So, 3 weeks ago, I found a house on the MLS listed for $74k, I made an cash offer on a short sale and it was accepted by the seller. Today, I got a phone call from my agent saying that GMAC negotiator wants $90k for the house and she said no counters. I was like WTH? no counters? I never heard of that before.
Have you guys had any banks / negotiators saying that?
Property is in Las Vegas, and the past 3-5 months has been crazy on houses at this price range.
Not sure if this matter, but the bank statement that I gave them when i submitted the offer had a balance of $91k.
I've dealt with this on a short sale I tried to work about 8/9 months ago. So far, I'm 1 for 2 on shorts.
Chances are, the short sale wasn't preapproved at $74k. $74k was probably the figure the agent came up with thinking this is what the bank *might* accept.
The seller can accept anything, but at the end of the day, the bank is the one who decides whether or not to move forward.
I've dealt with this on a short sale I tried to work about 8/9 months ago. So far, I'm 1 for 2 on shorts.
Chances are, the short sale wasn't preapproved at $74k. $74k was probably the figure the agent came up with thinking this is what the bank *might* accept.
The seller can accept anything, but at the end of the day, the bank is the one who decides whether or not to move forward.
Seller's acceptance on a short means absolutely squat. You have to have it before the bank will look at the offer, but only the bank matters.
Hi....yes, i understand the seller can accept anything they want, even $1, but that doesn't mean anything unless the bank approves.
But, my question is to all you guys is:
Have you guys dealt with banks / negotiators that won't accept any counters?
I was thinking about countering back with $80k but unsure if that would just ruin the deal.
I think a better approach is just wait and watch. If it is still on the market in 30 days try again.
Also what is the reason for the short sale? How good a job do you do selling the bank that it was only worth $74K. Are that comps low, Does the property have damage and need repairs. Is it in a neighborhood at risk with lots of vacants? You need to justify to the bank why they are better off with your offer than foreclosing.
I have done that before as a note holder. It is just cutting to the chase and getting rid of all the B.S. of back and forth. Either you are a buyer at the price or you not, the bank is telling you where they are a seller to a cash buyer. There is no duty by the bank to play back and forth with you.
If I am positive, in my opinion, what the value of the house is in the market, I have zero interest in talking about a number that is not close. It is simply a waste of time.
The fact that you showed them $91k and they told you $90, I would take that to mean nothing. At $90k, you have cash to close but need to get closings costs covered. Probably less of the conspiracy you think and more of just cutting to the chase.
If you are not at their number, just move on and don't waste your time. If you are at their number, which is $91k, then accept and move one. It is simple really. There is no in between.
The banks price is based on a bpo- someone told them it was worth more than you're offering.
Are they right?
In Phoenix, anything under $100k is getting mobbed with offers, so walking on this deal might be setting someone else up for an easy short sale, since the bank has shown their cards. The hardest part of a short is getting the bank to respond.
I wouldn't worry about the pre-approval, I don't think the lender is sizing you up.
But, my question is to all you guys is:
Have you guys dealt with banks / negotiators that won't accept any counters?
I was thinking about countering back with $80k but unsure if that would just ruin the deal.
Yeah.. It sounds like there's an Asset Manager that just doesn't want to spend time dealing with going back and forth with you. The bank gave you their best and final offer, rather than requesting yours.
In a short sale, the bank gets a BPO and their bottom line net from the sale is derived from the value the BPO indicates. Generally speaking, for FHA loans, the bank will accept about 88% of the BPO price within the first 90 days. After 90 days, they'll generally accept 82% of the BPO price. For other types of loans, there are other criteria (I don't know them offhand).
So, when the bank says it will accept $90K, that's what they've determined is the minimum net they're willing to take on the sale (most likely, the net is the $90K minus commissions and costs).
This is SOP for short sales...I'm guessing it's just a coincidence that your POF was around the same amount.
You are dealing with a FHA fannie or freddie funded, even when the bank gives you a verbal approval and then tell you give me 3-8 weeks to send out the WRITTEN approval, this usually means the real amount they will take has to be approved by whoever the investor is fannie or freddie. Is safe to say that when you get ( we need approval from the investor ) is when you should start praying. Is very typical of this kind of loans. Im waiting for investor approval on 4 s.s. at the moment. Good luck with yours.
