The only thing that I might suggest that you're missing is the understanding that bank's and lender's handling of loans that they have to take back or may have to take back is not particularly logical or rational. Generally speaking banks look at: amount of earnest money, closing date, and the least amount of contingencies (which give you potential "outs" from your contract obligations).
Carl is correct when he states that "Every bank is completely different on their loss assessment on a property. Some will take more of a loss than others depending on how many properties they have on their books. The bank may even have turned you down if you gave a full offer on the place. None of them have a fancy formula on how much loss that they will take. They don't want to take a loss period."
Be prepared to wait for a response if it's a property that you can not pass up, and be prepared for disappointment. I had a bank turn down an offer that was 44K higher than the one they accepted and which would have closed earlier for no easy to explain reason. There may be some Realtors out there who specialize in foreclosures and or short sales, but even they will not "know" exactly how a bank is going to react to any specific offer.
Work with a Realtor you trust and who does not overpromise and get a good lawyer. It's never a perfectly smooth transaction when you're trying to buy something that's been taken back or shorted. Good luck.
Broker Associate, Sudler Sotheby's International Realty
What an experience! Unfortunately too common of an experience if you ask me, and no, you're not missing anything.
In my experience (and I will give the nod to Carl here Realtors are just getting used to the short sale process), the Short Sales I've been involved in take too long to get the bank to approve the deal, even when the offer is fair and supported by recent comparables. I don't think there is anything you can do to prevent the lender from overplaying their hand. If they want too much for the property, there are only a few possible things happening. They are either misinformed as to value, are not motivated to help the short sale along or just too busy to know better (or any combination of these).
Carl is correct. If it's the place of your dreams, hang in there and eventually things should move along, especially if no one else submits an offer. I would add that you should also keep looking. In this market, you never know what you may run into.
You know what they say, If it's meant to be...
Best of Luck.
I just finished buying my 3rd foreclosure in the last year and the one piece of advice I can tell you is that every, and I mean every, Realtor out there has no clue what the bank is thinking. Even the Realtors that represent the banks have no idea. The banks do not show their cards to anyone which leaves all these Realtors to guess what is going on.
Every bank is completely different on their loss assessment on a property. Some will take more of a loss than others depending on how many properties they have on their books. The bank may even have turned you down if you gave a full offer on the place. None of them have a fancy formula on how much loss that they will take. They don't want to take a loss period.
If this is the place of your dreams then hang in their and get ready for the 3-6 month waiting game . If' it's just a nice place that you could live without then stick to your price Also, don't be surprised to eventually hear from the bank asking for your best and final price. It's their way of bluffing you into thinking that they have multiple offers, which just is not the case these days.
But, by no means believe these Realtors that promote that they are experts at the foreclosure games. All they do is call the selling Realtor once a week for an answer if the bank has said anything, which pretty much annoys the selling Realtors. The classic line I always heard from a selling Realtor was " You will be the first one I call when the bank calls me".
To put it all into perspective, the person that is handling all the files ( And generally not the decision maker) is an hourly employee who like everyone else these day wonders if they will have a job after Friday.
Lastly, remember that most of the foreclosures are sold as is and you will not be able to go back to the bank after you have done your home inspection and ask for anything from them.
Of course this is only my opinion after closing on 3 properties in the last year. I'm sure many Realtors will dispute what I say because they are all experts at the foreclosure process.
Good luck and hang in there!
Very well said Christopher. I base my success in Real estate on two things;
-A persistent Realtor that I trust
-A knowledgeable Real estate Lawyer who also seems to have a sense of humor that helps a lot when dealing with these lending institutions.
You have to love the Real estate market these days!
I just answered a question very similar to yours and outlined exactly what is considered when putting in an offer on a foreclosure. Please reference the web link below.
The reason the bank wants $242k despite the market value of $215k is 1.) $260 is owed and they are within 90% of that (93% to be exact) which is normal. Whether the bank would take a low-ball offer depends upon numerous variables. (reference the link a bit) 2.) the REO bank may not have a current broker's opinion letter notating approximate market value. This is performed usually quarterly or bi-annually and provides an appraisal-like set of data to the bank illustrating market value of the property and helps the bank set prices for their parcels.
Your situation is common and nothing to fret over. There are numerous opportunities available right now so keep looking but move quickly. Financing is the big question mark depending upon from where you are securing it from and how they are affected by continuous changes within this market.
Hope I have helped. Please contact me if any further guidance is needed.
Bank has other expenses:
include legal proceedings take possession including closing costs,
eviction or cash for keys
assest mgmt company
If you have a lower offer than does not work within banks boundaries for acceptance not much you can do till bank considers lower the list price on home