose
Chicago, IL 60618
773.746.5395
0 votes Thank Flag Link Sun Jul 17, 2011
Hi, It sounds like the conducted an appraisel and most likely a broker price opinion. They know the value is there along with data to back it up. This is happening more and more these days. I'm guessing the banks are tired of losing money...

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
914.406.9023
0 votes Thank Flag Link Sun Jul 17, 2011
Short Sales are tricky sales. Just because the listing agent lists it for a certain price, that doesnt mean that is what the bank is going to take. Remember, the bank is taken the loss, not the seller. Also, the bank sends out a BPO to assess the property and make sure its going for the correct price. Almost every short sale I do now, the bank is rejecting the price and wanting more money. You can negotiate with them, and see if they will take a price of what you think its worth. Have your agent draw you up a CMA so your not overpaying.
Web Reference: http://AmericorpRe.com
0 votes Thank Flag Link Sun Jul 17, 2011
After reading some of these other responses I need to say that the concept of an agent being a 'short sale expert' is an oxymoron. All agents have had experience with them over the past 5 years. The listing agent has almost zero control over the process or the result. Each bank has their own procedure and time frame for doing them although there are certain standard aspects to the process as some other answers have pointed out.
It does seem like the initial asking price probably was too low to start with otherwise when the bank did the BPO it would not have come up so much higher than the list price. That is the fault of the listing agent for not doing his/her homework on what the comparables really are/were.
You should have also done your homework to see what the real comparables are and if you had an agent on your side they would have told you that throwing in a low offer in relation to the real comparables is likely to fail and you would be wasting months of time.
These banks are not idiots and they also do not care how long they hold the property. They want what they think the correct price should be and they will wait 6-9 months in order to try to get it. I do BPO's for some of them and the rigid format they require often results in a BPO price that really is not very 'comparable' to the reality of any given local market, but they do not care about that. It has to be done their way…..period. It's very frustrating, but that is life in the R E world these days.
0 votes Thank Flag Link Sun Jul 17, 2011
A bank will get at least one, and often several, recent appraisals/Broker Price Opinions before deciding whether to accept any offer. There is a time limit on the BPO's, too - if it is more than a certain number of days 'old,' the bank will order a new one.

Banks often do not share the appraisal price with the listing agent. Many won't even get an appraisal/BPO until an offer is submitted. Therefore, the listing agent may not have any idea what price the bank will accept, until an offer is submitted and the bank gets its appraisal.

I've had short sale listings where the bank ordered 3 different appraisals, one right after another. None of the final appraisal numbers were shared with either the seller or buyer, either.

You would be best served to have both a Realtor and your own attorney representing you in your pursuit of a short sale.

Best of luck.
Maripat Flood, J.D.
Michael Saunders & Company
Sarasota, FL
941-320-0441
maripatflood@michaelsaunders.com
http://www.bestsarasotaproperty.com
0 votes Thank Flag Link Sun Jul 17, 2011
It sounds like;
you didn't use your own Realtor,
you didn't do (have him do) a CMA, so that you could determine the value before you made the offer
you still do not know how much the property is worth

The LISTING PRICE on most REO's is an arbitrary number that the Listing Agent uses to attract offers'
it is usually not given to him by the Bank
it is not a "binding" number
it is probably not even a good guide to what the Bank will accept

You need to contact a Buyer's Agent to help you before you get in over your head, or waste more time and paper.

Good luck and may God bless
0 votes Thank Flag Link Sun Jul 17, 2011
There could be many factors involved in this short sale. The number of lenders involved. The agent who listed the property, was it close to the value? If the bank has their own appraisal done they may know that the price is way off. If there is more than one bank involved one may not be willing to negotiate or concede at this point. The seller being an estate has no bearing on what the bank may or may not accept for the house. An estate is simply that the owner is not alive or capable of handling the sale of the home. Some short sales can take a very long time. If you think the price that they are asking is way off you can not accept the offer. If you feel the property is worth it and you are able to buy it, go for it. Remember a short sale can take a very long time. I was involved in one that went on for a year.
0 votes Thank Flag Link Sun Jul 17, 2011
The list price of a short sale is a guestimate by the listing agent and is not a "carved in stone" price for the property. Also, the list price is such to induce someone to make an offer to start the process; and, as it is stated in the contract, the offer is contingent on what the bank wants for the property.
Web Reference: http://www.321property.com
0 votes Thank Flag Link Sun Jul 17, 2011
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