Hello Marilyn,

The first thing to remember in writing an offer to purchase real estate (or any purchase, actually), is to ask yourself if your offer is "reasonable". Whether or not the bank/investor will allow concessions back to the buyer depends on so many other factors that it's impossible to know beforehand (especially because the lender/investor will never tell you up front). In basically every transaction, but especially if you're a buyer writing an aggressive offer, there needs to be some justification for why the offer is structured a certain way...whether there's buyer concessions, the offer is considerably low compared to the listing price, seller paid inspections and/or repairs, etc.

You must also take into consideration the local market conditions for the area where the property is located. Case-in-point: I recently closed a short sale where the Seller owed $340k and an offer for $270k less $15k for buyer's closing costs were requested (along with all of the normal/customary inspections and repairs). The home is in a declining market area with high foreclosure rates and where there are many other short sale and bank owned properties on the market. The particular home was on the market for over 8 months with the history showing the price progressively dropping during that period but with no offers.

Initially the Buyer's offer was countered at nearly $330k. However, I was able to justify the lower price and ultimately the lender/investor accepted the original offer. The entire process was long, but in the end the Buyer bought a nice home at a great price (which was substantially under both appraisals) and the Seller was thankful that they were out from under what was surely a very stressful time and situation.

I happened to represent both Seller and Buyer in this case and with help from the title company and my understanding of the local market we were able to close a very difficult transaction.

So the short answer to your question is no...you should feel free to request buyer concessions if you can justify the overall purchase offer in the long run.

Something further for you to consider. The Buyer in the above transaction had to endure a lot of uncertainty and be extremely patient because the bank/investors do not make these decisions quickly. As I mentioned, they take into account so many factors before making their ultimate decision one way or the other. Be sure that your agent has a clear understanding of the local market and ask yourself whether there are any other "substitute" properties that you would consider if you are unable to get the concessions your need or think are reasonable.

Good luck. I hope you become a happy homeowner soon!!!

Thu Apr 24 2008, 22:59

Not if the bank will agree. The main concern is it appraising for the purchase amount.

Thu Apr 24 2008, 19:10

A friend of mine sent this to me who has two sisters' working for Washington Mutual - Please be careful these companies are ruthless to the end.

Another anecdote for the soup:

My sisters' are service managers for WaMu's debt collections joint out in Santa Clarita and they both tell me that WaMU is still in the process of a huge ramp-up in response to the avalanche of people unable to pay their mortgages on-time.
BUT they are hiring more debt collectors in order to help facilitate the lengthening of the average foreclosure process.

When troubled borrowers are tapped out and their late mortgage payments start turning into no mortage payments, collectors hit them will all the possible options, of course, - refis, loan mods, post-dated checks - anything to get that promise to pay. But when borrowers say they STILL can't pay, agents transfer them immediately to the "loss mitigation" department that pushes them towards the short-sales option. Nothing worng with that, per se, but it's interesting to note that once a short sale process is started, that same department, understaffed and usually unwilling to accept real losses on the property, can offer little real help to the borrower, though all together it can add months to the foreclosure process. At this point, my sisters' say, the loss mitigation department it's just another internal mechanism to forestalling and prolonging the inevitable foreclosure process as WaMu is incapable and unwilling to process large numbers of foreclosure.

And so they do what their bosses want them to do. And they stem the tide.

Thu Apr 24 2008, 19:00

Hi Pilar...that is a great question. There aren't any hard and fast rules when it comes to short sales. Each case is unique and depends on the lender that is holding the mortgage. If your offer is close to the payoff amount of the loan then I would say go ahead and ask for concessions. If your offer is far apart from the payoff amount I would be a little hesitant to ask for the concessions especially if you are really in love with the property.

Thu Apr 24 2008, 17:27

It depends on the bank. Some banks will approve short sales with seller concessions, others will not. I just had a lender approve an offer with seller concessions and the offer was under appraised value. I always advise my clients to make their highest and best offer without gouging the bank or the seller.

Thu Apr 24 2008, 17:22