Bank countered on my SS offer, now what?

13 Replies

This is my second short sale, first one the bank accepted, so this is the first time I am in this situation.

South Florida, single family 2 bed 1 bath home, in fair condition, everything works, no major work needed - but I haven't yet done an inspection, however home is dated back to the 60s, pink bathroom tiles, yellow kitchen counter, you know.

First time short sale package submittal for this home, looking at the nearby sale, I say FMV is around 110K.

I offered 100K cash. 45 days later bank (Chase) countered 126K. I have 2 days to make a decision.

On top of this, realtor is asking about $3600 on assorted fees (short sale admin fee, processing fee, document prep fee, courier fee, settlement fee etc etc etc) on top of the commission.

From reading BP on various SS threads, there is not much room for negotiation because the amount was determined by BPO right or wrong and the decision to accept or reject is not a human decision but some formulaic thing - unless you can justify it with some major overlooked issues, correct?

So is this counter basically a take it or leave it number?

Counter at whatever price makes sense to you.

Many of those fees sound like title company fees.

@Jon Holdman , you are right. The realtor is getting commission, plus a SS admin fee. The title co, dictated by seller, is getting the other fees - processing, settlement, closing, doc prep, courier, copying, etc etc etc, the charges are on both sides of the HUD, buyer and seller with the understanding that if bank doesn't pay buyer will step up to bridge the gap. I do get a title policy out of it.

Originally posted by @J Scott:
Agreed with Jon, but I'll add that if you're planning to counter at much less than $126K, you should support your offer with several contractor bids on the work. If the bids indicate more required renovation than the BPO indicated, they may take that into account and lower the price.

@J Scott , the problem is there isn't time to do any contractor bids. I learned that they countered on Friday afternoon. They want a modified HUD and addendum by Tuesday. It's going to be difficult to get that done on Monday as owner is not too keen to show homes (realtor doesn't do showings, owner does). Besides, from my quick tour of the place, it is mechanically sound, just really dated.

I also asked the realtor what the bank's minimum net is, he said he doesn't know but will try and find out, I don't think that will lead anywhere.

I guess I have no other option except to figure out my best and highest and throw that out there?

Is there any past experiences with Chase that might suggest they will "general accept if offer is within X% of the counter?"

Agree with J Scott and Jon. But, this is another reason I require inspections up front (other than buyer can just walk away for no reason after S approval). Any major repair work, nor cosmetics, should be submitted, by contractor bids, with the offer, as it will help justify the offered price. But, yeh you're right about a stupid BPO number, without these repair estimates. As to fees "if not paid by the bank" the bank are used to paying ordinary closing, title and settlement fees. Sometimes the title co. charges "un customary fees", jacked up, that the bank won't pay. Submit repair estimates if you can, and specify an exact dollar amount of closing/other fees you will pay, don't leave it open ended. Depending on who the investor is (FNMA, Freddie, private, etc) they will have a specific procedure for a "value dispute" which should be submitted with your counter. Chase owns less than 40% of the loans they service, and this is investor dictated. Whoever is processing the SS should know this.

Counter at the highest and best that makes sence to you. Is their number negotiable? If you offer more than u originally did and less than they want, youll find out. As far as contractor estimates....the bank has already taken everything into account with their bpo, if their number doesnt make sence, then it should exceed your highest and best and you should move on. Perhaps writing a note with why your highest and beat is your highest and best would help. Contractor estimates can always be manipulated and everyone on all sides knows this.

Seth, manipulated, exaggerated contractor estimates....never heard of such a thing! Sam, also in a value dispute the agent should point out this unit is "original" and note if the comp.s have been updated/rehabbed. BPO agents rarely figure in repairs, and I've never seen them take the time to identify updated verse not, since they only get about $70 for doing a BPO.

So from all the comments I am getting the chance of getting the bank to lower their price closer to my offered price is not going to happen unless I can somehow justify it.

Contractor bids - this is not going to happen and honestly the house does not need repair work. Mechanically sound but really dated.

Comps - I do not see any home within several blocks that justify a 126K price. Similar 2/2s (and this one is a 2/1) all sold at 88K, 86K, 90K. There is a 2/1 that sold for 131K but much larger SF, so based on $/SF it goes back down to my offered price. Another 2/2 sold for 120K but has remodeled kitchen, granite countertop, new cabinets, crown mouldings, new flooring thorough and a garage. Everything over 120K I can see a clear reason, either much bigger SF, or substantially upgraded, or had something else (a garage and pool etc...) I don't see how they come up with this BPO EVEN if they excluded all distressed sales.

