Home Buying in West Linn>Question Details

Jman, Home Buyer in West Linn, OR

What to do when a bank counter offers on a approved short sale?

Asked by Jman, West Linn, OR Thu Sep 24, 2009

My wife and i found a house listed as an short sale approved by the bank for 225000 in West Linn Oregon area. Last week we made an offer for 217000 and seller pays closing cost. We got back an counter offer from the bank for 225000 and they pay the closing cost. Now we don;t know what to do any suggestions would be helpful.. First time home buyers

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There is no rule that you have to just ACCEPT the bank's counter proposal - or walk away. You also have the ability to submit a counter proposal. Not too long ago we went around with the bank on a short sale 3 times before they finally gave in (just a week before the auction) and accepted the offer we'd submitted (and stuck to).
0 votes Thank Flag Link Wed Jul 18, 2012
Hello Jman and thanks for your post.

Kris Simpson has very thoroughly explained the process to you, and at this time, you have a hard choice to make: 1) agree to the bank's proposal or 2) not agree and cancel the contract. Unfortunately, ti appears that the bank's BPO or appraisal has revealed the fair market price of the home to be $225K or above, and the bank is asking you to increase your offer. You can certainly try to counter back, but its unlikely that the bank will agree to any counters at this point.

Depending on how much you like this home, it may well be worth the $8,000 difference to purchase the property. If not, however, feel free to move on to the next property I might caution you that a short sale is NOT and should not be construed as a 'fire sale' of a distressed property. While the banks are definitely willing to agree to take a loss on the mortgage owed on the home, most banks and lenders are not willing to take a huge loss on the sale of the home compared with the appraised or fair market value.

So talk it over with your Realtor, review the current comparables, and make the decision regarding whether to take the bank's offer or move on to the next property.

Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty
San Jose, CA
0 votes Thank Flag Link Fri Sep 25, 2009
Hi there - Short sales and REO's are a different puppy, with Short Sales being the more complicated of the two! I list and sell both - and RMLS does post both available for sale for public viewing. When short sales are listed, usually no negotiation has begun with the seller's mortgage holder yet. In fact - most of them will not even speak to the home owner until there is an offer in hand. The list price is set by the seller and listing agent and they do their best to get the highest offer possible. The seller will accept an agreeable offer and then the negotiations with the bank begin. The banks will gather all of the owner's financial info and have 2-3 appraisals done. They will meet with their investors to review the file and determine whether the owner has any ability to re-pay the deficit, and to determine how much of a loss they are willing to take. If there is only a first mortgage - this process is easier...however many have both a 1st and 2nd. Generally negotiations get done on the 1st, and then the file transfers to the 2nd for them to start their review all over. When all is said and done and all the mortgage holders have agreed on what they will take - they'll compare this to the offer in hand. If that offer doesn't meet what they've agreed to take, they will counter back to the buyer and 95% of the time it will all be done verbally via all the Realtors involved. Once an agreement is reached, the final figures will be put in writing. At this point is when all the buyer's contingencies regarding earnest money being due and inspection periods beginning start. It is imperative that you meet all the time lines and have loan docs at title several days prior to the specificed closing date as it will take all the mortgage holders a few days to sign off on everything, and, if you do not close by the specified date - the banks will have to re-calculate all their figures and agree to a new payoff amount and this can cause closing to be delayed by as much as a couple weeks.

Short sales can be a little daunting, especially to a first time home buyer. If you're willing to hang in there and wait - you can get an awesome deal! One other helpful tip for you - even if a seller accepts your offer on a short sale, while you are waiting on the bank's response, I would recommend that you continue looking at other homes and write an offer if you find something else you like. If you get an offer accepted on another property, you can always withdraw any other offers you've written prior to them being accepted.

Hope that helps! Best of luck to you.

Kelly Gebler, Broker
Keller Williams Realty
0 votes Thank Flag Link Thu Sep 24, 2009
Thank you for your responses yes we do have an agent working with us. It is a short sale where the seller is still involved with signatures on offers that are submitted to the bank . Also we asked our agent if we can get the counter offer written but as far as our agent tells us the counter offer is verbal. Is that normal?
0 votes Thank Flag Link Thu Sep 24, 2009
I agree 100% with Kris answer. Don't deal with a bank by yourself (if you have an agent, ask them). The RMLS doesn't even allow foreclosures to be available via internet for public view because they are afraid of what might happen when the general public tries to deal with a bank.
0 votes Thank Flag Link Thu Sep 24, 2009
Jman,
From your question, it appears you are not represented by a real estate broker, which really is most appropriate in these circumstances. Short Sales are a long, challenging process. Also, if the bank sent you the counter offer, it would seem that this is an REO (real estate owned) property, not a short sale. The entity you are dealing with is different than if it is a Short Sale, where the Seller (the bank's borrower) is still involved as far as signatures on offers that are submitted to a bank for approval.

If you ARE represented by a real estate broker, then they should be assisting you in the decision of whether or not to submit an acceptance of the bank's/seller's counter offer, or to respond with your own counter offer. Either way it is your decision if you want the property and what you are willing to pay for it.

If I can help please let me know.

Kris Simpson
World Wide Realty
503-367-5817
0 votes Thank Flag Link Thu Sep 24, 2009
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