Home Buying in 83706>Question Details

Chris, Home Buyer in Boise, ID

Can you put multiple offers on same short sale house? What I am thinking is this. I like to pay less as

Asked by Chris, Boise, ID Thu Aug 21, 2008

possible. This house that I am looking into is listed at 330K. I am thinking to put offer 280K with 20% down payment. On the other had if banks care more about down payment I am willing to put 30% with 260K offer. The question is I can let bank choose which offer they prefer to take. Any suggestions?

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17
Remember that the person who decides whether to accept a short sale usually never even sees the contract. We send the contracts to the loan servicer, such as Countrywide, but in most cases the decision is made by the secondary lender. Secondary lenders are Fannie Mae, Freddie Mac, mortgage insurance funds, investment firms, hedge fund holders, etc. It is rare for a loan service to actually own the note. They are sold on the open market in bulk amounts immediately after a loan is closed. The servicer will work the short sale and send a summary sheet to the end note holder for approval. So, what the decision maker is seeing is just a summary of the value vs. offer, not the logistics of the offer.

Short sales come down to one thing. Net loss. Each bank has their own calculation for coming up with what percentage of BPO/appraisal price they are willing to accept. I have done over 20 short sales since January and I can tell you that regardless of what some people are advertising, the banks are netting approximately 90% (for a bank or securites backed loan) -100% (Fannie or Freddie backed loan) of value on their short sales. They do not consider our market bad enough to take major losses. Back in January, we were getting approximately 80% of market value, but that number has decreased significantly since June.

In most cases, the bank will call the Realtor with what net they will accept and it can be accepted or rejected. They don't tend to do counter offers, but they will allow you to bring your offer up. Be careful though because some lenders, including the largest loan servicer in America, will just close the file if the offer is too low without ever giving a net amount.

I tell all my short sale buyers to purchase a house because they love it and really want to live there, not because it is a short sale. As Scott mentioned, most do not close. Take a look at Eagle, Idaho. Only 5% of the short sales since January 1st have gone to closing YTD. Improve your chances and make sure the listing agent has experience negotiating short sales. This will save you time and heartache.

Good Luck!!!
1 vote Thank Flag Link Thu Aug 21, 2008
Not really, the bank cares more about what they will end up with at the end of the sale than how much someoen is putting down. In a short sale cash vs financing may matter in time to close, but remember , in a short sale the bank has nothing to lose other than lots of money. In most cases they will foreclose as if the buyer has PMI they will be reimbursing the bank part or all of the loss they will take in a forclosure but not a short sale. Make your best offer right off the bat, you only have 1 chance and the bank will not counter in most situations. Most important find out how far along they are on the short sale, make sure the seller has been approved financially to do a short sale and the appraisal and bpos have been done. short sales can take 3-6 months and almost 9 out of 10 dont ever close. Put your best ofer forward. good luck
Web Reference: http://www.ScottSellsNH.com
1 vote Thank Flag Link Thu Aug 21, 2008
Ummm that just seems unusual. If I were the bank and the seller I would take the one with the higher net. Cash is king but once the deal is closed the money is the same for the seller.
0 votes Thank Flag Link Fri Jan 10, 2014
It is almost two years since this question was posed, so I was just curious what the final resolution was.

Jim Paulson, CRS, GRI, EPRO, Broker
Owner/Broker - Progressive Realty Corporation
0 votes Thank Flag Link Wed Jun 16, 2010
Simple question with a very complicated answer with to many variables to answer in this type of forum. Get the best most experienced broker you can to assist you in this process. They type of loans(s), servicer, investor, liens, expected BPO, list agents experience, etc, etc, all go into the mix. Or said another way - you don't know what you don't know and either does your agent. As a wise Kung-Fu master once said - "Choose wisely grasshopper".
Web Reference: http://www.move-up.com/
0 votes Thank Flag Link Tue Sep 1, 2009
I don't think there are other offers after they rejected the 309K one. Bank wants to make 306K out of this sell and they are taggin 6% commision which turns out to be about 325K.
0 votes Thank Flag Link Fri Aug 22, 2008
it depends. are there other offers?
Web Reference: http://www.sellmydigs.com
0 votes Thank Flag Link Fri Aug 22, 2008
Chris probably not. Anything below that piont and the lender will probably decide to just take it back and list it again. You may check with the listing agent and see if they have it in writing from the bank just to verify.
0 votes Thank Flag Link Fri Aug 22, 2008
One more question, if the sellers agent says that the bank will not take any offer less than 324K. They already got an offer for 309K and they denied it. Is it still worth putting an offer lets say 310K?
0 votes Thank Flag Link Fri Aug 22, 2008
Chris,

You are obviously getting quite an education about short sales here. Kristine is correct in what she is saying about short sales. The best way to approach them is to have your agent do a market analysis on the home. Typically all the short sales I have successfully completed the banks will not accept more than an 8-12% loss.

If the bank has already approved 330K the there is not much chance they are going to come off that price as it's what they have determined is worth it to take the loss vs. the cost of the foreclosure process. The upside is if they have already approved it your closing should go much quicker.

If you do get an accepted offer it will come with an addendum that you are buying the property "as is." I would wait to do an inspection until the offer has been accepted by the lender but you should still do one none the less to make sure there aren't any major repairs needed.

