Home Selling in 34655>Question Details

Help10, Home Seller in 34655


Asked by Help10, 34655 Thu Aug 5, 2010

Why the bank does not want to lower the sale price on a short sale? It is obvious that it is way higher than the comparables in the area. Whta needs to be done?

Help the community by answering this question:


If you are the seller, your Realtor can probably lower the price every two weeks or so until offers come in. This way they have a track record of pricing to build their case to the bank that this homes offer should be accepted. The bank then may or may not approve the short sale at that price, but they will have a better idea where to market the home price-wise. An offer starts the negotiating process, so it is good to try and hit the sweet spot on pricing.
0 votes Thank Flag Link Sat Oct 9, 2010
Hello Home Seller

You are nor giving us much information. When you say that "it is obvious that it is way higher than the comparables in the area", I am assuming that your agent did his homework, and showed you that this is actually the case. If that is the case, and you only have about 10% distressed properties, then your area is in great shape, and should start seeing and improvement pretty quickly. The bank of course knows all this, and would rather wait for a better offer and try to get a better sale price.
Now, how are you compared to properties that are actually active for sale in your area? If you have plenty of active listings, and the sale price is better than yours, then maybe you should send those to your lender also.
Web Reference: http://www.kamalsalim.com
0 votes Thank Flag Link Sat Aug 7, 2010
Looking at the question-asker's name, "Home Seller" and the title, "Home Selling in 34655" I believe the asker is the seller in this transaction. This was not clear in the question itself.

Being so, the asker's Realtor should do everything s/he can to portray the home in the worse possible light to their negotiator and put their buyer's offer in the best possible light. This must be done with an accurate portrayal of his client's home's value, but with the goal of representing his client's best interests.

Being in a distressed situation the asker (seller) wants and needs to do everything they can to keep their buyer on the hook and sell the home before it forecloses.

Often, lenders have to be hammered into seeing the obvious. A bad BPO by an agent not familiar with the nuances of a community will throw a wrench into the machinery. Most negotiators are just a stop-gap to the lender and are just trained slightly more than collection agency callers. Since they are off in another state they rely almost solely on the BPO for the home's value. They mostly follow a script and once they have a short sale package and sales price within their script's guidelines they can forward to their "investors" (the lender) for approval or modification. They are also working hundreds of files simultaneously, so they don't have the time (or will) to investigate their commissioned BPO. This responsibility must fall to the listing agent to hammer away at them and convince them of the home's true value.

I've had a couple of bad BPO's in the past where I had to do all of the procedures I mention in my earlier reply and then argue (in the most diplomatic way) why they (negotiator) should accept the offer on the table.

Of course, there are times, as Anna states, where the home is already bargained priced and a buyer will come in seeking an unreasonable low sales price, but it is their option to do so and in this market I can't say that I blame them. If I do not have any other prospects about to make an offer on the house I will go ahead and submit the low offer for three reasons.

1. Some lenders will place a "working" status on the foreclosure process which doesn't stop it, but it can slow it down while they consider the short sale offer.

2. You just never know. A bad BPO is a double-edge sword. Sometimes it can come in too high, but that same agent unfamiliar with the area can also place too low of a value on the home and the buyer get's a steal.

3. If the BPO comes in at/or above market value, I now have a lender-approved number I can work with (or argue). The buyer can now step up and negotiate their offer higher or move on while I seek additional offers using the lender-approved price.

Either way, the low offer's submission was a worthwhile exercise and benefited my seller-client.
0 votes Thank Flag Link Sat Aug 7, 2010
Pretty simple really - BECAUSE THEY THINK THEY CAN GET THE PRICE THEY ARE AFTER. Look I'm not a big fan of banks because of the mess they got us into, but it what you say was "obvious", then they'd lower the price. Rather clearly, it's not obvious.

What can you do? Again, simple, raise your offer or move on to the next property.
0 votes Thank Flag Link Fri Aug 6, 2010
Your market is alot better in NC than in the Tampa Bay area where I am...you said 10% are distressed properties....here, it's about 45%...Funny thing is, we offer bargains and the buyers STILL want to offer less than the already-bargain prices!! Amazing!
Anna Georgiadis
RE/MAX New Dimensions
Trinity, FL
0 votes Thank Flag Link Fri Aug 6, 2010
BPOs, CMAs and appraisals are very subjective and is only an opinion of a single individual. Chris offered some good advice and shed some light on potential issues related to short sale options. Obtaining a good value of a property is a CRITICAL component of the process. Once a credible value is determined (point of beginning) from your agent/broker, then a reasonable "fair market value" should be used when listing the property on the open market. A bank will obtain several valuations and may include an appraisal when an offer is in place. Always, alway include quality photos with evaluations. I have not had to contest a BPO to date.

The information used for valuation is fairly simple in most situations. The comparables need to be within a mile radious, like-kind in structure, no more than 3-4 months old, age should be no more than 6-7 years old from subject, proper adjustments should be made for updates/renovations/repairs, topography and demographic information, and if 10% of properties within area went into foreclosure then include as well. Fortunately, my BPOs have always come in within $5,000 of acceptable fair market value from the banks.
0 votes Thank Flag Link Fri Aug 6, 2010
Your best course of action is to have your Realtor (if they have not yet done so) provide your lender the listing history of your home. Hopefully it shows a progressive lowering of your home's list price over a period of time to it's current short-sale list price. This will show your lender that no offers were obtained at higher list prices.

