Conventional sale / Short Sale

Asked by Tony, 92108 Wed Mar 26, 2014

We put offer on conventional sale 3 months ago that has now became short sale. Bank has countered offer now at $40K higher than the listed price. Is this common practice ? How can agent list home price and accept offer that is completely non-binding ?

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6
Nikole Carte…, Agent, Coronado, CA
Mon Apr 21, 2014
It sounds like the due diligence was not done upfront to determine the actual bank payoff and/or the seller was not completely forthright with the listing agent. As mentioned in comments before, the bank ultimately has the final say in what they will accept. My experience has been a skilled negotiator - like myself - can often get the bank to reason if what they are willing to accept cannot be justified - i.e. major damage, incorrect values given, etc.
0 votes
Alexander Gr…, Agent, San Jose, CA
Thu Mar 27, 2014
Because the Bank gets final say on all Short Sales. You can always submit a counter offer to them. Remember that they are in the place of weakness given that the property is underwater. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
0 votes
JR Thrasher, Agent, San Diego, CA
Thu Mar 27, 2014
You are not being educated on the home buying process by your agent. Click the link in the web reference below to read eight questions to ask your real estate agent... J.R. Thrasher
http://www.SanDiegoRealEstateVeterans.com
(619) 929-0105
RealEstate@JRThrasher.com
0 votes
Cindy Davis, Agent, San Diego, CA
Thu Mar 27, 2014
Hi Tony,

This happens every day. The way banks deal with short sales kind of forces this to happen. They won't look at a short sale until there is an offer on the table.

Listing agents tend to price short sales low to get an offer on the table quickly to get the short sale process moving. Lenders come back with higher counters at least 90% of the time.

There is a short sale addendum that makes it clear the transaction is non-binding until the lender approves the transaction.

Short sales are the most difficult deals to close. I'm at six months with one. This is unfortunately, they way it is.

Best of luck.
0 votes
Suzanne MacD…, Agent, Morristown, NJ
Thu Mar 27, 2014
All short sales are subject to bank approval of the price and terms of the sale. The reason is the bank will be taking a loss since the owners owe more than the house is worth. The bank has an appraisal done, and then they determine what amount they are willing to accept based on that appraisal. Your option, as the buyer, is to counter their counter offer. If you have some evidence that your offer is fair, for example, comparable sales and/or a home inspection report that shows that certain repairs are needed or that the home is in need of updating to bring it up to the same market value as the comparable sales, then submit those to the bank along with your counter offer. It's all a negotiation, but now you have to negotiate with the bank as well as with the owner.
0 votes
Dan Tabit, Agent, Issaquah, WA
Wed Mar 26, 2014
Tony,
I suspect the owners didn't know their pay off and the listing agent didn't research the home. The truth is, if the sellers can't write a check to perform, then I don't know that you could take them to court and compel them. Since the property has now become a short sale, will the $40k make up the difference or will the payoff still be short?
List price in a short sale is meaningless. Until the bank approves a price, you have no contract. Where this one started out as conventional, someone really blew it.
How do you want to proceed? If you walk away this should be easy to avoid. Public records indicate what was borrowed on a home (at least in my state) when they purchased it and any subsequent refinances too. A Title search should be ordered by the listing agent when the property first hits the market to determine if there are any issues that may get in the way. On a new home, review the public records your agent can provide and request a copy of the preliminary Title Policy with your offer to make sure your next one goes smoothly.
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