Home Buying in 08330>Question Details

Thomas Devito, Home Buyer in Somers Point, NJ

Trying to buy a short sale home. Should I back out?

Asked by Thomas Devito, Somers Point, NJ Thu Dec 9, 2010

Ive been waiting since Sept for a Shortsale home. I offered 10K more than listed price. During my wait for acceptance from the sellers lender my broker had the house appraised(at my expense). The house was appraised for 201k. My offer was 200K. I received a forwarded email yesterday from my Realtor, which was and email from the seller's agent, asking for 10K more than my offered price, and another email stating the second lien holder on the house is not in agreement and this could possibly go to forclosure. My question is should I back out? Why would I offer $9,000 more than the appraised value? I would think the lenders would be satisfied if an offer is close to appraised value, right? What should my next course of action be? I really love this house!

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21
Nycdrone-53799’s answer
They are playing poker with you and trying to squeeze every last bit from you because you've already probably let on that you love this house by offering more than listed, or simply saying it.

Tell everyone , including your realtor that you have a funny feeling about the whole thing and have to think twice but don't burn any bridges. In the meantime, get yourself some other options by getting another realtor and looking at more properties.
0 votes Thank Flag Link Mon Dec 13, 2010
Talk to your agent to see if this can be worked out with the lenders, if not ask your agent to find another similar home. I would have your agent find a traditional seller, estate sale, or foreclosed property for a quick sale. Don't give up, there is plenty of inventory and we don't expect price increases anytime soon.
0 votes Thank Flag Link Sat Dec 11, 2010
First of all, don't fall in love with homes. With the market the way it is right now, there are likely many other comparable homes available. If you look, you may even find these homes at lower prices than the short sale home you have been working on. Having worked on many short sales, my advice is get out. Get your EMD (earnest money back) and find another place. I have seen too manyoccasions where the banks think the home is worth more than it is; the second won't negotiate and the property goes into foreclosure often while you are negotiating. Choose another home. It is far less frustrating.
0 votes Thank Flag Link Sat Dec 11, 2010
Such an unfortunate position to be in. Short sales can be incredibly draining - financially and emotionally. Have a serious discussion with your agent to determine what your options are. Are there other houses available in your price range? How long do you plan to be in the home? Would it be worth paying the additional $9,000 to get the home you love? Short sales are always more difficult when there are several lien holders on the property. Hang in there! It sounds like you are almost there, one way or another.

Best of luck to you!

Jessica E. Nooney
Weichert Realtors
(609) 654-8633 Ext. 121
(609) 276-8183 (CELL)
(609) 479-5333 (Direct Fax)
jnooney@weichert.com
http://www.yourjerseyrealtor.com

"Helping You Reach Your Real Estate Goals - Buying or Selling"
0 votes Thank Flag Link Sat Dec 11, 2010
I wasn't looking at other properties because from listening to my agent I thought my offer was accepted and just the seller and lenders were negotiating. I was obviously wrong and misinformed. I spoke with the sellers agent's boss and he advised me that the jr lien holder wasn't budging and he firmly thinks it will foreclose. I guess I should just give up. I've waited 3 months thinking I was going to get it and now that's not the case. The house has already been on the market(as a short sale) since Oct. Of last year so I don't know how long they intend try to short sale this house before the foreclose on it.
0 votes Thank Flag Link Sat Dec 11, 2010
Thomas,
There are a couple of points that need to be addressed. One - would you be financing the house? If so you may
have a problem aquiring financing based on the appraisal if you go over the value. Second - if the the owners second mortgage bank will not accept it is all a mute point. Have your agent dig deeper. If I were you I would be
activly looking at other houses while waiting this out but the loan issue is important to resolve now.

Best of Luck to you! Vicky
0 votes Thank Flag Link Sat Dec 11, 2010
I think you should have you agent to dig a little deeper into finding out what the banks true position is. They may have to put more pressure on the listing agent to find the answers you need to make your decisions.
0 votes Thank Flag Link Sat Dec 11, 2010
Thomas,

You have a relationship with an agent working on your behalf and you really need to get with them for answers to your questions. It would be highly unethical for another licensed agent to become involved when you have a relationship in place as we are bound by a Code of Ethics.