J.N.R.
Peter, the last 4 shorts I've closed all were non-negotiable. I even asked for some items off after the inspection came back ugly, and they still would not budge. In the future you can meet the BPO agent (or your agent) provide them with your repair costs and a CMA. Most BPO agents do not know what it takes to bring a house up to livable standards. Most listing agents do not do this kind of followup and it results in a lot of short sales falling out of escrow.
Peter, do you have a letter from the bank saying the net they will take? The selling agent came back and told us, The bank will not take less than x amount, take it or leave it. Turned out the selling agent was just figuring in her inflated idea of costs and coming up with a much higher figure that would easily net the bank their amount. Our agent actually got a copy of the letter to the seller showing the net the bank needed for approval, then she ran real costs through a title company and came up with the absolute lowest asking price that would still net the bank what they wanted. It included the seller having to give up a $1500 credit that apparently is becoming standard to help them with moving expenses, etc., and some other fees being waived or lowered. They all seemed pretty upset that we wouldn't just pay more and shut up, but they also came down over 7K from their "take it or leave it" price once our agent showed them the bank could still get their net with our offer. I'd see if your agent can get that letter and find out exactly what they want, then see if it's still worth it to you.
Normally, lenders will require a pro-forma HUD-1 statement as part of the short sale package. I would recommend finding a good title/closing company and using them to prepare the HUD for any short sale offers you make. This way, you know that the HUD is free of "fluff" added by the seller or listing agent and it also gives you direct insight into the net going to the lender.
Once the lender decides on what their minimum net is, they'll generally give this information to the listing agent (though not always). If they do, you should ask the listing agent for exactly what the net payoff amount requested is, and then work with the title/closing company to revise the HUD and see what your purchase price would need to be to generate that minimum payoff amount.
Working backwards like that makes things much easier...
Some more points here:
1. It is a falsehood to assume that all secondary market investors consist of Fannie Mae, Freddie Mac, Ginnie Mae or other government entities. There are BILLIONS of dollars held by private equity firms such as York, Apollo and other which carry a massive amount of distressed assets.
2. There is always an investor behind every loan. When an investor boards his loans with a mortgage servicing company a mortgage servicing contract is executed. Most of the time that contract will have a clause which gives the servicing company the capacity to act on the liquidation via sale or refinance on behalf of the investor without additional investor approval. (as investor approval is noted in the contract) This comes pretty standard in MSC for security trusts as well. Not all investors enable that clause and therefore need to approve the deal. (I tend to not allow the clause so I can make my own decisions)
3. Justin S. I like your thinking. Mortgage investors understand just as much as street level guys (if not more) what a BPO is. (likely seen hundreds/thousands more than you) We understand who does the report and understand how it is compiled. We understand agents are not good with repair costs. His idea of meeting the BPO agent to share repair costs was a good one. Accurate repair costs are a desire from a mortgagee standpoint. Be careful, what you think is a "required" repair and I what I think is a "required" repair are the same. Accomplishing that only seems likely if the Listing Agent is doing the BPO for the servicer/investor. And if the agent is willing to take your feedback.
Justin, what can you detail your experience on the matter? Who did the BPO and how did you know and meet up with them?
In general, as a mortgagee, I will weight a Listing Agent BPO very lightly. Think conflict of interest. Unless, the agent is someone I sent to work with the buyer (through my servicer). Other BPOs come through a national BPO service and most of the time SOP is get two for a short sale (one agent and one third party). I don't know how you could ever know when that third party agent is headed to the property. A buyer side BPO from buyer or agent, would carry even less weight, again conflict of interest.
By the time a disposition has been determined on any asset there is a pretty sold idea of value. That comes well before I said, I would even think about a short sale.
How about change the lockbox combination, so that only you know it? How about just remove the lockbox, so you must be contacted to gain access?
How about change the lockbox combination, so that only you know it? How about just remove the lockbox, so you must be contacted to gain access?
A few reasons:
1. If you're not the listing agent (which oftentimes you won't be), it's not your lockbox;
2. Since it's a short sale, the house is generally occupied, and the agent doing the BPO will often just knock on the door;
3. With many BPOs, the agent doesn't even go inside the property.
That said, generally the lender will let the listing agent know that the BPO is being done, and if the selling agent has a good relationship with the listing agent, they can generally work out a way that the selling agent knows when the BPO is being done (within a couple hours).
Steve Babiak I was speaking (or typing) from the perspective of the investor who owns the loan (mortgagee). As J Scott mentioned none of what you describe is possible. I do not control the property, the owner of the property does.
Additionally, for me to obtain a BPO, is quite simple. I can either tell my servicer to order one or I can log into my account at a national BPO vendor and order one (it is the same for the servicer). That would be a third party BPO. That BPO agent does not contact anyone to conduct a BPO when it is exterior inspection.
If I desire an interior inspection, in the case of an owner wanting to do a short sale. I click a button for interior inspection and then clearly the agent has to contact the owner.
If there are agents in the deal, we would request one from the Listing Agent with interior photos. The third party BPO would usually only be exterior.
Update.
The seller's agent says that the negotiator will only take $90k for the house. When I asked for a minimum net, she did not know what I was talking about. I did find out that she's only been doing real estate for 1.5 years now. arggghhh.
When I told my agent, there were 2 others in the subdivision, same sqft, same model that sold for $84k in 3/2012 and $85k two weeks ago (8/1/12) and both were 3 bedrooms, mine is a 2+Den.
She's said she's going to try to talk to the negotiator, I'm thinking she's not. She's been flaky and seems to forget what we talk about.
Peter, May just be they want too much right now. I would e-mail the listing agent, personally, as her contact info is probably on her website, just let her know that 90K is too much with those comps, but you are willing to work with her if she has a net figure from the bank to see if a deal can be made or not. Copy your agent on the email if you want, but doesn't sound like she's going to be much help. Otherwise, I'd move on and find a better agent for the future, someone who knows more about short sales and problems and how to negotiate.
Update.
So, my realtor ask the negotiator for the bottom line net and they came back and said something along the lines of they wouldn't give that information and something about shooting themselves in the foot? Whatever that means. Any ideas J Scott ?
Then the negotiator told my realtor to just submit a counter offer with a HUD? (Not sure why he wants a HUD at this stage)
So, my plan is to submit an offer for $80K and since there are two other comps that sold for $85K (8/1/2012) and another one for $84K (3/30/12) - yes old comp.
Both homes are much nicer, all have 3BD (Mine is a 2+1den), slightly bigger lot, nicer floors, painted walls, landscape and the most recent one that closed even had a tile cover patio.
How long has the property been listed? I've found that after 90 days or so, the lenders tend to get a little bit more reasonable in terms of sharing information (like net payoff) and trying to work with buyers to get the deal done. But, even before the 90 day mark, if the agents are pushing hard, they can get more information.
If you feel like the seller is in a tough spot and probably won't get an offer for what the bank is demanding, one option is to tell the listing agent, "Hey, I really want the house, but without knowing the bank's lowest acceptable net, I just can't make a counter-offer. If you get that information, let me know and I'll be happy to consider it."
I've done that a couple times and in EVERY case, the agent came back to me with the net the bank was looking for. In my experience, lender negotiators aren't too hesitant to give a net if and when they have to -- I'm guessing that the agents in this situation really just aren't doing a very good job of facilitating this short sale, which sucks for you and the seller.
Here is the problem I am seeing with this. Neither the listing agent or your agent knows what they are doing when it comes to a short sale. Your agent can't negotiate with the bank at all because they wouldn't have an authorization from the seller of the property. The fact is the only thing your agent can do is tell the listing agent what they need to do and stay on top of them to make sure they are doing it. The listing agent is the person that controls the deal and will either get it accepted by the bank or blow the entire thing. Once you submit your offer it is up to them to negotiate.
You do not have to submit another offer either. If you end up raising the sale price it would just be an addendum to the original contract.
