Help please on short sale counter offer...

Asked by Pamela Russo, 07716 Thu Apr 23, 2009

I got word from our attorney this morning that the Bank is countering $21,000 OVER list price. The house has been on the market since last summer. It was originally listed for $345,000, then dropped to $325,000, then in January it was reduced to $315,000. We offered $290,000. The $336,000 counter from the bank is in line with current neighborhood list prices, but there are no comps more recent than November - NOTHING is selling. First quarter last year, there were 85 homes sold in the town...this year there were 8, and they were ALL townhouses. In addition, home sold prices in our county dropped 8% last year, and continue to drop at a rate of 1% a month. We are thinking of countering the bank at $294,000 - does this seem reasonable?

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James L Stec…, Agent, Montclair, NJ
Fri Apr 24, 2009
I am not familiar with that particular lender's practices.
If there is only one loan then your odds do increase.
I do understand there has been a major decline in prices yet you have to know if the decline meets the counter and if this home has depreciated to that price or is it still over market value.
They are determining their counter on the BPO (broker price opinion) that was ordered by the lender.
Did your agent do a market anlysis on this home as if they were listing it themselves? Have they determined that your price is fair market value? That will be the key going foward.
Have your agent do this if they havent already and ask them to be straight with you.Its the only way you are going to know the odds of getting this house at the price you want.Hopefully there arent any other back up offers on this home.One last thing the listing agent that lowered the price to 325k may have gone way below what is truely market value of this home Ive seen this happen a number of times.
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Pamela Russo, Home Buyer, 07716
Fri Apr 24, 2009
I don't think the house will appraise at market list - nothing is selling at the list prices now. There are some updates that need to be done, but the house is in beautiful condition on the inside. The house is on a very busy road, across the street from a school and the town library, so that should also trigger a price reduction based on comparables. The listing agent said that the BPO was done months ago, but hasn't been very specific about it - if the BPO was done when the house was first listed last summer, then we obviously want it reevaluated because it is a very different market now...
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Laura Gianno…, Agent, Manahawkin, NJ
Fri Apr 24, 2009
You don't mention whether the home needs repairs or if maintenance has been deferred. In that case your offer might be reasonable. Did the bank order an interior BPO or did the broker just do comps and review the property from the outside?

But if the home's price is in line with the market, you might want to go in higher than the $294,000.

Laura Giannotta
Keller Williams Atlantic Shore
0 votes
Pamela Russo, Home Buyer, 07716
Thu Apr 23, 2009
Thanks James -

To answer most of your questions, AHMSI is the lender; the loan is not backed by Fannie or Freddie, and it is a single mortgage. The reason we are offering less than 10% of the bank's counter is because of the decline in the market. We really want to keep the home below $300k - we are approved for a higher amount, but don't want to be house poor.
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James L Stec…, Agent, Montclair, NJ
Thu Apr 23, 2009
Banks are looking for fair market value on short sales.At times they work within 10% of that number
Based on the number you gave of 336k 10% puts you at about $302,400.That 10% range will depend on a few factors.
1.) Who is the lender?
2.) Who is the investor? Fannie Mae or Freddie Mac ? (or is it a private investor)
3.) Is there more than one mortage?
4.) Do they pay MI on their loan?
If the answer is yes to the last two questions the firmer the bank will be on this 336k counter offer.
The lender and investors will have something to do with it but the latter two are most relevant.
Fannie is most reasonable at the moment.Go to their website and put the address in to see if they are the investor.Your agent can find out answers 3 and 4.
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Heather Dacc…, , Monmouth County, NJ
Thu Apr 23, 2009
Hi Pamela,
It is hard to say whether or not your counter offer seems reasonable because I don't know the property. In a short sale the bank wants to recoup as much of their loss as possible therefore they usually do a BPO (brokers price opinion) to determinte market value and try to get as close to that as possible.

My advice is to give your highest and best offer to the bank and let them decide whether it is worth it to take the offer, wait for a better offer or let the home go into foreclosure. I understand what you are saying about the comps for the area but the decision is at the sole discretion of the bank.

Good Luck,
Heather Daccurso
Weichert Realtors
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