Home Buying in Florida>Question Details

Lks1113, Home Buyer in Florida

Seller removing items from house in short sale and wants an offer in above value of home based on pencil search. What should we do?

Asked by Lks1113, Florida Tue May 8, 2012

We put an offer in on house based on the pencil search we had done. Owner is RE agent and said they would not accept offer we want to put in as she keeps teeling us it is worth more. So we looked into raising our offer, but I know it will not appraise for that price! Then they sent new paperwork over and now there is a list of things they are taking from home. All window treatments, light fixtures, fans, home theater equipment and furniture, salt water pool system, washer and dryer and hurricane shutters attached to house. We know they haven't paid mtg in 2 yrs and they are moving out June 1st so they will be abandoning the house. What should we do as we really like the house but 1st off it is not going to praise for what she thinks and 2nd now they are removing stuff from house! How should we make an offer?

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Answers

12
Clearly the current owner has no interest in selling the home, they are working against that goal. If they were interested they would accept your offer, regardless of how much it is for, since the Lender will be the one to determine final price (not the seeler).

The home will likely go into foreclosure after being abandoned. Keep an eye on it and you should be able to buy it much cheaper in the future once it is a foreclosure sale and make all necesary fixes with what you saved.

Tony Vega
Charles Rutenberg Realty
1 vote Thank Flag Link Tue May 8, 2012
how badly do you want this house? Offering more than the house will appraise is just a waste of everyone's time. I do hope you have your own Realtor and are not using the sellers. My thought is "NEXT" or just wait until the bank takes it and puts it back on the market
1 vote Thank Flag Link Tue May 8, 2012
Just had another thought... is the Short Sale only on a 2nd mortgage? Will the first mortgage be paid in full? If that is the case and the seller cannot negotiate with the 2nd lender, the Seller may be required to sign a promissory note (or bring cash to closing) to get the 2nd mortgage lender to allow the sale. For that reason, the Seller may attempt to sell for the highest price possible to minimize the amount they may have to agree to repay the lender.

All the best,
Alma Kee
http://www.SoldOnTampa.com
0 votes Thank Flag Link Sat May 12, 2012
LKS,

I've read through all the other agents answers, and I do think that there are a lot of good answers below, although Tony's is my favorite. The one thing no one has commented on is the fact that the seller really shouldn't be removing fixtures from the house. Now, that's really an issue between them and the bank, but I have to think the banks should be looking at such behavior, and simply foreclosing on homeowners who engage in such antics. There are so many beautiful homes available right now, I suspect you'd be much better off finding another home, or simply waiting for the axe to fall on this property, and get it during the foreclosure process.

Ann
0 votes Thank Flag Link Tue May 8, 2012
Thanks for the vote of confidence. I have found that the simplest, un-emotional answers are more effective with distressed buyers.
Flag Wed May 9, 2012
Take a look at my listing, it's $700k and the neighboring homes sell for more than a million:

http://Www.soldontampa.com
0 votes Thank Flag Link Tue May 8, 2012
I am working with a RE but unsure how experienced they are in short sales! A pencil search is term used by appraisers and is a rough valuation of home without them actually going to home and doing an appraisal. This came back at 740k. We were trying to make offer slightly below based on what we knew at the time they were removing. Seller would not accept, then said they had another offer for 825k. So we submitted a written offer at 830k. Seller is now counter offering at 850k and added things to be removed to list! Seller told us that they are moving out of home on June 1st as they have somewhere else to live! They owe 1.1 mil on home that is no where near worth that price. So actually sellers havent paid mtg and lived mtg free for 2 yrs, are abandoning the home June 1st, taking things attached to home out and somehow they don't want to accept a reasonable offer on what we would pay which is not unrealistic of fair market value of home without all this crap removed! So I actually am not sure what this all means. I also am convinced that other offer was BS!! We really like home and understand it is long process and we are very strong buyers, but that being said just want to make a reasonable offer that makes sense on information given to us by professionals given market value and items removed
0 votes Thank Flag Link Tue May 8, 2012
Shanna is correct that some of the items you mentioned are considered fixtures. However, you do not have a contract at this point. At this time, the seller can do whatever they want basically. You should be happy that the seller was thoughtful enough to let you know in writing that they are removing items from the home. If they had done this after your had a signed, accepted offer, then this would be a whole different ballgame.

Also, I am not familiar with the term "pencil" search. You would do well by enlisting a buyer's agent to run a market analysis for you to find out the estimated market value. Then make a clean, honest offer based on the results and wait. On a short sale, you could be waiting a long time, so be prepared.
0 votes Thank Flag Link Tue May 8, 2012
Bottom line is unless you get a contract signed by the Seller with terms acceptable to the Seller (he doesn't care what you want by the way...) then you will not even have a chance to try to buy this house.

