Is the short sale completely up to the bank?
I am a looking at a property which is a short sale. And, admittedly I'm a bit confused. The property is listed at $25k and I was advised the bank approved that amount. I was also advised that in that $25K there is a $3k settlement. So from what I gathered from my agent my purchase price is $22K plus $3k. Does this make any sense???
Also, I was wondering if that $22k is a fixed price or I can put in a lower offer? Does the seller have any real say in what is accepted or is this completely up to what the bank will offer?
You have 2 main players if there is not any junior liens on the property.
The lender on the loan and the owner.
The banks DOES NOT own the property with a short sale and is merely agreeing to release their interest (lien) on the property for a discounted payoff.
The owner of the property has to agree and go along with the price and terms the bank accepting the short sale wants.If both do not agree then the terms and price and conditions go back and forth until they settle or the short sale doesn't happen.
So a seller can want to sell to you at your price but the bank doesn't agree or the bank agrees to sell at your price but the owner doesn't agree to the conditions of the sale the bank wants.
So without both on board you have nothing.
In most shorts, the seller walks away with nothing, but they need to approve any offer before it goes to the bank. In some states, that underwater seller might still be on the hook for any deficiency. That's part of the negotiation that happens behind the scenes if the seller has any sense.
The bank can approve or deny the sale for any reason, or no reason at all. You can offer whatever you want to offer, but they don't have to take it, and if they've "approved" a price, that would normally only happen after a bpo, which means the bank believes the property is worth that "approved" price. Offering less might work, but doing so means weeks or months of uncertainty, probably waiting for another bpo or appraisal, and they might still come back and say no. In my market, an approved price is usually "take it or leave it" - if it sits on the market for months without a bite, they might consider a lower offer, but generally you won't get it any cheaper unless no one else wants the property.
OK, thanks. I guess what I was looking to know is if the owner makes any money out of the deal. I was also trying to figure out if the bank gave an okay for $20k if the owner would be allowed to inflate the price to make $$ out of the deal.
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#1 Foreclosures Contributor
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The bank only akays a deal After a purchase contract is executed by the seller and submitted to the bank. At that point it is up to the bank. The seller may, or may not, get relo money. Not your concern, just offer what makes sense to you. Anything less than the $25k will certainly cause delays, at the least.
Typically the listing price of a short sale property is a value that the bank has determined (through BPOs and appraisals). Banks usually approve a deal that is at least 90% of the market value of the property. If you offer less, you will cause a delay because the bank will have to approve the seller to sell the property at that price.
The list prices for most approved short sales listed are usually at a value that the bank has approved, and expect the property to sell by that amount.
The seller makes no money on the sale (unless the lender gives them money), so inflating your offer will only put more $$$ in the lender's pocket, not the seller's pockets.
That said, in some situations, a seller may have to agree to repay the lender the difference and/or pay taxes on the difference between the sale and what is owed, and in these cases, the seller's future burden is reduced if you pay more for the property.
The BPO will determine your short sale offer and approval. Make sure to "influence" it well and ethically.
Hendrix, if the bank approved it, then ask for the approval letter. You won't get it. What happened is the bank named a list price. it doesn' not mean it's an approved sale. It COULD get approved quickly but there are a LOT of varying factors.