Home Buying in 80524>Question Details

dvarnell, Home Buyer in Greenwood, IN

Wells Fargo Raises Short Sale Above Appraisal??

Asked by dvarnell, Greenwood, IN Wed Jul 3, 2013

I made an offer on a short sale in May. I was told that listing agent had been instructed by Wells Fargo to list the property at $339,900, and 10 days after it was listed that is the exact value that I offered. 2 Weeks ago Wells Fargo had an appraisal performed and the house appraised at $340,000. WF then responded to our offer and said they could close the deal for $354,900. How can they ask for more than the house is even appraising for and why can they not be held to the number they asked for 90 days ago?

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Wells Fargo isn’t required to do anything beyond collecting what they are owed on the existing mortgage (and I am not defending WFHM). I doubt seriously they instructed anyone to do anything, that’s not how banks work. But let’s assume I am wrong, the next question is how do you know what their appraisal said it was worth? Again, I bet they did not do an actual appraisal. And if they did why would they share that information?

To you it appears the lender is negotiating a sale price, not exactly what is happening, they are agreeing to accept less than what they are owed, they could care less what the house sells for. Can they ask for more money, yes they can.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Web Reference: http://jamessimms.com/
0 votes Thank Flag Link Mon Jul 8, 2013
Short Sales have always been "experiments in progress" and unfortunately I've heard that it's been getting worse as of late, not better. It's not uncommon for a Realtor to step out front & create or make up a price - more often than not - well below the banks consideration. One of my first questions to the Realtor when I call on a Short sale is, " has the bank approved this price, or is this an early fishing expedition to get an offer and begin to engage the bank?" (remember - Short Sales are different).

As others have mentioned, I'd encourage you to stay in contact with the listing agent. A short sale means the homeowner/bank is already underwater on loan to value. The bank will likely continue to reduce the asking price until it falls within the area of reasonable market value. You could risk it and offer them $354,900 hoping that it will not make appraisal. If it does not, they're likely to renegotiate. If Wells Fargo does not renegotiate, you're contract should protect you & allow you to walk away. Short Sales are an art...I've done many of them & each case is typically different from the last. Ask your Realtor for guidance. Best of Luck!

Andy Burnett
ERA Herman Group
0 votes Thank Flag Link Mon Jul 8, 2013
I think everyone here is missing the point. It's a short sale, not a bank owned property. If I'm understanding the info in his question correctly, it is unusual for A) The bank to instruct the listing agent to list the property at a specified price ASSUMING WellsFargo had no appraisal done beforehand and B) to get the appraised value after the offer is submitted and list it for higher than that value. With that said, not much makes sense in short sale land, and we've all had our horrible experiences with them. Obviously, you aren't locked into the deal at the higher price and it still stings that they're doing it, but that's a short sale, and you (and more to the point, the seller) are at the mercy of the noteholder. You're probably doing what I would suggest, which is to just keep after it and be patient. The best deals on short sales don't typically happen fast.
0 votes Thank Flag Link Sun Jul 7, 2013
I am assuming that you did not have a signed contract on the property, If you did not have a accepted and signed contract which sometimes can be hard to get on a Bank owned property. A seller can ask and do whatever with a property until they have a contract. When you get a contact on a property is when you are locking in terms and conditions. If you had a accepted and signed contract on the property then it is time to be talking to a real estate lawyer.
0 votes Thank Flag Link Thu Jul 4, 2013
That sounds like a really nice place and a better than middle class price!
It may be possible that it will appraise for more, each and every week that you did one.
Understand that the Banks are no longer in the P.R. business; they don't care what we say about them or think about them. Some of the stories insiders tell would curl your hair.
Understand also, that you can walk away from this deal.
You can also offer $340,001
You can offer $341,000
You can make them wait.
The most important factor in negotiating, is that you will stand up and walk away from the table.
0 votes Thank Flag Link Wed Jul 3, 2013
I have not heard of this happening before. I would contact a Real Estate Attorney for legal advise. If you have a signed contract from the bank my guess would be that they would have to honor that price but the attorney would have to verify that.

Rick Lesquier
Remax Eagle Rock
0 votes Thank Flag Link Wed Jul 3, 2013
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