Home Buying in Virginia>Question Details

Nyu, Home Buyer in Virginia

Why would a bank counter HIGHER than the BPO price in short sale situation?

Asked by Nyu, Virginia Wed Sep 2, 2009

My husband and I are in the process of *trying* to buy a home in short sale. We have put in 2 offers. The second offer was higher based on the fact that the BPO price came in and we were advised to come in closer to that number. So we did - within 5% of it. The bank has countered with a price HIGHER than the BPO? Insight? Advice?
Thanks so much!

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Hi Nyu! There are many factors for you when putting in an offer on a short sale. There is only one factor for the bank "trying" to sell you their home. Their only factor is their bottom line. Keep in mind, they are selling it short of what is owed them, and paying fees and commissions for that to be accomplished. They have a right to attempt to get as much for that home as a buyer is willing to offer.

The great thing about free market, if they will not sell at price your are willing to pay, you have the right to move on!

Who did the BPO? Was this done for the bank, for you? By your agent? or another? Broker Price Opinion is simply that...an opinion. You don't mention if you are using an agent, you mention that you "were advised". If that advice is not coming from an agent, perhaps you could request a Broker Price Opinion from a Realtor and see if they find anything different.

It may simply pertain to the first part of my answer, that the bank would prefer to receive a higher amount to cover more of the existing loan and closing costs.

I hope it all works for you!
1 vote Thank Flag Link Sat Sep 5, 2009
Writing an offer on an owner occupied traditional sale is working with an owner.
Writing an offer on a foreclosure is working with a banker.
Writing an offer on a short sale is working with an owner, who must then work with a banker. It's a double whammy and that's why, in Virginia, we see 4% of the short sales listed actually make it to the closing table.

I agree with the other posters who suggest you rely on an experienced agent who is working for you to give you your "advice". A short sale may be a great opportunity for someone who has the time to wait (second home, investment property, etc.) but if you need to move or have a deadline, it can be dreadfully frustrating.

On how much to pay for any house, consider this. You know what's on the market in your price range. If this isn't the one, what's your plan B? (If plan B isn't all that great, maybe it's better to bite the bullet and pay what you need to ENSURE you get this one.)
Look at the bigger picture. If you'll live in a house for 5 years or more, you'll likely do well with appreciation over the entire time you own the property (not to mention the tax savings you'll enjoy and the better standard of living that pride in ownership brings--it also instills a good "norm" in the minds of your children). If it's the right house for you, you can pay $5,000 MORE than it's worth and still be happier in the end.
Sometimes trying to save a few thousand bucks on the purchase price can cost you dearly in interest rate changes or having to settle for second best because you let the really great one slip away. It's like tripping over silver dollars to pick up a few pennies.
0 votes Thank Flag Link Wed Sep 23, 2009
Nyu, I think Angela hit it right on the head, they are trying to get as much as they can. Were there other offers made? In my area it has become a common practice to list the house very low, this brings in many offers and I have seen the houses sell for more than market value in some cases, it becomes a feeding frenzie for buyers thinking that there must be something they are not aware of and the other buyers are so they keep bidding it up.
All the foreclosures and short sales have created a market for first time investors hoping to get in on a good deal!! This past year I have worked with many buyers that thought they wanted a foreclosure only to be disappointed and end up buying a great house that was not a foreclosure and got a good deal anyway. Please keep the other houses on the market in mind when choosing, working with an owner is much easier than with a banker....
0 votes Thank Flag Link Sun Sep 20, 2009
Because many markets are appreciating - that would be my guess.
0 votes Thank Flag Link Sat Sep 5, 2009
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