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Looking to B…, Home Buyer in Ohio

Who has dealt with buying a home in a short sale? We put a bid in on a home of fair market value and the seller/realtor countered?

Asked by Looking to Buy, Ohio Tue Jul 9, 2013

From reading all the various posts, it appears that the bank is the one that is counteroffering, not the seller. We are dealing with a pre-approved short sale and we believe that the seller or selling agent is trying to get full asking price opposed to fair market value. Any help on this?

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12
I can certainly understand your frustration. Believe me when I tell you that we agents also get frustrated with the way shortsales are sometimes handled by the banks. At times there doesn't seem to be any rational thought behind their actions. Needless to say they will always do what is in their best interest. I won't try to defend your agent as I don't know all the circumstances. It is always important for the client to feel that their agent is working in their best interests at all times.I will tell you that not all agents are equal in their experience with shortsales and foreclosures. If this is the avenue of homebuying that you have chosen, it is important to tnterview agents and find out how extensive this experience is before committing to working with them. It is like hiring a builder to build you a new home without knowing that they have only built one building in their career and that all of their experience is with commercial buildings. Best of luck to you. If you have any additional questions post them and I will try to give you an answer.
1 vote Thank Flag Link Fri Jul 12, 2013
The seller is the one who accepts the offer and counters, and then the bank after that will have to approve the number. The frustrating part is that the bank could say no months later to the offer.
0 votes Thank Flag Link Fri Jul 12, 2013
Dave thanks for a thorough answer. We find out that the sellers realtor has been say not forthright with the sellers and to our soon to be former realtor who seems to believe everything the other realtor is saying opposed to common sense. We asked what the sellers realtor was using as comps. House #1 was 2 years old. House #2 was 1600 square foot more and 20 years newer. House #3 was more than 5 miles away and over 1000 square foot more and only 4 years old opposed to 30 plus years. She conveniently dismissed other property that more nearby, same age, same square footage, and 100 to 150k less. Not that we are real estate experts nor appraisers but none of the comps add up. Our realtor defended her comps. We questioned if he thought those were accurate. That was the last straw how he could have defended us but sided with the other realtor. We hope our realtor doesn't drag their feet and get us a termination of buyer agency soon like they have done everything else. If so, they will get a complaint to the board of Realtors. Not sure why our realtor who is new to the business treat us as if we are ignorant to the process. We never claimed to be experts but common sense does help us and we fan figure out when you spend more time advocating the seller and the sellers realtor than representing us tells us you are not our person and stalling the release will not make things pretty foe them! Sorry venting a bit.!
0 votes Thank Flag Link Thu Jul 11, 2013
By the way, it is difficult to snatch up a shortsale when it goes to sheriffs auction. In our county, Hamilton in Ohio, sheriff's auctions start at 60% of appraised value. You are also going to be bidding against the bank that holds the mortgage. My experience is that, if the bank wants it back you won't outbid them. The length of time from foreclosure until a house goes on the market as a bank owned or REO property can vary from a few months to a couple of years. I do appraisals on REO properties for banks and I have done appraisals on the same foreclosed home multiple times and it still is not on the market. As far as the pricing being too high for ther market on a shortsale, the seller may be upside down in the home and is asking for a price that will get him out from under the mortgage. Many banks will not give the seller any direction as to how much they will take to drop the foreclosure, some will actually tell them the price at which the home should be listed. It all depends on the bank.
0 votes Thank Flag Link Thu Jul 11, 2013
The purchase contract on a short sale is between the buyer and the seller. The bank has final approval of the contract after both parties come to a final agreement. The bank can refuse to approve the deal as it is stated in the contract. When the listing states that it is a preapproved shortsale it usually means that the bank holding the mortgage has told the seller that they are willing to accept a certain sale price prior to a contract being received. The seller still has the option to turn down a contract or counter as they are still the owners of the home. The bank may also refuse to arrove a contract if there are contingencies on the contract that are unacceptable to them, such as the length of time necessay to close, the type of loan the buyer is utilizing etc.Fair market value may not cover the amount still owed on the mortgage along with closing costs and commission.
0 votes Thank Flag Link Thu Jul 11, 2013
be very careful buying at sheriff sale