Your best bet is to sit down with your agent and go though everything in detail and make the appropriate decisions.


Best of Luck,


Tom Priester e-PRO
"Results Driven Real Estate"

Keller Williams Realty
561 308-0175
tom@tompriester.com
Web Reference: http://www.tompriester.com
0 votes Thank Flag Link Sat Dec 11, 2010
Thomas it depends how much you want this house as to how much you are willing to pay. The first problem is listing agents often underprice houses to attract more buyers, the bank most often has a bpo done which is close to but not a formal appraisal. They then base what they will accept on this bpo. Where there are 2 mortgages involved, the 1st wont want to let anyone else take money when they are taking less and teh 2nd wont just let it go, they want something. Your agent should be guiding you through ths, have them complete their own bpo and see what the house is worth in todays market, use that to base what you will offer.

please see my blog for how a shorty sale works with advice and tips on how to get them approved.
0 votes Thank Flag Link Sat Dec 11, 2010
Hi Thomas,
Sorry to hear what you are going thru with this transaction ,although, not unusual for a shortsale. I do not encourage any of my Buyers to pay more than the property is appraised for. You say you love it, the question is, "Do you love it enough to pay $9,000 more?. I will tell you if it goes to foreclosure, they will take what you offered. maybe its worth the wait , there is alot of inventory out there. One door shuts, another opens! best to you.
Debra Sacchetti
das@lnf.com
0 votes Thank Flag Link Sat Dec 11, 2010
Welcome to short sales the most ridiculous real estate process there is. Do yourself a favor and withdraw your offer. Do yourself and even bigger favor and stop considering short sales (which really should be call Extra Long and Unproductive Excercises in Wasting Time in Buying a Home Sales). Most short sales are not approved, and most do end up in foreclosure which is a much quicker and simpler process for a Buyer to navigate.

Cancel your offer now. You'd be crazy to continue wasting time or to pay their price which would put you upside down in the house. I wouldn't dream of offering as much as you did, and in foreclosure my guess is you can pick it up for much less.
0 votes Thank Flag Link Sat Dec 11, 2010
If the home already has things you would need to buy like a nice kitchen. It may be worth $9000 more.
I sold my condo $40,000 above other comps in same complex. It was in much better shape and it became the new comp bringing up appraised value for all.
0 votes Thank Flag Link Sat Dec 11, 2010
If you really love the house $9000 is not the end of the world, How much do you love $9000 dollars:)
The bank is not ever going to be happy throwing away money. Remember they bought the house.
Always be prepared for a slow deal if it is a short sale.
One of the reasons the appraisal was low is because of the most comparable sales in the neighborhood.
Paying $9000 more maks your home a higher comparable for the rest of the neighborhood.
We are seeing some areas start to climb again.
0 votes Thank Flag Link Sat Dec 11, 2010
I hope your realtor can make it work for you - it sounds like you want to make this place your home. Remember that the lien holders have no emotional ties...its only a transaction to them. All of the other posts have given you some good ideas, the lien holders want this off their plate - stay strong, I also hope you ahve continued looking at other properties while waiting for the short sale to be approved...just in case...
0 votes Thank Flag Link Sat Dec 11, 2010
They need you more than you need them. You're already the highest bidder, which should tell them that they may never see this kind of money if you decide to walk. Just play it cool and let them know that paying more than appraised value (if indeed the appraisal was a good estimate) is ridiculous when you really think about it.

I've seen these situations always play out in the buyer's favor when he or she stands on a firm offer. Everyone still wants the deal to happen so then they are forced to get creative. Don't get nervous, they'll find other ways to resolve it without you having to saw a limb off to make the deal happen.
0 votes Thank Flag Link Sat Dec 11, 2010
The good news is that the dialogue is going on between the lenders and the sellers representatives. This shows that the sellers have submitted enough information that the financial institutions are going to accept an amount "short" of what they are owed.

