Home Buying in 34292>Question Details

Tcarter1, Home Buyer in 34292

Is it a common practice with short sales for a bank to take a cash deal over a finance deal, resulting in a $40,000 loss.?

Asked by Tcarter1, 34292 Sun Sep 19, 2010

Help the community by answering this question:

Answers

6
BEST ANSWER
T,

There is no way to predict the out come of banking logic. What seems rational and clear may end up wild and unpredictable. Banks are not interested in taking additional risk when it comes to distressed property. We have had a number of pre-approved financed offers on bank owned property turned down for lesser amounts as cash offers. This does seem to be the trend....regardless of the net gain or loss!

There seems to be a serious shortage of common sense and good business practice...
0 votes Thank Flag Link Sun Sep 19, 2010
Sounds like the seller, listing Realtor and an "insider" investor may be engaging in Short Sale fraud... that would be the only explanation for a $40k lower all cash offer being accepted over a financed offer. An "insider" will submit a lowball short sale offer with fraudulent repair estimates and then immediately (within a week) flip it for a profit to the next buyer. Cash buyers do not have the scrutiny of a lender so these scammers typically target all cash buyers.

Or... perhaps the first offer beat you to it. Many sellers and agents will sign a contract with a buyer and not submit any subsequent (even significantly higher) offers.

Good luck.
1 vote Thank Flag Link Mon Sep 20, 2010
Yes.

It all depends on what kind of numbers you are talking about (is this a $200k house or a $2m house..), but the banks want to close the deal and get on their way. If they see road blocks (like financing) in their way they might easily be willing to take a deal $40k less to do so. I've see private sellers do the same.
0 votes Thank Flag Link Mon Sep 20, 2010
This wouldn't make much sense to me. Especially if your getting financing from another source, the bank doesn't take a 40k loss and they get the money at closing just as they would with a cash offer. This is the same scenario as a car buyer thinking he will get a better deal by bringing cash to a car dealership. Actually the opposite is true, the car dealership makes much more profit on the financing end of the business so they don't want your cash.
http://ftmyershomesearch.com/
Web Reference: http://capecraig.com
0 votes Thank Flag Link Sun Sep 19, 2010
Dear Tcarter1,

Each short sale transaction is uinque ~ terms lenders accept vary and can depend on many factors.
Perhaps in the scenario you mentioned, the lender wanted to have a quicker closing.

Best Regards,
Maureen
0 votes Thank Flag Link Sun Sep 19, 2010
Hello T Carter1,

It doesn't matter to the bank whether a buyer purchases with cash or is financing. If financing is approved, it's as good as cash. It comes down to how much of a loss the bank is willing to take. Typically short sales are priced lower to attract buyers but the bank may not even agree to a full price offer. The bank will get their own BPO (broker price opinion) or appraisal when an offer is submitted. They'll crunch their numbers, do their diligence, and either accept the offer price or counter it with a higher price. It depends on the bank, the amount of the mortgage, and the amount the bank is willing to forfeit. That's the long answer. I hope this answers your question to your satisfaction.

Theresa Brown
Michael Saunders & Company
110 Nokomis Avenue North
Venice, FL 34285
Direct: 941-350-5005
0 votes Thank Flag Link Sun Sep 19, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer