Hi All,
I'm completely new to short sales. About 1.5 months ago, I submitted an offer on a shortsale (saw the home on Saturday, selling agent said he was submitting bids to BofA on Monday and any offers after that would be "backup" offers). Of the 5 people that saw the home that weekend, 2 submitted offers, mine was submitted on Monday, I believe the other offer was submitted later. I have stellar credit, 30% down payment (not including other savings), so they tried to get me to up my offer by $5k, I said no. By the end of that week, my agent informed me that my offer was the one that was being submitted to BofA, with all other offers being backup offers. That was 3 weeks, no news since then until today. My agent calls and says BofA is doing an appraisal on the home and hopefully they'll have an answer (and/or counteroffer) within the week. In the meantime, I had a friend call to ask about the property and the selling agent told her that the home was still for sale, that its a short-sale and that they're accepting offers (nothing more). Is there something I need to be aware of, has my offer essentially been revoked without my knowledge? (I offered the asking price, though the home is arguably worth a little more).
Any thoughts/ideas would be most appreciated (Los Angeles area).
Thanks,
Richard
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Hi All, thank you for all the helpful advice. Finally, after almost 7 months, I heard back from the selling agent. After months of my realtor telling me my offer would be the only offer on the table, etc. I'm now told that BofA thinks the house is worth more and wants a higher offer and they are opening up the bidding. I realize they are totally in their right to do this, but then is my agent a meathead for having reassured me otherwise beforehand? Plus, I really do feel like my agent is trying to "sell" me. When we put the offer in, he agreed it was a "good/strong" offer (I know I have stellar credit, 30% downpayment), all of a sudden he tells me the selling agent claims there are 7 offers on the property and mine is the second to last. Meanwhile I sense my agent wants to convince me its time to panic and "fight" for the property, which in his mind means up'ing the offer by $50k. As he put it, there is no risk because if the home doesn't appraise I can renegotiate a lower price or walk away. Of course, he doesn't bother to tell me how much money comes out of my pocket by the time all of this is said and done. When he realizes I'm not panicking and rushing to find out how much $50k adds to my monthly payment, he says that if I want a "bargain" I should look for foreclosures, etc.
I find this quite condescending, I'm as worried as the next guy about housing prices. One day someone is saying we've hit the bottom, the next someone is saying the bottom is coming. Bottom line, I feel my agent isn't "advising" me. All I'm hearing are reasons why I should up my offer, yet I'm never told about the other side, if I don't up my offer, etc. I.e., there is no sense of strategy, anyone can throw more money at a bid, thats the easy part. I’d love to hear about your experiences and whether going with a “strong” offer is really the way to go, or staying with an offer that I think is reasonable and “good” even though its so hard to say given that it is property and therefore subjective. All the indications point to a weaker market (at least in that area) now than 7 months ago, yet all of a sudden the price has “ballooned”. I’m so confused, can someone please help me straighten out my thoughts? Thank you all again! Enjoy the festive weekend!!
Richard,
I'm not an agent, but went through the SS process as a buyer in FL. CA will be different, so FWIW....
If you are concerned about your agent, you should find another one. What I don't know is if you can use another agent on a house this agent found for you (I'm sure someone will chime in).
You need to ask yourself how much do you want the house. Do you love it? Or are you only looking for a bargain and nothing more.
If you love up, up your offer to what you are willing to pay. (Note Tara's story above where someone paid market price because they really wanted the house)
If you are looking for a bargain, stick to your guns. Also be prepared that you may not be the eventual buyer.
As others have said, something is not adding up right. Once the offer is accepted by the seller, it goes for approval. In my experience, we went back and forth on the negotiations. I was not the only offer on the house but the other offers were not accepted and did not factor into the negotiations. It did not go back 'out to bid' during negotiations.
One thing I was willing to pay for out of my own pocket was $450 for a professional appraisal during negotiations. $450 was a small amount compared to the price of the home. This house was tough to appraise and in Florida, prices are very fluid. That appraisal helped cement my ceiling price. I was looking at it from an investment perspective, not because I loved the house. I was very willing to walk. are you? Or do you really want the house?
Good luck
Thank you Peter for your thorough information. I did up the offer and was told that our offer is now a backup offer because it wasn't the "highest/best". This sounds like exactly the same process I went through starting 7 months ago and at that time, my offer was picked. I guess the waiting game paid off and they possibly found someone who "loved it" more than I, I'm not going to get into a bidding war just because I like the home, there will be others. If I decide to sit in backup offer status, your advice sounds really good, I should probably hire an appraiser. I'm tempted to rescind my offer more out of contempt but I do wonder if there is a remote likelihood that my offer will be accepted at some point. I do feel a bit chaffed because I just feel like my agent (and I) were played by the selling agent, certainly he wasn't forthcoming with what was going on and it really upsets me because I lived up to my end of my commitments the entire time (even delivering documents within 24hours whenever he requested, etc.). But, I guess I have a right to walk away as well so maybe thats just the nature of the beast, I don't know what is considered smart tactics and what is unethical behavior.