Your Realtor should then combine this report with an accurate view of your home's market value using comparable sales in your community then aggressively (yet diplomatically) argue a lower list price (or the acceptance of an existing reasonable offer) with your lender. He should contest the BPO (appraisal) your lender commissioned on your home. When provided with accurate comps, a lender will often go forward and order a new BPO (Broker's Price Opinion) and obtain a second opinion on the value of your home. We've successfully contested several BPOs in the past.

Short sales are a lot of work. We've done a bunch of them. Your Realtor needs to be a squeaky wheel to your lender's assigned negotiator by getting on the phone every other day and calling them and then notating and dating everything discussed. But, at the same time, being an apparent partner to your lender by continually reestablishing the fact that he is trying to provide them the service of off-loading this asset for them. It's a very fine line the Realtor has to walk and the proper walking of that line only comes from the experience of successfully closing many short sale transactions.

If s/he is unable to reason with the negotiator and make them see the light, then it might be time to go above the negotiator's head and get a hold of a supervisor or ask for another negotiator to be assigned to your file. But be advised that you could be burning bridges at this point.

If after talking with the higher-ups, if you're still stuck with the same negotiator and you can not get them to accept a lower, REASONABLE, offer. Then your lender's negotiator could be your obstacle. Negotiators have personalities too. In very extreme cases, and if you still have time prior to any foreclosure, it might be better to cut your time lost with the current negotiator and let them close your file. Then resubmit the offer and have a new negotiator assigned to your file.

BUT BE ADVISED, this is a risky, last-ditch, all-else failed, effort as your lender might not consider to reopen your file AND your buyer has to be okay with the longer delay AND the clock is still ticking on the foreclosure sale date. So make certain that the offer you have on the table is a reasonable offer and that you and your Realtor is doing everything you can to obtain a higher offer.

And as always, augment this information with that of your lawyer's and financial advisor's advice.

Good luck.
0 votes Thank Flag Link Fri Aug 6, 2010
I think you are asking why the bank doesn't want to lower the listing price? If this is your question, it's the real estate agent that markets the property at the asking price they determine will bring one or more buyers. The bank has no say at that point in the process. Once an offer is signed by the owner, the fully executed contract is presented to the bank. The bank orders a BPO (water-down opinion of value performed by a Realtor from another real estate company. The bank will then accept it as written; counter, or reject the offer. Once the bank lets everyone know what they will accept, if that buyer on the contract does not want to go to the bank's price, he/she can cancel. Then the real estate agent/Realtor knows what the bank wants, and THEN can change the list price to that number and in the "remarks" say that that is the price the bank needs in order to get what they want (their bottom line after paying taxes, homeowner fees, fines, commissions, etc.).
Responding to the second part of your question...I can only respond to the Pasco/Pinellas pricing, and to my knowledge, the distressed priced properties are usually lower than the "retail" prices.
What needs to be done is, listen to your Realtor. If he/she tells you the bank wants $x, then offer $x or move on to another property. Realtors are working to get the inventory SOLD...so please listen to what they are telling you and makre your decisions accordingly!
Anna Georgiadis
RE/MAX New Dimensions
0 votes Thank Flag Link Fri Aug 6, 2010
This is the question of the past 2 years, isn't it. I think that you will find many "answers" the truth is, I have never heard a for sure answer. Everyone just has a guess, or an opinion. In my opinion you should; take many photos of the property, be sure to capture the condition of the home. Next, don't expect to "steal" the home, send in a FMV price. Banks are not stupid, they are stubborn. Also, have a new BPO done on the property, if your agent is on the ball, that will help your case with the bank. Hope this helps!
0 votes Thank Flag Link Fri Aug 6, 2010
What happens in a short sale and a foreclosure, is that, even though the market may be dropping value in a particular area, either the bank has done a BPO or Appraisal, by either a realtor or appraiser inexperienced in the area, that is higher than the market or your realtor has not convinced the bank by their comps that the home is going down in value. Probably, the former, is my guess. Either way, your lender, will not drop the price "just because". the other homes in the area are dropping theirs. Sold and closed properties in the last 90 days is the only benchmark that everyone works from to determine market value of a home. The lender will have to do a new BPO or Appraisal. The lender sometimes will balk at his because it costs money to do it. If your property is covered by a VA loan, your property is stigmatized by a VA appraisal for 6 months and usually there is no recourse to get another one done until the time elapses.
Hope this gives you a little insight.

Bill Szydlowski
Future Home Realty
Web Reference: http://www.tampamyhome.com
0 votes Thank Flag Link Fri Aug 6, 2010
Most banks will take the appraisal price and take a certain percentage off. Each bank has different guide lines depending on the investor and if their is any PMI insurance on the property.
0 votes Thank Flag Link Thu Aug 5, 2010
What is your agent suggesting--Keep in mind that lenders are looking to get as much money back as possible--you can try disputing the current appraisal and or asking for another, and go from there.
0 votes Thank Flag Link Thu Aug 5, 2010
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