I believe the lenders are evolving in their strategies and there is no model of what to expect from them. I know your thread is an old one, but over time, we should see how this all changes, maybe. We still see short sales, (bad mortgages) being sold to a secondary bank somehow. The new bank then asks for all the paper work to be submitted again. Logic would say, why would a bank buy a mortgage that is bad already? It is easy to make a case for staying away from short sales. It is also understandable why a real estate transaction requires an attorney in this area as well as NY.
Deb below is on the money with her comments. The trouble is, as agents we see these variations, but as soon as a pattern developes, some other example occurs that defies the pattern. Most of us call the listing agent, find out as much as possible- any offers? ergo you will be backup only; short sale approved? ergo 1st offer should go in with hardship papers; agent has no info? bad sign that agent knows nothing of what they are doing. Agent claims to know nothing of loan balance- bad sign. You either have a chance or its not worth showing the house. IMO, it comes down to, why would you want to pursue a short sale? Is it the only house out there?
I say, Banks often change their minds on price; even if you have an agreement from Seller.
Resolve, If you want the property, you have to be competitive and well "INFORMED".
Forgot one note...
If a bank has a pre-determined approved sale price and it is higher than you want to pay, you can always submit your offer. The seller is not obligated to send it to the bank, but why wouldn't they? Agents are obligated to submit your offer to a seller, unless the seller directs the agents to only submit offers that meet certain criteria. In reality, that is rare.
If the pre-determined approval price is above the price you are willing to pay, you have nothing to lose by submitting your offer. If they return an answer of no, then decide your next move. Your risk is that another buyer steps up to the target.
Deborah Madey - Broker
Peninsula Realty Group
Thank you for taking the time to come back online.
I cringed when I read your update. There should not be any "under the table" deals when it comes to real estate. Yikes, and this suggestion was coming from a licensed agent. It doesn't sound good. I'll reserve final judgment since I don't have all the facts. But, it's hard for me to conceive that there is a reasonable explanation. Let's just say I am leaning strongly in the direction of suspicion.
I do hope that the poor experience will not dissuade you from all short sales. Not all short sales travel this route. Although it is uncommon for banks to pre-determine an acceptable offer price, I have heard of it before. All transaction in which I have had involvement have been negotiated. I have seen multiple offers sent to the bank. I have seen only one offer sent to a bank, unaccepted and not signed by the seller, but the bank was advised the seller wanted to accept the offer as it stood. I have seen contracts fully executed and though attorney review before ever being submitted to a bank for approval. Whoever tells you there is "one way" it is done, has not walked the same paths I have. I have listened to various debates and points of view of which way of processing offers is best. How your next offer will be handled, if it is a short sale, will depend upon the seller, the listing agent and the bank.
I have taken buyers to a property where the listing agent represented the bank had clearly communicated the offer amount which they would approve. I spoke at length with this experienced listing agent and surmised she was accurately conveying the information since she was able to explain the details.
In another instance with a different experienced listing agent, there had been no contact made with the bank at all. In this situation, there had been a failed contract with another buyer due to inspections. How the agents, attorneys, buyer and seller got as far as post inspection negotiations without even contacting the bank at all was mind baffling to me.
My buyers were not interested in either of the above properties, but these two examples show you how differently short sales can be handled.
Good luck. Have your buyer agent find out as much detail as possible about the short sale, then make the decision to pursue or not. There really are short sales that close. Some are really great deals; others are not. Keep doors and options open, investigate and move on until you find the right property, terms and conditions.
Deborah Madey - Broker
Peninsula Realty Group
Sorry to hear about your experience. There WELL priced home that in coming on the market this week in Bloomfield. It is not my listing but I photographed it for an associate (working on the pics now). It is not a short sale and is situated on a huge piece of property. Be happy to give me more details if you are interested. Again I want to let you know that I am sorry for what you went through. That guy give us all a bad name. Some of us are here to help.
This house has been unoccupied since Nov 08. Weâ€™d put in an offer on the Dec foreclosure and some time later, got word back that there were 2 liens on the house. Ok â€“ so this happens â€“ donâ€™t panic.