Hope everyone had a relaxing/enjoyable Easter!
Richard - this doesn't sound right at all. Did the house go to foreclosure/trustee sale and is now bank owned? I'm missing why BofA wouldn't have countered to you. Did it go back on the market as active? I would disregard all the talk about these other offers- who knows the listing agent could just be saying this trying to increase interest.
Look over comps from last 6 months with your agent- expect to pay market value to perhaps 12% less and that's what they will take. I see no real steals- other than the market plummeted from what seller paid. I have one right now where lender took offer $6,000 higher than market value and it wouldn't appraise as high. We are working on getting it approved for the appraised price. No steal there for the buyer- she just loves the house and wants it.
Yes, you can renegotiate a price- or rather you have to bump up your price to what lender wants . Going through this now- and you don't immediately get a new approval letter with the new price.
Are you still under contract on this house or has it expired? Did you have a short sale addendum? Do you have a contract with the agent for buyer representation? It may be time for another agent if you aren't getting the explanations you need.
It doesn't make sense unless after 7 months the property went back to the bank and is now a REO (bank-owned) in which case your contract I would imagine is void since homeowner can no longer sell it and contract was with the seller. Then I would expect BofA to solicit for multiple offers in a short time span.
(disclaimer- I am not in CA...so this could be different there)
Wow, thanks for the awesome information Tara. In October, the sellers and I signed a RSA (Residential Purchase Agreement), I haven't heard anything since, and the house remained "active" the entire time, something else that I thought was strange. Today the selling agent sent a notice "counter offer #1", indicating that "seller has recevied multiple offers and short sale lender requests only highest and best offer be submitted".
I have 24 hours to respond. My agent said that the bank "risks" foreclosure if they delay close of escrow, etc. but he didn't mention whether they were now in foreclosure. I assume not because the "counter offer" came from the sellers not the lender. Strange that its a "counter offer" yet it says there are multiple offers and the way it was explained to me was that all offers are now back on the table.
Something does not sound right here. From what I have experienced BofA only reviews one offer at a time (1 contract- signed)...I believe they recently started allowing a back-up to be submitted.
Are you getting anything from BofA themself or just what the agent is writing in an email?
When there are multiple offers all are to be advised to bring highest and best- not a counteroffer. Certainly not 7 months later.
I wouldn't feel pressured to bump up your price any on this...stick with what you are comfortable with. Something isn't being shared with you.
Thanks so much Tara!!
Jeff, I think I have to press my agent for better answers; I asked him to explain how the various post-appraisal scenarios can play out (i.e., if appraisal is higher/lower than list) and all he said was they would "counter-offer" but didn't give more specifics. I didn't mention I had a friend call because I didn't think the selling agent would appreciate it very much if he caught word.
My concern is more around the appraisal, the home is in pristine condition (its old but it was remodeled 20yrs ago using top quality stuff and it still looks fantastic - i.e., it is above average in condition). In the back of my mind I was thinking that if they had gone the BPO route, they would've been more likely to under-value the home given that the average home is not so well maintained. However, if they're doing a full appraisal I'm wondering if they're going to counter with a much higher amount (the home was dropped from $680k to $630k, and then a huge drop to $550k which is where I put my offer in). Even at the price the home didn't seem to generate an overwhelming number of offers thus I'm worried that maybe the appraisal will value the home based on its appearance even though the "market" hasn't reacted much to its current price. Sorry everyone, I've never been through such a transaction so I'm just trying to get as much feedback as possible (and yes I will press my agent to give me more info as well).
Harry, thanks for the note. I agree, I don't question the legality of what the agent is doing, I do agree it is within their right. I'm more wondering from a practical standpoint what it means to me as a "first in line" bidder - sounds like it doesn't mean much (yes I did sign an SSA; I signed a purchase agreement (?) contract with the seller but so far I haven't seen anything from the bank's side.
Quite a strange market we're in, its scary thinking of spending so much money especially with the economy still wobbly. I'm still not 100% convinced that we've seen the bottom of this real estate market but for sure its a better time to get in than it was 2+ years ago! Thanks again all! Happy Friday!
Was your offer accepted by the seller? Where in the world is your agent, they should be able to easily answer your questions.
I am out of state - but it sounds like it is going smoothly for you. Where I am at this summer we were required to pend our short sale listings in the MLS - meaning they were no longer marketed as active. Prior to that we would still show them as long as we marked them as under contract in the MLS- and back up offers only.
The key is whether you have a contract or an offer. If the seller signed you have a contract and the bank's approval is a contingency.
It sounds like it is moving quickly. Bank of America only looks at 1 contract. They now have started allowing a back-up to be loaded but only when buyer is ready to walk- which you are not.
Sellers get nervous about short sales, especially when buyers get nervous. Agent could just be looking for a back-up or knows listing was priced too low.
Hang in there! I would not worry about it still being shown. The agent should have disclosed it was under contract, but it sounds like your friend didn't ask. I would only be concerned if you do not have a signed contract by the seller.