What the lender will take is a direct function of what the current market value is for the subject property. In all Short Sales, the bank will order either an appraisal or a BPO and what they need to net in the transaction is and will be based on the type of loan the Seller has. If the Seller has an FHA loan, which is insured by the government, the loan is insured at a certain %, therefore, any offers that net the bank $$$ below this percentage will not be accepted. If they are accepted, usually the Agents will be asked to forfeit their commissions, which can be avoided with the right training. The % net thresholds on an FHA Short Sale will either be 88%, 86%, or 84%, depending on how long it has been since the homeowner was formally approved to participate in HUD's pre-foreclosure sale program. HUD Form 90045 provides proof of the Seller's acceptance and has to be sent to both the Seller and the listing broker within 7 days of acceptance. For VA loans, which are guaranteed by the government, the net threshold is 88%. For conventional or home equity loans, the target net threshold for most lenders is +/-85% of the current market value. What does this mean? This means that in order to pay all the typical closing costs, commissions, etc in a Short Sale transaction, an offer must be high enough to ensure that all these expenses are paid before reaching the bottom line %threshold.
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America's Home Rescue
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Wow if this one doesn't make clear how ineffictive this forum is for getting yoou a complete answer.
Agree to work with an agent so the person trying to help can have a clear understanding of what your question is and then can give a clean answer. We seem to have gotten down to the "what is is" question.
It is true that the agent and owner who is trying to aviod foreclosure set a price for the listing. Rest assured that the bank has the final say over what an acceptable price is. When it's the banks turn to work on a final price they will make a business decission using all the available information none of which the agent or owner have a say over.
SO who sets the price?
I'll stand with my original answer. I answer it from the prospective of someone who is my client and that is my obligation.
The bank makes a business based decission using market value, loan balance, & appraisal which can be a brokers opinion or an actual appraisal. Most banks have REALTORS they depend on to help develop the pricing and marketing plan.
That being said, when I work for a buyer we make offers at the price you want to pay. Sometimes they work out sometimes they do not. I am not scared or intimidated in writing offers that are aggressive. In this market you just never know what anyone will take. Heck I've had offers on non-distressed listing that were 30% below list price which was at market value.
What you need to know is that in recent months about 3% of homes listed are in forclosure & 5% are offered as short sales totaling about 8% of available properties. However, recently about 15% of closed sales come from this pool of distressed homes. This tells us that these homes are aggressively persued by buyers. You need to have current information and be ready to move on day one when properties become available in your target area & price range.
Give me a call or email if you'd like t work together in finding your home. The sellers (banks) pay for my professional services as your buyers agent so it costs you nothing. Free is a pretty good price.
Bill Austin ~ 512-709-6343 ~ firstname.lastname@example.org
Guy E. Gimenez ABR, CRS, GR
Broker / Investor
The PowerHouse Group