Ok, I offered list price on a short sale, $150K, with $4500 closing costs. I received a counter offer of $169K with $4500 closing costs...

Asked by Smkkms78, 92562 Tue Mar 8, 2011

Ok, I am a 1st time homebuyer, using FHA, I offered list price on a short sale, $150K, with $4500 closing costs. I received a counter offer of $169K with $4500 closing costs... but they did not want to pay for the home warranty, about $450. I accepted the counter as presented. Then, they came back and did not want to pay for NHD (Natural Hazard Disclousures ($200), only partial tax, second lien to property, only $750 max on settlement charges, so in actuality, the Seller wants me to pay their costs?!, another $4056.21. My doing so puts the price at $173K and the home only appraised for $172K in 2010. This is crazy, isn't it?! For a short sale?!
So, my question is; is this kind of back and forth common with a short sale? Are they just going to keep countering until I give them the world? I really liked this house, so I've waited through the process for it, but really, at this point and I'm about to walk away, but because I'm FHA it's hard to get anything. Words of advice?

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Smkkms78’s answer
Smkkms78, Home Buyer, 92562
Sat Mar 12, 2011
Thank you so much everyone for your helpful answers! I am still trying to work out this deal because I do really love the house. I am trying to be patient, but really it will all come down to price. I honestly have no more to give.
All of your answers have given me great insight. I now realize short sales are really full of "hidden costs", they are not deals at all! It may be a harsh reality for me, but perhaps the bottom line is that this is still not an affordable market for me. I'm doomed to rent!
Thank you all for the honesty and clarifications. This site is wonderfully informational thanks to the great community members taking the time answer questions for people like me (even if wish the answers were different)! :)
0 votes
scott farmer, Agent, Scottsdale, AZ
Tue Mar 8, 2011
Smkkms78,

I've had success in the past with renegotiating sales price with the bank in a short sale when a home did not appraise. As long as your contract has an appraisal contingency you should have the option to cancel the contract if you reach a point where there is no negotiation with the bank or your lender will not approve the loan based on a low appraisal. Read the contract and make sure your agent explains it to you if you are having trouble understanding the terms and make sure you have a "safe" out where your earnest money will be returned without penalty. Since you like the home you should at least try for it but, not without making sure your money is protected first.

Best of luck,

Sandy Farmer
Realtor, GRI, CSSN
John Hall & Associates
homesales411.com

Good luck,

Sandy Farmer
Realtor, GRI, CSSN
John Hall & Associates
homesales411.com
Web Reference:  http://homesales411.com
1 vote
Emelia Sanch…, , Ontario, CA
Wed Mar 9, 2011
I am assuming it is B of A they are the only ones who pay 750.00 max for settlement. Escrow should reduce seller's settlement to 750.00 so you do not pay this difference. NHD should be less than $100.00 and home warranty should be closer to the 300.00 range and is optional. Only partial tax? does not make sense, remember seller pays (seller's bank) all up until close of escrow. Example you close on the 15th they pay from the 1st to the 15th you pay from the 16th to the end of the month. If you really are considering walking away make sure you are still within your contingency period or else you will loose you earnest deposit. Short sales are very frustrating for both the buyer and seller so if you really like this house hang in there, have your realtor get actual figures from escrow so that you know exactly how much you are really adding to your costs because it can not possibly be $4056.21.
0 votes
Garrigus Real…, Agent, Redlands, CA
Wed Mar 9, 2011
This is common in short sales negotiations in this market. It really comes down to your desire to obtain this property. In a short sale the bank and the seller resist paying for much- the transaction is a losing endeavor for them. And if the property appraised for only one thousand less than your paying price you are sitting pretty. Again, I think you just need to decide if you like the home.
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Tue Mar 8, 2011
Hi Smkkms78

It is not uncommon for a listing agent in a short sale to list the home below market to generate offers.
Bank/s (if there are multiple lenders) do BPOs. They have good idea what the market is doing or what the home is worth.

So your situation is very common, when you offer X and bank comes back with X+10%.

If the market has move up since the appraisal in 2010, then the bank is justified.

Prudent for you to counter back and see if you can come to a common ground or look
for alternatives.

