Home Buying in Seattle>Question Details

Sepo, Home Buyer in Seattle, WA

Bank raises the price after submitting an offer on a short sale

Asked by Sepo, Seattle, WA Sun Feb 22, 2009

I out in an offer of 323K on a short sale where asking price was 360K. bank turned it down and raised the asking price to 375K. is this legal and what are your thoughts on this ? i am willing to offer 340k as a last offer to get the house. countrywide is the lender.

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When I work with a buyer on a short sale I make sure that I explain this to the buyer. It is different the a foreclouser. In Wisconsin we have a form that we use to explain this so the buyer. So they knows this up front how it work. Subject to lenders approval. And that the lender can come back with a different price over what it is listed. At that point the buyer can decided if they are willing to go to that price or not. We also have on this form how long the buyer is willing to wait for an answer of the proposal. We state that it is not an offer it is a proposal to the bank. I am not sure if they have this form in Washington.
0 votes Thank Flag Link Fri Feb 27, 2009
Since the lender ordered it, you will not know what the BPO price is. Lenders lie all time about the BPO estimate. Sounds like they might be bargaining with you.... What were the comparable properties priced? And I am talking about comparable distressed properties. Do not use traditional Listings as comps. After you have determined fair market value for distressed properties, then drop it 10%. If this figure is below the $340K, then use it. Otherwise, just split the difference between your original offer and your $340K (top offer).

I work with Countrywide all the time as an investor. I would be happy to give you some tips if you would like for free! Just go to my site. Good Luck
0 votes Thank Flag Link Thu Feb 26, 2009
Either the bank has received a ton of offers (doesn't matter if they've expired/rescinded) or the BPO amount is equal to or above 375k. You need to close the file, let their BPO die and have them reissue another one. However this depends on your time frame. When is their auction date? Also, is there a 2nd? If you are looking for serious answers to your questions, I suggest calling or having your agent call me or any other short sale expert and explain to them the situation.
0 votes Thank Flag Link Thu Feb 26, 2009
I have seen it happen quite a bit.. They hold the title, they can do whatever they wish. I know of a transaction that every time they countered, the bank raised the price. They ended up paying 2000K more than their original offer. They don't have time to play around.. If the house is only worth to you 340K that's it, but my question is.. Is this house still a good deal at 375K? Perhaps they would buy your rate down a wee bit to help offset the rise in price, and keep your payment the same.. Only your agent can best council you...
0 votes Thank Flag Link Tue Feb 24, 2009
Steve is right on here. Make an offer that you'd be happy with, and go for it. There are no set rules, just make sure your offer is one that you'll feel gets you a great value on the home. Be ready for a long ride, and expect the deal to have some detours. You can get a good deal if you're willing to work through it.

Sam DeBord
Seattle Real Estate
0 votes Thank Flag Link Tue Feb 24, 2009
Sepo,
You should be picking up one clear and consistent point here. There are no 'rules' in the game of short-sale buying. Most times the process begins without any guidance from the ultimate decision maker, the lender. So as things progress it may appear as though it is a moving target. Not only does the acceptable price bceome subject to change but even the deadlines can move because the lender controls when the game ends. Keep in mind they or more importantly the underlying investor are taking the loss. Trying to mitigate the loss is their objective and who can blame them. There are techniques and questions asked in the beginning that may help improve your success but in the end it's a crap shoot. Roll the dice enough time and you're bound to win. Just make sure the price is worth your efforts.
Steve
0 votes Thank Flag Link Sun Feb 22, 2009
Countrywide is the absolute worst lender to deal with on a short sale. I have a short sale that I've sold 4 times since listing it and each time Countrywide shot themselves in the foot causing the buyer to walk away. Each successive offer has been a lower price. In your case it looks like Countrywide raised the price based on their appraisal of the property. You can offer more and see what happens, but the thing to keep in mind is what is the actual market value of the property? If it's actually worth a lot more than $375k and you're just trying to lowball, it may be time for you to move on.
0 votes Thank Flag Link Sun Feb 22, 2009
Sepo,
The agents stating that you should submit another offer are absolutely right. The price discrepancy you mention is pretty much irrelevant, and it is legal. The bank will wait until the bitter end (just prior to foreclosure) before accepting a low offer. In many cases the bank will buy their own foreclosure and re-list the property to try and realize their price rather than sell the property too cheap. This shouldn't stop you from making an offer or multiple offers, if you have the patience to wait them out.

