Negotiation advice with the bank needed

Asked by Home Seeker, 90068 Tue Jun 28, 2011

I am a first time buyer and have no idea how the negotiation process should go. This negotiation will be on a short sale with the bank. After all the inspection, there were a lot of things found wrong with the property and I submitted a lower offer. So what do I expect next? If the bank comes back with the counter offer, do I have to take it as a final offer or do I still have room for further negotiation? My agent is not much help. She tries her best to convince me to buy the house. Thanks for much for your input.

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Tina Lam’s answer
Tina Lam, Agent, San Jose, CA
Fri Jul 1, 2011
You can stand firm on your offer and wear the bank down. I have seen banks turned around to accept offers the 2nd time around. That really depends on the banks. If you really don't think it's a good deal, you can always back out as long as you are within the contingency period.
Web Reference:  http://www.archershomes.com/
0 votes
Dan Tabit, Agent, Issaquah, WA
Tue Jun 28, 2011
Home Seeker,
Banks and Short Sellers generally don't do much work due to inspections on short sales. Dropping your price may be the best suggestion. The next problem may be whether the unrepaired inspection issues affect your financing. FHA will demand any safety related issues be resolved.
A good agent doesn't try to convince their client to buy, but assists them in understanding what a purchase decision may entail. If you don't understand all that is going on, get more help and consider getting another agent and another property.
Short sales can take months and depending on what the inspection issues are they may get worse while waiting. If your new offer is not accepted or countered in a way you feel comfortable with, reconsider this property. There are new ones coming on the market everyday. Buying your first home is a big enough step, taking on a lot of problems may be more than you need.
1 vote
Randy Stoker, Agent, Carmichael, CA
Sun Aug 31, 2014
The bank (lender) controls the short sale transaction whereby the seller has very little control over the decision making. All short sales are "As Is" so you must accept the house in it's existing condition with no exceptions. Your Realtor can help you determine the value of subject property when completely repaired and then subtract the cost of repairs; which is the value of the property in it's present As Is condition. Your offer should reflect the As Is condition. Sometimes a cover letter explaining the reason for a low offer can convince the lender to accept a low bid offer.
0 votes
Scott Godzyk, Agent, Manchester, NH
Sat Aug 30, 2014
With a short sale you are not negotiating with the bank per say as the owner still owns the property. Once a bank approves a short sale they will not usually lower what they will take. You have to make your best offer up front and that includes finding out any work needed and including that in your first offer., Submitting a new offer or trying to re-negotiate starts the process all over and delays a decision by the sellers bank Buying a short sale is not like a traditional sale and needs to be done differently and according to the sellers banks rules. At this point you should include as many pictures of damage and estimates to fix to teh seller s bank and hope they will lower what they will take,
0 votes
Mike Dronge, Agent, West Hollywood, CA
Fri Aug 29, 2014
Figure out now what the house is worth to you and what your looking to pay for it AS IS. The bank is already taking a loss and most likely will not be doing any repairs or credits.
0 votes
Annette Law…, Agent, Palm Harbor, FL
Thu May 22, 2014
Question posted in Jun 2011.
Do you think the buyer is one of the rare 1st timers to succeed with a short sale?
0 votes
Scott Godzyk, Agent, Manchester, NH
Thu May 22, 2014
With a short sale there is not much negotiation on your part, the sellers bank will say what they will accept for a price and want an offer free of continincies to go forward. yo8u can not re-negotiate after an inspection. Inspections should be done before you make an offer and include any such report, estimates to fix and lots of pictures with your initial offer. Short sale buyers really need a buyer agent who is WELL experienced with short sales if the deal is to work. Banks often do not accept counter offers once they set a price they will accept. There is no rule or law that they have to accept a short sale so you have to play by their rules.
0 votes
inna ivchenko, Agent, Calabasas, CA
Thu May 22, 2014
I've been on both sides of short sale: as a buyer agent and as a listing agent.

All depends what kind of financing you have, who is a lien holder?, how many offers behind you?, and what kind of damage the house has? Did the bank already approved short sale and all terms?
The general answer: it does not hurt to try, but they will not fix or credit anything back to you. You might try a price reduction.If it is something big: structural damage, roof, plumbing, etc. ~ submit inspections results, bids, everything important that effect material value of the house.
Good luck!
0 votes
Arthur, , Pasadena, CA
Wed Jun 29, 2011
Short Sales are often sold without the bank paying for termite, home warranty or repairs. It often is a fight between 2 banks as to how much they should receive. We have even seen where they require the buyer to pay some of the seller fees such as back HOA fees or taxes. Thinking about it this way, they may not sympathize with you and require you to foot the bill. I hope you are still looking at other homes.

-Arthur
0 votes
Gerard Carney, Agent, Spring Hill, FL
Tue Jun 28, 2011
Expect little, the price asked is probably too low for the bank but going lower will get even less response, these homes are as is and the bank will not make allowances for the property! If the bank makes a counter, it will be the only one they make if they even make one, so if you feel the price is something you can live with and the condition of the home is something you can live with, then accept the counter, otherwise look at better deals!
0 votes
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