Also check my blog post on frustration with Short Sales:
http://www.trulia.com/blog/perry_mistry/2011/03/short_sales_…

Good luck
Perry
Web Reference:  http://www.ruthandperry.com
0 votes
Dennis Dieter…, , Corona, CA
Tue Mar 8, 2011
As I specialize in working with First Time Buyers, shopping for short sales can indeed be frustrating. You sound like you are about at the end of your patience. Take a deep breath (in fact several) and try to relax. Think about the end goal. The house you are wanting to call your home.
I was involved in a short sale in Lake Elsinore where there were 10 offers. Fortunately it was my buyer who stepped up and made an offer $15,000 above the list price, no closing costs to be paid by seller and was the one chosen by the seller to be presented to the lender. The lender had A BPO performed and subsequently the terms were accepted by the lender for the sale to go through, subject to all the many other items needing to be performed. As it was an FHA loan, we were very pleased to see the appraisal come in for more than their offer.
It was not too long ago, lenders would not even look at the short sale paperwork from a home owner until there was an offer to go with it. So listing a short sale high in price was ultimately a loosing situation for all parties, if the goal was indeed to actually sell the home.
In this day and age of short sales and REOs, many listing agents choose to list a home below market price in an effort to acquire as many offers as possible. After all, how can anyone argue the Agent has not performed their duty, when legitimate multiple offers are placed before them.
As to the negotiating of items. It is common to do so, but typically depends upon the lender as to what they will or will not pay. As an example, most will not now pay for a home warranty, but occasionally you will find one who will. I can not answer as to whether they will or will not keep countering you. Best to discuss that with your agent. Most home appraisals are only good for the day they were performed. While I can not speak for your situation, most offers,especially those including an FHA loan are written subject to your agreed upon price meeting with a favorable current appraisal being performed. So if your offer is written in this manner, the subsequent performance of an appraisal should either give you comfort that you have made the right decision or give you solid grounds to not proceed with the transaction.
Now take another deep breath and think about whether you really want the home. That is a decision only you can make.
0 votes
x, , Hawaii
Tue Mar 8, 2011
When you accepted THEIR counter offer as presented the deal should have been done.

And, if you proceed - buy the $100 NHD unless there is a reason to buy the $200 one. Who asks for a home warranty on a short sale? Pay that yourself also. They should pay the back property tax and their own escrow charges.

It's hard to say without looking at all the paper work but losing the home you really want for $900 to $1,000 doesn't seem like a very good idea either.
0 votes
Jane Grant, Agent, Aguanga, CA
Tue Mar 8, 2011
Many times short sales are listed really low to attract buyers so offering full price on a low list price is not necessarily what it will sell for. Banks do their broker price opinion and want an amount that is in line with what the recent sold comparables are.

What are 'Recent Sold Comparables" in this neighborhood?

Your expenses are $172,000 but the price of the home is $169,000. Your FHA lender will order an appraisal and the value of the home will NOT include your loan fees and, or some of the other things mentioned. Those things are part of purchasing a property and obtaining a loan to purchase a property.

This is really not out of the ordinary for short sales, they always take a lot of negotiating, especially when their are additional lien holders.

All banks care about is their bottom line, and if they can't negotiate with you they will foreclose on the borrower and re-list it as a bank owned property.

Hopefully, you are working with your own agent and not using the listing agent to represent you. Having your own agent explain things and negotiate is always best.

~~~~~~~
0 votes
Ryan Smith, Agent, Murrieta, CA
Tue Mar 8, 2011
Unfortunately this is common with short sales. The listing price means nothing because the lein holder decides what they are willing to take the loss at. It is also common for the bank to try and approve the least amount of transaction costs as possible such as the NHD and home warranty. This is why buyers walk from short sales so often.

Good Luck!
Chris Blasic
0 votes
Christopher…, Agent, Hemet, CA
Tue Mar 8, 2011
With a short sale, the price is determined by the lender - servicer of the original mortgage. In short, yes, the agent who listed it at a certain price can only make a best guess estimate of the value and must leave the negotiations (Actual price and terms) up to the lender in question. It is not uncommon to receive a counter that is substantially different than your offer. It is just part of the process with a short sale. You can always make a counter to their counter. Good luck in any case....hope it all works out. Patience...patience..patience are the three most important factors when dealing with a short sale : )
0 votes
Ray Lopez, Agent, Lake Elsinore, CA
Tue Mar 8, 2011
Where is the house and how does your realtor think about this?
0 votes
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