While I've done several purchase, fix and flip, I haven't bought a short sale. I am currently negotiating one. I made an offer seven weeks ago. Cash, no contingencies, close immed.
There was an offer $10k higher than me than needed financing. The bank/seller wanted them but they dropped out. Now the bank has finally responded with a "net offer acceptable to satisfy FHA" which is $3k higher than our initial offer- which wasn't a net offer. Is that their true bottom line?
The listing agent isn't a short sale agent/specialist. Very nice person who says she cannot resubmit an offer that doesn't meet the net offer counter (which was an email from the bank). She wants a HUD with a net of the banks amount they stated in email.
My title company created a HUD with the net they want on line 504. However now the agent is saying it needs to be about $7500 higher to cover commission etc.
My questions are:
Am I able and will the seller/bank consider an offer lower than the net they've stated??? (There is one other cash offer but it's $1k less than mine. ) worth trying? CAN the agent submit (she doesn't think she can)
The appraisal is $13k higher than they are saying as net they need.
Thank you for any experienced input!! Julia
@Julia Deck-Russell run your final number through BP calculations. If the number make sense then offer that number. Don't just put a number because bank said so. All they can say NO and you keep moving. Don't try to stretch the number because of outside influence or emotion. Take the emotions out of the equation and you will NOT get burn
@Julia Deck-Russell In addition to the good advice given by @Tan Mehedi , be prepared for a very long, drawn out process and for subordinate lien holders to pop their heads up at the last minute looking for more cash.
The last one I did for a client was within 5 weeks of closing. The 2nd lien holder wanted another $5,500 in cash - not financed, or the first lien holder would grab it.
You can get some good deals through short sales, but it can be a popsicle headache along the way.
I work on numbers only. Not emotionally attached to any property was just wondering about if bank reply is their bottom number. The agent doesn't want to resubmit for me.
Since I posted , I've learned that for now, that may be their bottom number. But the appraisal is only a few weeks old. After it sits on market for 90 days from appraisal date- if they don't get what they want, they will reconsider offers. FHA can accept 82% of appraisal.
And thank you both for your input and replies. Very much appreciated.
FHA is mortgage insurer and the guidelines in regards to minimum NET revolve around 3 tiers of the Pre Foreclosure Sales Program. It goes 88% NET of appraised value tier 1, tier 2 is 86%, and tier 3 is 84% NET. A variance would have to be submitted to get a lower NET approved if the timeline to drop into the lower tier hasn't been met.
Brett - THANKS for responding and I want to know more please -
what is the timeline to drop into the lower tiers?
And I'm not familiar with a variance (how do I submit?) What should I cite?
I was told 82% NET after 90 days on market from time of appraisal. Is that incorrect then?
please advise. Details very much appreciated.
also, I've been reading https://portal.hud.gov/hudportal/documents/huddoc?...
It states 87%. I'm confused why everyone keeps sharing different percentages Of appraisal that FHA will accept on the short sale?
I don't know what their timeline is for tiers nor if NET to them includes commission to agents? Or they will pay agent out of net proceeds?
And what's a good reason for a variance ?