Home Buying in Daly City>Question Details

Vain, Home Buyer in 94014

Will a lender even order a BPO if the short-sale package was not complete?

Asked by Vain, 94014 Thu Jun 17, 2010

I put in an offer on a short-sale on 3/27/10 and was accepted by the seller immediately on site. On 5/15/10, I was told that the lender(s) (2 liens) did a BPO. On that same day, I checked the public records and the home used to be listed as being in the AUCTION stage of foreclosure disappeared (I'm assuming they stopped foreclosure).

Today, I asked my buyer agent to follow-up with the seller agent to see if the lenders have had any movement. The listing agent said that there has been movement, and that the lenders are "working on the seller's requirements."

I didn't want to be a pain and didn't try to clarify that. But that sounds like the lenders are trying to get stuff like proof of income, and hardship letters from the seller? Or are they working out a recourse plan of some sort with the sellers?

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Vain’s answer
I have been doing my own comps. Homes that are identical (identical in size, and appearance), sold for around $510k but they were in better condition. I offered low with the expectation that they'd counter offer me to that range anyways.

My comps were mainly distressed properties though. There are identical properties that are regular sales that are asking really high, but has been on the market for a long time.

Maybe I'll have waited 4 months to get a rejection. I'm willing to pay more for the property though. I'm just hoping for a counter offer, and not a rejection (if they don't accept the offer that is).
0 votes Thank Flag Link Thu Jul 22, 2010
Hi there. The answer to your first question is no, most lenders want a complete short sale package before they order a BPO in my experience as a seller's agent on mostly short sales. Most lenders, except Wachovia - they don't even ask for proof of income from the sellers, will ask the listing agent or seller for missing documents. And to clarify on "working on the seller's requirements" - that can mean the lender just wants updated or the most current bank statements and/or paystubs from the seller which happens all the time, just to make sure the seller's hardship is real so that there is really a need to do a short sale.

If there is no longer a sale or foreclosure date on the property, that is good news! It can mean the lender finds your offer sufficient and could be approving it soon and they are just working on the allocation of costs and the amount of the pay-off. Good luck!

Fiona Santos
(415) 513-8876
0 votes Thank Flag Link Thu Jun 17, 2010
Hello there again. Did your agent show you comparables before you submitted an offer? Because even if the seller owes $480k on the 1st lien and $110k on the 2nd lien, the lender should still accept your offer even if it's only $430k as long as the current value is within that price ($430k). Actually, if the property values in that area is less than your offer, they should accept it as it is, without any counter offer. Some banks though, such as Bank of America, ask for a seller contribution if the property is the seller's investment or 2nd home. This amount is negotiable between the lender and the seller but sometimes, like in my recent experience, the lender is asking too much from the seller that they would rather let it foreclose than come up with money out-of-pocket.

By the way, Chase is one of the slowest in processing short sales. I have a listing under contract now that I submitted in November last year and we only got an approval in June but it fell through because of inspections so we are now with the back-up offer. They again asked for updated documents from the seller just days before issuing the approval. So this timeframe for you is normal but I understand the wait is frustrating. Also, the 2nd lien might be with Chase as well. When they issue the approval, they will include the pay-off amount for both the 1st and 2nd liens. Usually, they will budget the amount of your offer for the pay-off for both liens as well as other closing costs such as unpaid taxes & utilities and other costs depending on your county. So you shouldn't pay the 2nd lien separately because it's really up to the 1st lienholder how much they should be getting. In short, the 1st lienholder has to allot a pay-off for the 2nd lien. And if it's unacceptable to the 2nd lienholder, then that's when you can add to the pay-off, but also with the 1st lienholder's knowledge and through escrow. So just hang in there!
0 votes Thank Flag Link Thu Jul 22, 2010
It's been a little more than a month since this post. Still no word from the lender. But I noticed the owner moved out of the home already, and is vacant.

I just found out the first lien holder is Chase, and is owed $480k in principle. Lien #2 was not disclosed to me, but is owed $110k.

My offer was for $430k. I'm hoping Chase approves it for that price, and I can just buy out the other lien in cash.
0 votes Thank Flag Link Thu Jul 22, 2010
Hey Vain,

Unfortunately the listing agent has no real power outside of providing the requested package. I have dealt with deals where the first lender has approved the sale but they are back and forth with the 2nd for 3-4 months to iron out terms.
0 votes Thank Flag Link Sat Jun 19, 2010
Just as I feared. The information the listing agent provided us was as good as not asking her at all. Now an issue is raised whether or not this agent was experienced? Incomplete package? :(
0 votes Thank Flag Link Sat Jun 19, 2010
Hello Vain,

Good tactic! When there is space, I always go low, especially when I know there arn't other offers coming in. But having done a lot of short sale, sometimes the banks do order a BPO before the entire package is submitted just to get an idea of what price to expect. It's up to each different lender really.

Kamal Randhawa
0 votes Thank Flag Link Fri Jun 18, 2010
Thanks for your response Fiona. I hope this is the case. Quite honestly, my offer was a low ball offer. I will be extremely delighted if it goes through. I offered low because I was expecting the bank to come back and shake more money out of me.
0 votes Thank Flag Link Fri Jun 18, 2010
Another interesting observation is that the sellers have 2 more propreties, and recently, they have deeded those homes to other people. Maybe to protect themselves from recourse.
0 votes Thank Flag Link Thu Jun 17, 2010
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