Home Buying in Phoenix>Question Details

Larry Wendt, Both Buyer and Seller in Elmhurst, IL

We are attempting to purchase a short-sale house, and the bank is now asking for more the the original listing prince they agreed to.

Asked by Larry Wendt, Elmhurst, IL Sat Nov 24, 2012

We are attempting to purchase a short-sale house. We made an original offer 2.2% less than the listing price. The seller accepted, but the bank came back and said they want the list price. We immediately agreed. The bank then delayed for 4 months to accept the offer. Now the bank is demanding an additional 4.3% premium above the original list price they agreed to. Do we have any recourse?

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Answers

12
Welcome to the 'Wild, Wild, West of Real Estate!" Short sales, where there is an illusion of rules but anything can and will happen....ANYTHING!

Experienced real estate professional, those who have been emersed in short sales for the past 4 years, know how to evaluate who is on the other side of the table. If it is a bank, the goals are different and one would structure their validation to align with the banks values (if they have any).

If it is an investor, especially a small investor, their will be yet another shoe to drop. A shake down of the current owner will occur in an attempt to find any sock drawer or under the mattress money...and this may be deferred to you also. Yes, they will sabotage a good deal with vengeful actions.

Did I mention 'Anything can happen?"

You need to assess what this house means to you. How much do you want it? Can you live without it (the first mandaory criteria for ANY short sale buyer) justify your offer with current supporting comps, highlight your contingency free, quick close offer, and/or the added pile of extorted cash your agreed to since this is the 'Wild, Wild, West" of real estate. Buckle up! This ride may not be over.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us
0 votes Thank Flag Link Mon Nov 26, 2012
Thank you all for your responses. They were very helpful and I appreciate it!
0 votes Thank Flag Link Mon Nov 26, 2012
You can agree to pay the additional amount or you can reject their offer or you can counter their offer. Your real estate agent should be able to guide you on the best option to proceed with.
0 votes Thank Flag Link Sun Nov 25, 2012
The answers below are very helpful and for the most part accurate. The real question to me is: What is the property actually worth? Was the list price correct, is the bank correct?

This is like Black Friday, just because something is on sale may not make it a deal or it may be a great deal if it fits what you want/need?

What is the property worth in today's market? Hire a professional to represent you that can identify the true value of the property so you can make a qualified decision.
0 votes Thank Flag Link Sat Nov 24, 2012
You can counter their offer and take your chances. The bank will then need to accept, counter or decline your counter - or possibly counter you again (although unlikely). They could also decide to close the file and foreclose on the seller, if they are in default. They could instead, direct the sellers to look for another buyer willing to pay the bank's now "pre-approved price".

Short Sales are no fun but typically are well priced by listing agents to attract a buyer. The bank will only accept what they perceive as fair market value provided they satisfy all involved. All involved can include mortgage insurers, second loans or other property liens involved and of course the Investor (note holder) while paying all of the Seller's closing cost. Before agreeing to a number, banks perform their due diligence on Seller and the pending transaction, review all the available data in the immediate market and will order an Appraisal or a BPO (with photos) in determining the final price.

If this home satisfies your needs and is highly desirable then move forward. Here's why, if you don't walk away from your home inspection, you could still walk away if your lender's appraisal doesn't come-in at-or-under the agreed purchase price... or you can now take that appraisal, go back to the seller/bank and ask them to lower the price to your appraised value.

Your agent should have already answered these questions for you. Home prices and interest rates are at their best - This is the time to buy!

Good luck.
0 votes Thank Flag Link Sat Nov 24, 2012
You can try and counter back. If they won't take your counter then you can decide to go with their counter to you. Unfortunately this is a common occurrence. If the home value is there and you want the home then go for it!
0 votes Thank Flag Link Sat Nov 24, 2012
The short answer to your question is no. You pay the bank's price or you keep looking. If the bank doesn't cooperate, there is no possibility of a short sale. It sounds to me like the investor may be Fannie Mae, and if so, this is par for the course with them. They do an internal evaluation and determine that they can get more for the house as a foreclosure because we are in an appreciating market and Fannie Mae does a forward appreciation calculation based on an anticipated foreclosure date.

Basically if you are not willing to pay the bank's price, it's time to move on. You can counter the bank, but they can cancel the entire short sale and close the file. It's very difficult to find a property right now. I would not quibble over a 2% increase when the overall market in Phoenix has gone up over 20% in the last year. If you don't take this property, you will be back to months of searching - in the meantime, prices are going up over 1.5% per month based on the last year. Pick your battles.
0 votes Thank Flag Link Sat Nov 24, 2012
Definitely negotiate back. And be firm.
0 votes Thank Flag Link Sat Nov 24, 2012
I'm sure your Real Estate Agent communicated to you that a short sale is between a buyer and seller and the sellers lender. The current seller is asking the bank to forgive a portion of the note and if the value of the property has increased from the time the property was initially on the market (as banks can take months for approval) it is not surprising in this market to find banks asking for more than the property was initially listed at.

Your agent can certainly negotiate back to the listing agent and see if you can settle in the middle. Banks are aware that values are increasing in certain markets and we as Real Estate Professionals are aware of this too. We are further aware that it will cost the bank money to put it back on the market....so...and absolutely you have recourse...you can walk away...

Good luck

Debbie Nieman
Real Estate professional
602-799-5239

diverdebi@cox.net

http://www.diverdebi.com
0 votes Thank Flag Link Sat Nov 24, 2012
You need to remember that short sales are subject to Bank's approval. Nationally sales prices still down 30% from their 2006 peak and homes are selling faster due to the tighter supplies. If you really like the property you should go for the price that the bank wants.

Best of Luck,

Maria Cipollone

Century 21 Tenace

http://www.Flahomespecialist.com
0 votes Thank Flag Link Sat Nov 24, 2012
I'm sorry Larry, but what has happened to you is a possibility and something that you should be ready for. I recommend that you evaluate your situation and look at other possibilities on the market currently to see if you might be better off moving on. Just be aware that short sales can take 90 days or more for a single mortgage and 180 days or more for multiple mortgages. Your agent can help you with expectations on each home you are considering.
0 votes Thank Flag Link Sat Nov 24, 2012
No, the bank probably did a new evaluation of the home and with home values rising so much here in the valley they went with the new price. They may also have had other costs incurred such as HOA fees or subordinate liens. Typically homes are going for way over asking price right now so if they are only asking for 4.3% I would jump on it. I just sold a home that went for $33k over asking price. The market is hot here in the valley so I wouldn't hesitate at that range.
0 votes Thank Flag Link Sat Nov 24, 2012
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