Well the 1st position and the 2nd position on the loan(s) couldnâ€™t agree on terms. The 2nd position wanted more of the pie than the first lien holder would give. We were shocked. Not shock that people wanted as much as they could get â€“ thatâ€™s understandable. What surprised us was that theyâ€™d rather fight until the bitter end to the point where the property goes into foreclosure. Doesnâ€™t make sense to me. Seems like thatâ€™s even more of a loss for everyone.
The 2nd lien holder turned out to be the realtor â€“ long story.
Guess what he wanted us to do?
Well, letâ€™s just say, for the purposes of this thread, the house was being sold for $400k for example. He wanted to sell us the house at that price, but wanted us to bring him $8k to the closing table â€“ UNDER the table â€“ and then, he release the lien. Iâ€™ll leave it at that.
Ahhh â€“ can you say ILLEGAL?
Our atty flipped her lid, our realtor flipped her lid and we â€“ well, we were just in shock that someone would want to take such an under handed route.
Before I could even fully comprehend all of the illegalities of the situation, we knew straight away this was far from kosher.
We ran â€“ quickly â€“ away from that deal.
Back on the hunt we went.
Oh and sure enough, the house is still sitting there on the market.
We later found out that he has taken TWO other prospective buyers down this same exact road and the deals fell through as well.
But, on the other hand.. is this a "great buy" for a great house in a great neighborhood? Do you really want the house and so on... I would give you comps in the area and really make a descision on what your price is. period. Make the offer.. Some agents below to think that buyers have the banks by the privates is nonsense. Value is in the home and the land and the desire to buy it.. and I think the more you try and shake down a seller person -or- bank the more you will not get the house you want.
If it is THE house for you and you wnat to live there.. will you be upset to find out you did not get this property for the $10k more the new homeowner offered then you? - The person who paid 10k more and took a 30 year mortgage at 4.75 % and you realize you gave away your home for $52 per month?
For example, a bank told me to set the price at $180,000 because they needed to net $159,000. We eventually negotiated and closed on a contract of $169,500, netting the bank $154,700.
So in answer to you question start at $275 and let the bank come back with a number. When you've reached your limit, let them know it's your best and final offer.
Keller Williams Atlantic Shore
That is a little concerning. The short answer is the agent representing you should have significant knowledge of the process to be your advocate for these unique transactions. They are the person who fights for you and in these situations it is before the offer is made. I would probe your agent further about this. You are going to need someone who is going to be on top of the listing agent to make sure that things are moving along. The listing agent needs to be diligent with the bank as I can tell you from a recent listing that I had people at the bank sometimes blatantly lie about the status of the paperwork, review, etc. It requires multiple phone calls a week sometimes.
I can provide you with more specific details but I will not do it on a public forum. I can be reached at (973) 464-0568 if you would like to discuss.
FYI â€“ weâ€™re not doing the dual thing â€“ we have an agent repâ€™g us and thereâ€™s a totally diff agent on the house.
I asked our realtor this very question â€“ the whole â€œwill the bank entertain a lower offerâ€ etc.
She told me absolutely not â€“ the bank doesnâ€™t care that such and such will need work or this will need fixing, etc, etc. Said that a bank wont ever negotiate on a short sale because theyâ€™ve already lost enuff $. Sorta along the same line as what Gina mentioned a few replies below.
Even tho I â€˜getâ€™ that â€“ totally understand this â€“ logical, basically - I wondered to myself â€“ how can she say that? How can she know what the bank will say or do?
Been an odd few days because not everyoneâ€™s working regular hours. My lender is not back in the office until Mon back from vacation. Thereâ€™s someone in the mortgage dept whoâ€™s covering her of course but we prefer to wait until sheâ€™s back. The agent showing the house â€“ their office is also spread a little thin until Monday as well, plus the fact that theyâ€™re in the process of moving to a new location â€“ our atty is not back until Monday as well but weâ€™ve also put atty on alert for next week, on, and on and on and on â€¦
Everyoneâ€™s off enjoying the tail end of the holiday season and New Year hence my begging you all for you thoughts! (theyâ€™ve been great-thanks)
Iâ€™ve just been really curious how the short sale process works - internally â€“ I was hoping to figure out who it is that will â€˜fightâ€™ for us, so to speak. If it were the actual OWNER/SELLER we were dealing with, I know for sure that my realtor would be in there, negotiating the heck out of the thing for us.