As you've already made clear the process is very confusing, and it isn't helped any by the number of agents who have different ways of doing them. Some of the tactics agents are using are not the most ethical. Most of what you see in this post is correct. Like Kristine says it's critical to get an agent experienced in handling these. On the flip side if the agent representing the seller is doing something that doesn't seem right, run away. These types of sales take too much time and energy to waste it on a transaction that is not likely to go anywhere.

Thanks for posting a great question.
0 votes Thank Flag Link Fri Aug 22, 2008
The lender will not accept any inspection contingencies. There is always a possibility that the seller will agree, but in most cases they just don't have the funds for it. You should assume that any property will be purchased in its current condtion. HOWEVER, even if the house is sold as-is, if the contract is written correctly you still have the option of walking away because of major damage that you are not willing to buy into. "Property to be sold as-is, but such does not negate the right of the buyer to have an inspection to guarantee the integrity of the property. Buyer may cancel contract in the timeline specified after inspection based on results. Inspection timeline to begin the business day following lender approval." This allows you to have an inspection through the inspection clause in the contract (RE-21) after the lender approval so you don't have to pay for an inspection before you find out if you are getting the property.
0 votes Thank Flag Link Thu Aug 21, 2008
Thanks for all your help, but I have more questions. Usually short sales and REO says that will sell "AS IS". this one does not say anything like that but I am assuming it will be like that. Will bank accept an offer for an inpection contignecy on a short sale? EVEN if the addendum attaching says otherwise?
0 votes Thank Flag Link Thu Aug 21, 2008
Yes, you are correct. The seller can do whatever they want with the property thus, they have every right to decline an offer without ever submitting it to the bank. Although it may seem like they don't have anything to lose, sometimes their are extenuating circumstances. For example, I have had clients that have only shorted the second and the first has been paid off in full.

When the seller accepts the offer, it is with a contingency that the lender also approve it. For the record, lenders can also unexplicably decline offers. There are lenders who do not do any short sales at all, some that will not short sale anything other than primary residences, or firsts that feel they have enough equity that they should not accept a loss because they can get more for it in the *REO market.

*REO is a home that has been foreclosed upon, gone to auction, did not sell at auction and is returned to the market as a banked owned property by .
0 votes Thank Flag Link Thu Aug 21, 2008
As i understand there are two people involved. The seller himself and bank. First seller has to accept the offer. If my offer is lower than one previously offered isn't it sellers best interest to counter offer to us before the offer goes to the bank? Or is that not so and they would not say anything. Part of the reason I asked in the past I made an offer on a short sale house which was refuse within a day (I put offer 280K on a 295K listed price). They said this was because the seller denied before it went to the bank. So in that case I still do not understand why seller had an interest to deny my offer.
0 votes Thank Flag Link Thu Aug 21, 2008
This is next question into this process. The bank has already pre aproved their current list price and has been through the apraisal process. I dont know about BPO's , that is a new term to me what does that mean? In any case, since this house has already started the process would I still expect same slow resonse? Also, they said they already have one offer, is there a way to find out what the previous offer is? What would you suggest is a good offer in this case?
0 votes Thank Flag Link Thu Aug 21, 2008
A BPO is a "Broker Price Opinion". This is sometimes used in place of an appraisal. Instead of being done by an appraiser, a Real Estate Agent is hired to give their opinion of the current value of the home.

If the appraisal is less than approximately 45 days (90 for Fannie or Freddie) old they will usually use the one they have on file and it is doubtful they will come down much off their original net price. If it is older they will order a new one or a BPO to determine value changes. I will tell you the fact that more than one offer has been submitted will probably hurt your chances of getting the price down. They will most likely respond with a multiple counter offer to bring the offers up.

Your agent can ask for the offer price on the other offer. The decision will be made by the seller and sellers agent as to whether they will tell you. It depends on which scenario benefits them more.

The fact that they have already approved the short sale definitely will cut down on the amount of waiting time. A lot of the tie up on short sales is verifying the information provided by the seller to approve the short sale. You are definitely ahead of the curve.

It is impossible to tell you the best offer because I don't know anything about the house or the area, but I would go with Scott's recommendation and put your best foot forward.
0 votes Thank Flag Link Thu Aug 21, 2008
Scott & Kristine have already done a great job answering this question for you. #1) You really can't make multiple offers to a bank anyway. #2) The bank is not real hung up on the amount that you put down as long as it the amount that your lender requires down for the type of loan you are qualified for. #3) Short sales take a VERY long time, sometimes several months, and you aren't assured that it will close until it actually does. These work best for people buying investment property for this reason.

Just make your best offer and maybe you will get lucky. I recommend that you have your realtor discuss with the listing agent the stage in the process they are in with the bank. That may give you some idea of your chances with the bank. If you aren't working with a realtor, or if they are not comfortable with the short sale process - I strongly recommend that you find one that is. Let me know if you need any help with this.

BPO = Broker's Price Opinion. It is basically an appraisal done by a real estate broker. The bank already telling them they are willing to accept the listing price would be a good sign if you were planning on making an offer for that. Where you want to offer less will still cause you to go through the long process.

Good luck!
0 votes Thank Flag Link Thu Aug 21, 2008
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