Sellers can attempt a short sale with any buyer they chose (as long as it is an arms length transaction) so I wouldn't suggest putting any of your demands on the seller if you want him to sign a contract with you.

Also some sellers want to continue living for "free" for as long as possible so they may overprice or require an above market contract price as you are possibly experiencing.

So unless you have some sort of reason why you only want to buy "THIS HOUSE" then move on if the price and terms are not acceptable to you.

Also if you are paying ALL CASH or getting a conventional mortgage you may also be experiencing a fraudulent "FLIP". What happens on those is the Seller already has a contract with an insider investor who will attempt to get approval at a lowball price with the intent to immediately FLIP to the next buyer at or above full market value. CASH buyers are the perfect target for this scheme.

Good luck and keep looking.

All the best,
Alma Kee
http://www.SoldOnTampa.com
0 votes Thank Flag Link Tue May 8, 2012
LKS,
You are in a tough situation. IT becomes even tougher when one realizes what the meaning of "pencil search' may mean. It could mean you are an expert and know everything about real estate and can go it alone. How closely will a 'Pencil Search' resemble a 'SWAG?" Why would you make a financial commitment to a 'pencil search?"

Back on topic, if you like the house, if you can see yourself living there, if you have the cash to replace what is being removed....then there is no reason not to go forward. Of course the devil is in the details. Know what the contract with the seller involves.

Be aware, you are racing the the foreclosure clock, which apparently has a two year head start. 70% of all short sale offers to purchase fail. Realize you are on the losing team. Don't get emotionally attached.

What you are witnessing is an emotional reaction to betrayal. It is perceived the bank failed to negotiate in good faith with this home owner. It is very likely the owner did everything the bank asked of them, including 'we can't talk to you if your account is current" only to have their credit wrecked by the bank directives and in the end, compelled to leave. Try as best you can to separate these actions intended to retaliate against the bank, from any relevance to your purchase expectations. You have entered the 'Wild, Wild, West" of real estate.

Be aware, in short sales, the Wild, Wild West of real estate, there is only an illusion of rules. Anything can and will happen. No amount of text can properly prepare you for all situations that may occurs. You will have more than one opportunity to reconcile your purchase offer later in the negotiation process. IF you want the home...and are willing to lose it without suffering emotional distress...you possess the patience of Job, and can withstand persistent and enduring abuse, continue, with professional guidance of course. Be fully aware of the content of the documents you have signed or will be signing.

There are many intricacies in this process. Your real estate professional will be able to guide you.
0 votes Thank Flag Link Tue May 8, 2012
Hi Lks1113,

I hope you have a Realtor representing you. If you don't, hire one!

Have your Realtor do a Comparative Market Analysis (CMA) on the property usind SOLD comps within a 1 mile radius of the property (the closer, the better) that have SOLD within the last 3 months. This will give you current market value and this is what you should base your offer on.

The light fixtures, fans, salt water pool system and hurrican shutters are considered fixtures as they are attached to the house (the other items you listed are considered the seller's personal property and wouldn't automatically convey with the house). If you want, have your Realtor reduce your offer by the value of the fixture items.

If the seller won't accept your offer, move on to another property - unless of course, you are willing to pay more for the house than it's worth - and you are able to. You can pay any difference between appraised value and purchase price in cash if you want - unless you are using VA financing (all other loan types 'allow' you to pay the difference if you wish to).

Shanna Rogers
SR Realty
http://www.RealtyBySR.com
0 votes Thank Flag Link Tue May 8, 2012
Lks1113,
In a short sale, your contract is with the seller, subject to lender approval. This ultimately means that the sale price will probably be determined by an appraisal by the bank. Read your contract carefully. Seller always has the right to refuse any offer on any basis, so seller hasn't done anything wrong at this point. Currently you have an offer on the table, but no contract. What their arrangement is with the bank you don't know. There is normally a clause in the Florida real estate contract of sale that addresses the issue that releases the buyer from the contract if the property does not appraise at the sale price. If you are not working with a realtor, you should be, as they can be your best protection in the transaction.
If this is a true short sale, remember that the seller is coming out with 0 dollars in the transaction.

Myke Triebold, GRI, LMC, SFR, ABR
MykeSaysSold@aol.com
850-305-6256
0 votes Thank Flag Link Tue May 8, 2012
Your agent should have included everything in the contract that was listed in the MLS.
Your agent need to negotiate this for you.

Goof Luck!

Devi
0 votes Thank Flag Link Tue May 8, 2012
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