â€œHey Mr. Seller, your roof is crap or â€“ this kitchen is from 1901 â€“ the sellers want to yâ€™all to knock off $$$ for thatâ€
That kinda thing â€¦
But who the heck is it that goes to bat for us, the buyers, against the bank?
Who talks to the bank?
(never mind â€“ I forgot â€“ money talks)
You can certainly offer less than asking on the property. The percentage numbers you are proposing do not seem outrageous. I hate to even ask this with fear that this will turn into another crazy Dual Agency discussion, but are you using the listing agent or do you have someone representing you as buyers? Your agent, assuming you have one, should be able to advise you where to go in based on the condition of the property and knowledge of the short sale process. It is extremely important that you have someone representing you who knows what they are doing. You also need to engage an attorney that is experienced in handling these transactions as well. Frank Martone on Broad Street is comes to mind.
While we are seeing more short sales in Bloomfield, prices on these homes are not set extremely low to generate multiple offers like markets where 3 in 4 are bank owned. A cursory glance in the GSMLS shows no single family that claims that the short sale has been approved. Based on my knowledge of the market I am almost certain that I know the property you are interested in. There was a deal but it feel apart and the home was put back on about 2 months ago. If this is the case you are in better shape than if you are the first offer in. I would tell you that they will need to do a new appraisal if it is older than 90 day so that make take some time.
Gina is correct that you are pretty much buying the house as is so make sure you take into account the roof and any issues that may be in that basement etc when making your offer.
It sounds like you are in a good position and with a little patience there are some good deals to be had. Good luck.
"The bank has already approved the property to be sold short".....In my own experience with short sales...the banks are usually aware that the sellers will attempt to sell the property in a short sale and the banks will say "ok, bring us an offer" (hence, never agreeing to selling it short or for any particular price but just to bring them an offer) thus sometimes leading to a misrepresentation. Not saying that this is the case with the house you are interested in but I have seen it happen. Only ONCE did I have a bank that actually gave the "magic" number and said bring us an offer between this and that amount and the bank was ready, willing, able and did accept it.
Back to your initial question....obviously if the house is being sold short the house is being sold for less than they owe on the mortgage(s). Again keep in mind that the bank will only accept the deal IF the bank will lose less money on a short sale vs. if the bank forecloses on the property. Irregardless of what the house is listed for, what offers come in, etc....the bank will only do what's best for them and yes I have seen banks agree to a price lower than the list price but I've also come across banks that got a list price offer and would NOT sell and took the house back in foreclosure. It's all about the numbers...the numbers in their favor...not anyone else's. Again, this is will all change if there is a second lender on the property because they too have a say in the sale.
Also I've seen many short sales fall apart during attorney review because the seller's attorney expects you to go ahead with inspections, mortgage applications, etc. BEFORE even knowing if the bank has accepted your offer. That issue is something to discuss with your attorney and have them advise you of the risks associated with moving forward without the bank's acceptance. Also keep in mind that the seller's have no money so if the house needs any repairs to get the CO, most likely that expense will fall on you although I have seen some banks cover those costs. Pretty much you are buying the house as is and will be responsible to make sure it is up to proper codes, etc.
Gina Chirico, Sales Associate
Prudential NJ Properties
973-992-6363 ext 116
We're going back out tomorrow with a friend who happens to be an inspector, to get another perspective on it.
It's in startlingly good shape but the roof will need work in a few years - even my untrained eye can tell that!
Let you know how it goes .......!
In the final analysis, the vast majority of short sale properties end up not being any kind of real bargain. But most people realize that only after they've wasted 6 months trying to buy one or after they've moved in and realize how much work the house needs that was not apparent during the home inspection.