sometimes it is better to wait for the foreclosure to be completed, then look for the home to be relisted as an REO
0 votes Thank Flag Link Wed Jul 10, 2013
Our situation, our offer didn't even go to the bank. The house is not even priced reasonably in a rural area. I would have rather have it go to the bank and the bank say no or counter. I don't see how this realtor/seller can expect their home to sell $150k higher than surrounding homes that have been sold and call it a short sale. We are tempted to just wait and snatch it up at the sheriff's sale if we have too.
0 votes Thank Flag Link Tue Jul 9, 2013
In this situation, the seller's Realtor is doing what the seller wants. If it doesn't make any financial sense to you, then you'll just have to let it go. Maybe it'll get foreclosed and come back on the market at a more reasonable price in 9-12 months. Or, if you have all cash, the sheriff's sale is one possible option. But, if the lender has a big loan on the property, it probably still won't sell at a fair market price at auction.
Flag Tue Jul 9, 2013
LP,
The Realtor is not likely the one advising the bank on whether to accept the offer or not. The agent in a short sale works for the seller not the bank. The bank still has to approve the sale because they are the one accepting a loss, which is why the counter is from the bank. At this time, they are not willing to accept the loss your offer costs them.

It is difficult to understand why the banks make some of the decisions they make. I personally have had short sale listings that received full price offers that the bank did not accept. After going to sheriff sale and reselling with an REO agent they bank sold at 1/3 the offer price they had when I listed the home.

Just one of the reasons I don't take short sale listings anymore.
0 votes Thank Flag Link Tue Jul 9, 2013
Unforttunately, the banks don't care about the market value as much as how much money they are going to loose. That's just the way it is sometimes. And yes, it's the bank that's calling the shots, not the seller.
0 votes Thank Flag Link Tue Jul 9, 2013
With an approved short sale, it is approved at the list price. If you feel it is priced too high, you can counter back. This may cause a long delay and months later you still may not have your offer accepted.

The seller or listing agent likely feels that the home is listed at the fair market value and if it is, it will sell. If not, at some point they will lower it or accept your counter offer some time in the future.
0 votes Thank Flag Link Tue Jul 9, 2013
Thanks Tina for the prompt reply. We actually have been in a short sale ourselves and was given a price to accept if it was above that amount. On the other hand, the bank would have accepted anything close.

What made this situation strange was this house was regularly listed for about 1 and a 1/2 with no prior offers. Reason being, it is in a rural area and not convenient to drive to civilization although it is a really nice house. Coupled with the fact no house within a 5 mile radius even sold within $50k of it's list price. Tax records show $150k less than asking price. We are perplexed that a counter would be the original asking price. We spoke to 3 different lenders because this house would potentially qualify for USDA loan. None of the 3 would lend out anywhere near the asking price. They would lend out closer to the tax records and that was what we bid.

Unfortunately our realtor and theirs work for the same company. If we were lower than the bank's target price, then we would have expected a counter to reflect that. We are dealing with a local bank which they should know what the average home prices are.

If the house goes into foreclosure, would the selling realtor be on the hook for advising their clients to turn away a potential interested buyer?
0 votes Thank Flag Link Tue Jul 9, 2013
Yes, I've done dozens of deals with short sales, from both sides as well. There are two steps--the seller's acceptance and the bank's approval.

The seller wants to get the highest bid possible so that both you and the seller has the best chance possible of getting the bank to approve the short sale. If the seller is countering now, your offer may be behind other bids or the seller doesn't believe your offer would be high enough for the bank to approve.

As for whether the price makes sense, only you and your Realtor can determine that based on your assessment of a fair market price.
Web Reference: http://www.archershomes.com
0 votes Thank Flag Link Tue Jul 9, 2013
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