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.
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.
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.
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
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
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 wayâ€¦..period. It's very frustrating, but that is life in the R E world these days.
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
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