At this point it seems that the lending institutions need to come to terms with the current market value of the property. It certainly doesn't matter what they want, it only matters what someone will pay for the home and what the next lending institution will offer as a loan.

I can only imagine your agent is all ready presenting the facts to the banks via the sellers.
0 votes Thank Flag Link Thu Dec 9, 2010
Your question here is should you pay $9000 over the appraised value? If the appraised value is the value that is what the house is worth. But you may see more in the home than just money. you seem to really like it. Ask yourself ... Is it worth 9000 out of your pocket to get this house? Are the other homes out there comparable? Is there another home you like? Do you absolutely want this hoe. Essentially you will be paying more than what it is worth but that value now is what it is worth to you.

In this market we are seeing values depleted, some are unbelievable buys and others just good buys. When you start paying more than what something is worth then it is a question whether you feel it is worth more... or not... "You "Really Love this house!" How much do you love it more than what it is worth. Is this the end, I've seen these linger on and on asking for more and more.

It was said here go back and ask the appraiser if they could raise the price, No can do ! You cannot ask an appraiser to raise their valuation. You can present proof and ask for reconsideration as long as you can provide evidence of more value. Maybe something was missed, using different comps, allowances for sq ft or lot size or location. But you cannot ask the appraiser to just raise the value. I think the response was actually referring to what I am saying here, provide for a reconsideration of value but you must provide some proof. And appraisers are not always agreeable, since their licenses are on the line but we all make mistakes, so a valid reason for reconsideration would have to be made.

Again the appraisal is not what is the problem here until you go for your loan, it is what is owed and what the jr lien holder is getting out of the deal here. http://goo.gl/ZlKNb Sounds like the jr holder wants 10k to buy them out or maybe that is not what is actually being negotiated maybe it's just an offer to try to get jr holder to accept...
without knowing all the actions and what is being said it is hard to help. Your agent should have the answers.

We are all answering in the dark here. and it is not fair to you or your agent. but you question should yo be paying more than the appraised value? ? ? You and your family needs to determine the value now... Is it worth $10k more than it's real market value... the appraised value!

Larry Sarlo
Weichert Realtors Turnersville
609-868-1171
lsarlo@comcast.net
0 votes Thank Flag Link Thu Dec 9, 2010
Hi, I was trying to give you some input. But after I saw Laura Giannotta's reminder, I totally agree. As long as you have an realtor presentation, you should ask your realtor. If he/she can not help you, it's another story. Good luck!
0 votes Thank Flag Link Thu Dec 9, 2010
Hi Thomas,

I would like to invite you to my free workshop tonight at 7 PM called Winning With Foreclosures. At this class you will learn the ins and outs of buying foreclosed property. Learn how to be successful at purchasing bank owned and short sale properties. It is to difficult for me to answer your question in this format but my hour long class will be helpful in understanding the process and knowing what options you have available in your situation.

To register go to http://www.jotform.com/form/2655117417

This class is held the second Thursday of every month at my office in Northfield:
Keller Williams Realty Atlantic Shore
200 Tilton Road, Suite 5
Northfield, NJ 08225
Web Reference: http://havilandgroup.net
0 votes Thank Flag Link Thu Dec 9, 2010
First, I am assuming the appraiser knew the amount you offered so they usually just look to see if the offered amount seems to be in line with the comps. If he thought you had offered $210k he likely would have appraised the house for $211k.

The second trust is probably going to be a problem and may be why you have been waiting so long. Your $10k above the listed price was the way to go, but the 2nd trust will be the problem. Since you paid the appraiser already I would contact him to ask if the value could be $10k higher to give you some peace of mind. The question is about value, is the house worth $211k compared to what else is out there.
0 votes Thank Flag Link Thu Dec 9, 2010
You are represented by a REALTOR, it would be unethical for another REALTOR to advise you.
0 votes Thank Flag Link Thu Dec 9, 2010
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