Also it doesn't matter if your agent has only been doing this for 1.5 years. What matters is they haven't been trained properly. I have been doing this for less then a year now and know how to get a short sale done because the company I work with has proper training. There are to many agents in this city running around pretending they know how to do short sales because they know 70% of the market is short sales. If they didn't pretend they wouldn't have any business. Problem is pretending gets people in trouble.
Coming from a realtor, I'm always skeptical, why.........let's see, it's always a great time to buy! a great time to sell, a great time for an agent to make money!!!
How many times have i heard after selling a house, a realtor says, I could of gotten you much more than that?!?! really? that might of worked for naive sellers.
Not saying that you're one of them, but a lot of realtors that I have dealt with are no good, and don't last in this business. They also have excuses, a lot of excuses.
So Nick, tell us how do you do a short sale properly, and how to negotiate? FYI, we all have access to Google & shortsalesuperstars.com
Peter, I read the updates. And clearly there is a bit of frustration. Your issue is you seem to believe the market value is less than what is being asked. You believe you have comps to support your offer. Heck, it seems like you are right.
None of that is the same as the note investor having a desire to sell it for less than the number they seem to have told you once or twice. The plight of short sales is buyer's wanting to prove their value assessment and change the mind of the mortgagee. That is, short sales where everyone agrees on a value just move forward and are not battle grounds of perception when value is not agreed to.
I really think you have been told the number from the mortgagee. It is $90k. That said, how do you "prove" your point about lower value? Is this really worth your time to do so?
You can put together a pretty little package of comps and send it over to the listing agent, who in turn can send it to the mortgagee. That doesn't mean it will change their mind. From your perspective, the deal is simple but you are removed from the mortgagee's perspective.
If the borrower is still paying on the mortgage, that may inflate the value from the bank perspective. You are off by $10k, that could be another year of payments from the borrower. My point is, it is not always as simple as the street level perspective wants to make it seem. And because most real estate agents and real estate investors have zero experience as asset managers for mortgagees the easy assumption is consider all mortgagee's idiots. That is a dangerous assumption. That assumes this is all about you and your offer and voids the fact that there is still a borrower and a mortgagee involved. Perhaps a better disposition is for the lender to modify the loan. You can't know unless you sit with their P&L in hand and see what they see.
Point is, many folks spend a whole lot of time spinning their wheels on deals that will go no where. This might be one of those. As J Scott said, close up your offer. Ask if the bank is willing to look at comps to amend their value assessment, if they say no. Then put your offer on the table and tell them to call you when they are ready. Just for further protection, I would tell the property owner too. You never know when a real estate agent losses their assignment. That's it, move on. There is not "art" or "science" to doing short sales like you allude to. The "short" in short sale is the mortgagee taking less than what is due. Choosing this disposition option is one of many ways to maximize the recovery of the principal owed on the note.
How many times have i heard after selling a house, a realtor says, I could of gotten you much more than that?!?! really? that might of worked for naive sellers.
Not saying that you're one of them, but a lot of realtors that I have dealt with are no good, and don't last in this business. They also have excuses, a lot of excuses.
So Nick, tell us how do you do a short sale properly, and how to negotiate? FYI, we all have access to Google & shortsalesuperstars.com
This barely deserves a response since the first thing you decided to do was attack me because of my profession. The funny thing is that you attack me because I am a Realtor yet you are using one to get your deals done (I guess I can't really say done can I.)
I wasn't trying to sell you on anything either. It is up to the listing agent to take the best offer on the house and work with the bank on a price all parties can agree on. The listing agent needs to show that the property is not worth $90,000 (if it really isn't.)
You have made it sound like the agents just gave up when the bank said $90k and no counters. Well the fact is there is always someone above the person they are negotiating with. The first person they speak with doesn't have the final say. Also just because that one person said no counters it doesn't mean you can't submit a higher purchase price. The listing agent needs to be on the phone with the bank until they get a better answer to go on. Agents must be willing to go beyond just talking to the first person that answers the phone. It sounds like both agents just took the first thing the bank offered and want you to be the one that gets the deal closed by coming up with more money. Sorry but that is not how it works.
Good luck with your deal, I really do hope they can get it worked out for you.