Hang tough and good luck.
Web Reference: http://www.homehounds.com
0 votes Thank Flag Link Sun Feb 22, 2009
Unfortunately some agents list short sale properties for prices less than what a bank will realistically approve. It's impossible to say that's what happened here, but it happens enough that the NWMLS warned agents about doing it.
0 votes Thank Flag Link Sun Feb 22, 2009
When we list a home on a short sale we try to come as close to what we think a home will sell for however the lender has the last word in what the price is. It is not the same as a home owner listing their home. It is a proposal to the bank. The bank will not help us to determine what they are willing to take until we have an offer. We also have to put together a complete package that goes to the lender before they will even look at the offer. So things work a lot different with a short sale. They are different then even putting an offer in on a foreclosure. In that case the bank already know what they are willing to take. In a short sale it should read this offer is subject to seller mortgage company approval.
0 votes Thank Flag Link Sun Feb 22, 2009
Hello Sepo,

In a Short Sale the lien holder for the seller has agreed to take less than what the seller owes on the home. The seller and listing agent have been told by the lein holder to get an offer. They do not specify what the listing price nor the offer should be, they depend on the seller and agent to bring offers to the table.

Once an offer is received the lien holder will order a BPO (Broker Price Opinion). This is done by an agent the lender pays a fee to determine what the market value should be. If the lien holder obtained 3 different BPO's, they would see 3 different prices.

The lien holder then counters if the potiential buyer's price is too low.

Whether it is legal or not , this is how a short sale works. Some lendere take a week to return a counter, however will take longer than 3 weeks. Most are vry difficult and can take a long time to get to close. Forecloser auctions can be delayed by the negotiators for the lein holder so an offer can be negotiated.

If the home you have an offer for does not receive any further offers, your final offer can still be negotiated. The lein holder will not see the home go tforeclosure with an offer on the table, regardless of whether it is what the BPO was or not.

Convince both your agent and the listing agent to resubmit your offer and I recommend that you go to your highest price, tell them to submit it to the lien holder with a cover letter that says, in the event you they not receive the 375K price to please reconsider your final offer. I just closed one exactly like this and it will work if you are patient. Ours took 4 months.

Again, this assumes that no other higher offers are sent to the lender. Find out when or if the auction is scheduled. If it is not for several months, it may be a long wait. If it is comming soon, then you will have a better chance.

Good luck.
0 votes Thank Flag Link Sun Feb 22, 2009
Sepo:

Sometimes short sale homes are offered at a price without knowing that the lender or mortgage holder will actually accept that much of a short fall in the payoff. The good news is that your short sale offer will probably go through if the bank has identified a number they will accept. (80% of short sales do not work out before foreclosure). If you are willing to pay the price, looks like you have a deal.
0 votes Thank Flag Link Sun Feb 22, 2009
OK, this strategy is a little confusing but not unheard of. Ultimately the bank is trying to maneuver to get the most for the house they possibly can. Apparently they saw enough activity on the house that they think they can get more then they thought for the house. Yes, this is legal. The house essentially belongs to the bank and they can request (list) what they want for the house. Don't let the listing price through you though. In this market the buyer is king. Go ahead and offer whatever you are comfortable for the house. The worst they can do is say no.
Keep in mind that on a short sale you may be looking at a long time before closing. I would go ahead and resubmit your offer at $340 and see what they say. What is the worst that can happen?
0 votes Thank Flag Link Sun Feb 22, 2009
Often the seller is guessing at what the bank will accept when they set a list price. Often the bank won't tell the seller what price they will take until they have an offer. It's all legal, the seller is not the bank and the seller is often just as confused as you. But in your best price and don't give up unless another buyer offers more and gets it.

What the bank wants is irrelevant. What another buyer is willing to pay is the only consideration as to whether or not you will get it at the price you offer. The bank may take it and try to sell it themselves. If you really like it, and can wait, you may get it cheaper if you have the patience.
0 votes Thank Flag Link Sun Feb 22, 2009
At anytime a seller can raise list price of home. It could have been placed in MLS as an error.

Resubmit your offer determine if bank will accept it. If not keep looking.

Short sales and foreclosures always have drama.

Dallas Real Estate Agent, Mortgage Loan Officer, Credit repair consultant
– Lynn A. Crosby
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Sun Feb 22, 2009
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