Home Buying in Chestertown>Question Details

mcmullen.lau…, Home Buyer in Chestertown, MD

My husband and I just had a seller refuse our offer on a short sale property...

Asked by mcmullen.lauren, Chestertown, MD Tue Jul 17, 2012

There is major water damage (interior puddles from burst pipes), mold throughout, kitchen needs to be redone and the entire house will need new heat, drywall and flooring. It is listed at 85k. A very comparable property (right down the street, same size, same size lot), but in liveable condition sold for 89k. We put in a cash offer of 50k, following the advice of our contractor that gave us an estimate of 60k in renovations. The seller has been forced out of the property by the bank and there is no electric and hasn't been for months. We found out that the bank set the price. The seller is refusing our offer...can we go above the seller to the bank and attempt to negotiate...or do we need to grit our teeth and walk? We're self employed so financing is out for purchase.

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Lauren - The first thing you should do - if you haven't already done so - is enlist the aid of a buyers agent to try to ferret out the reason your offer wasn't accepted and otherwise assist you in negotiating a home purchase. The fact is that you came in very low as a percent of the asking price. On a short sale, the owner gets to decide whether or not to accept an offer before it is remitted to the lending institution for second tier approval. And, an owners decision will be based on their exposure to having to make up any difference between the sale price and mortgage balance and their prospective income tax exposure. Typically, banks also establish a floor selling price below which they will nix the sale - and they have the final say. In my experience, short sale lenders will not engage in direct conversation or negotiations with prospective buyers. So, your best bet is to get a buyers agent. From there, you and your agent can realistically assess your chances of buying the property you are focused on at an acceptable price - and also work together to identify alternatives. Also, don't assume that you won't qualify for mortgage financing just because you're self-employed. The mortgage qualifying process and criteria is more rigorous, but it can be done.
0 votes Thank Flag Link Tue Jul 17, 2012
Honestly, your offer sounds more than reasonable. Have your Realtor submit photos of the property and damage to the bank along with your contractor statements. I can't imagine they want further damage done and more mold!
0 votes Thank Flag Link Tue Jul 17, 2012
You must deal with the legal owner of the property which is the seller. Due to privacy laws their lender will not talk to you without written permission from the seller.
Good luck
0 votes Thank Flag Link Tue Jul 17, 2012
Hello Lauren,

If the seller still owns the property, then they have a right to refuse your offer. Long term, it may not be in their best interest but they are entitled to it nonetheless.

At this point you can either wait for the property to go thru foreclosure and the bank list it for sell or move on to another property.

Either way good luck
0 votes Thank Flag Link Tue Jul 17, 2012
Unfortunately you NEED the Seller in this case. The Bank can provide the Seller with information that can persuade them to accept the offer, i.e. an appraisal, a recent BPO (Brokers Price Opinion) that shows the comps. in the area, etc. If you have an agent that represents you, have them provide the estimate of repairs to the Sellers. This can help in the negotiations. The Sellers still are Captains of the Ship...until the dreadful day of foreclosure. Time may not be on their side.
0 votes Thank Flag Link Tue Jul 17, 2012
Until the banks owns the property, they can not sell it.
Grit you teeth and walk.
There may be many other reasons your offer was not accepted besides the price.
Even with a cooperative seller, the odds of success are 30% or less.
Let the listing agent do their work and if this can not be salvaged, find yourself another Chesterton home to buy.

Best of success to you,
0 votes Thank Flag Link Tue Jul 17, 2012
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