@Wayne Brooks , is there a vehicle whereby the agent can point out to the bank that the unit is "original" and the comps may be off? However, I have no idea if the comps may or may not have taken that into account.

I am curious, does it make sense to spend a few hundred dollars to say order my own BPO to submit my counter to their counter? I am assuming that just upping my offer a small amount will be a waste of time in a short sale like this, or is it worth a shot. May be I should find out who the investor behind the Chase loan is.

Originally posted by @Sam Leon :

I am curious, does it make sense to spend a few hundred dollars to say order my own BPO to submit my counter to their counter? I am assuming that just upping my offer a small amount will be a waste of time in a short sale like this, or is it worth a shot. May be I should find out who the investor behind the Chase loan is.

Not in my opinion. The time is better spent getting contractor bids, as this is the only thing that I've seen sway lenders in short sale negotiations.

Seth indicated "the bank has already taken everything into account with their bpo" -- this may be his experience, but again, this is not my experience. I'm not sure how many short sales Seth has done, but I've done many (from the purchaser side), and I've had many instances where I've had to negotiate counter-offers -- the only tool that's every helped was contractor bids. I've seen cases where BPOs were done without the agent/appraiser even going into the property, so to say that the bank has factored rehab costs into the equation is many times flat-out incorrect.

On many occasions, I've had the bank come back and say, "Please submit 3 bids to support your offer." While anyone can make up any rehab numbers, this will at least allow the asset manager to make a decision based upon documented information. It's as much a CYA for the asset manager as anything else, since he may have to justify his recommendation to his boss or -- in the case of an audit -- even to shareholders in a sense.

@Sam Leon Depending on who the investor is they will have a method for reviewing a "value dispute". FNMA has a specific process, opening up a ticket with them , submitting comp.s directly to them, etc. whoever is negotiating the short sale should know this. They need to submit the exact comp.s, and differences, you just mentioned. Pictures off the MLS from the sold updated comp.s will show this. Also, I don't know if it really factors in, but a bank processor may not be as willing to actually look at the comp.s hard enough to establish a true difference when you still have an insection/walk away clause, even if they approve your price. I wouldn't.

Originally posted by @J Scott:
Originally posted by @Sam Leon :
I am curious, does it make sense to spend a few hundred dollars to say order my own BPO to submit my counter to their counter? I am assuming that just upping my offer a small amount will be a waste of time in a short sale like this, or is it worth a shot. May be I should find out who the investor behind the Chase loan is.

Not in my opinion. The time is better spent getting contractor bids, as this is the only thing that I've seen sway lenders in short sale negotiations.

Seth indicated "the bank has already taken everything into account with their bpo" -- this may be his experience, but again, this is not my experience. I'm not sure how many short sales Seth has done, but I've done many (from the purchaser side), and I've had many instances where I've had to negotiate counter-offers -- the only tool that's every helped was contractor bids. I've seen cases where BPOs were done without the agent/appraiser even going into the property, so to say that the bank has factored rehab costs into the equation is many times flat-out incorrect.

On many occasions, I've had the bank come back and say, "Please submit 3 bids to support your offer." While anyone can make up any rehab numbers, this will at least allow the asset manager to make a decision based upon documented information. It's as much a CYA for the asset manager as anything else, since he may have to justify his recommendation to his boss or -- in the case of an audit -- even to shareholders in a sense.

Perhaps I should've been more detailed. "taking everything into account" more means the bank would believe such a thing to be irrelevant in many cases, particularly if they believe their bpo accounts for the value of a house as it currently resides. I have been involved in several shorts as both buyer and agent and closed most while some fell through. I have found negotiating on price of a bpo is only relevant when a bpo is found to be drastically off, which can happen. in that case a contractor estimate could certainly help, particularly from a cya perspective. However, I wouldn't believe the situation above to be one of those given the relatively minor price differential. further, sometimes a bank on a shortsale simply wont care. They don't like willingly losing money and aren't in a hurry to do it. Offer what is worth it to you, if they are flexible, they will be. otherwise move on.

After some number crunching I countered the bank.

My initial offer 100K.

Bank countered 126K.

I now countered 108K.

I don't think this is going anywhere. I did compile nearby properties with pictures showing there are only 1 property sold in that range in the last six months but that one has new kitchen, granite countertop, SS appliances, new hard wood floors, new windows with accordian storm shutters etc etc etc...and this one is 1955, unchanged. I sent my analysis to the agent.

However the agent didn't think it would matter and seem reluctant to include my justification. Said "market is hot properties are flying off the shelves." and he said he will send my counter offer to the bank, not sure about my explanations.

Well, we shall see.

Sam, it's a bad deal. The price does not make sense to you so you should counter back to your original price.

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