Buyer question: Short sale offer amount?

Hi, I'm new to this forum and to the short sale scene so pardon me if my questions are dumb.

We found a house we really like here in Florida (Gulf Coast) and are trying to get the best deal for it, We have a set budget of $175k-180k.

Bank (Chase/Morgan) already approved twice a $190k offer but both times the deal fell through on the buyer's side.

I read on some places online that banks will accept offers ~80-85% off BPO so based on that, I submitted an offer for $175k

Here are some numbers/ Info I gathered (hope I got them right)

Asking price: $199k

BPO: ~$210k

My offer: $175k

 Amount owed: 1st Lien ~$240k, 2nd lien: ~$30k (same bank for both liens)

2nd lien holder only gets $5000 out of the sale

Type of loan: unknown yet (guessing conventional? Seller bought the lot, I'm guessing that's what the 2nd lien if for and had the house built)

The real estate agent is sending our offer out to the bank (seller just signed) along with some "low ball" offers (not signed by seller) hoping to get a bank approval.

So how does these numbers look to you? Any chances on having this offer approved by Chase/Morgan?

Thanks!

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Permalink Reply by Gab on May 9, 2012 at 4:19am

From what the real estate agent told me, 1st deal fell through because of buyer's financing (couldnt sell his house) and second buyer didn't want to wait longer. Both times the bank accepted the buyer's offer.

Permalink Reply by Jeff Payne on May 9, 2012 at 5:46am

Hold on one minute, the agent is sending in your contract PLUS low ball offers?  Why in the world would they send in an offer?  There is a big difference between a contract and an offer. 

Who is the investor?

Has this agent ever done a short sale before?  Are you working with the listing agent or do you have an agent?

 

Permalink Reply by Gab on May 9, 2012 at 6:01am

I'm dealing with the listing agent (who is the seller's mother). She told me she have some experience with short sales, but you never know....

She is sending low ball offers with mine according to her, to push them to accept my offer since lower ones are coming in (again, they accepted twice $190k and refused once $169k now I remember).

She seems to really want mine to go through (to get full comission I guess) so that's a good point though :)

JP Morgan Chase is the loan servicer

 

Thanks!

Permalink Reply by Jeff Payne on May 9, 2012 at 6:52am

I agree Brian!  Gab I hate to be the one to break this to you, you hired the wrong agent for sure.  Some experience means she was on the buyers side of a short sale.  Sending in unsigned offers is just plain dumb, it will not help the cause, it will hurt the cause because it just adds to more paperwork and more frustration on the banks end.  If I were the negotiator at teh bank I would throw this file in the trash if the listing agent was sending me offers instead of contracts.

Like Brian said, tell her to send in your full accepted offer and stop the nonsense with low ball offers.  The bank is going to base the short sale off of their values, not how many low ball offers unsigned that come in.

what part of the Gulf Coast? I am in Panama City

 

Permalink Reply by Gab on May 9, 2012 at 8:02am

I see, I appreciate your honest input.

I already asked her about sending multiple offers (again only mine was signed by seller) and if it was normal procedure but she told me yes for this case since my offer is lower than previously approved offers.

She list short sales as one of her specialities on the realtor website so I hope she know what she is doing (just checked )

Going to call her again about that.

 

Would it have changed anything if I had hired my own agent? Isn't the listing agent the person who submit the contract and deal with the bank?

 

 

I'm not far from you, I'm in Pensacola :)

 

 

Permalink Reply by Janis Schade on May 10, 2012 at 5:21am

If the homeowner is related to the Listing Agent, BIG, BIG mistake.  The Listing Agent will not be able to sign the Armslength Agreement.  This Agreement keeps family members from profitting. So, basically, the Listing Agent, who is the seller's mother, won't be able to get a commission. 

Permalink Reply by Satar Naghshineh on May 10, 2012 at 5:55am

As I was driving to my appointment yesterday, I remembered this post and I was like, "wait a minute". Not only is the listing agent the seller's mother, but she has a vested interest in protecting her daughter and not the buyer!

As a mother, she won't be able to get a commission if she discloses the relationship. However, she still can do the short sale. The bigger issue is that the buyer is in a very bad position on this transaction.

Permalink Reply by Satar Naghshineh on May 9, 2012 at 1:55pm

If the BPO came back at 210k, then 175k seems about as low as you can go in a declining market.

Asking price: $199k - Irrelevant

Amount owed: 1st Lien ~$240k, 2nd lien: ~$30k (same bank for both liens)  - Irrelevant

2nd lien holder only gets $5000 out of the sale - Same bank, then irrelevant

Type of loan: unknown yet - Irrelevant

"The real estate agent is sending our offer out to the bank (seller just signed) along with some "low ball" offers (not signed by seller) hoping to get a bank approval."

Although I understand the logic as to why she is doing this, it won't help. She's basically telling the bank that the offer she has from you, is better than the other offer she got and the bank should go with your offer. Instead, I suggest for her to download a Fannie Mae BPO and fill it out and submit it in. Maybe even find out how to contest the value or see when the valuations expire so she can have another BPO ordered. Hell, providing her marketing timeline on the MLS is better than sending in unsigned purchase offers that will confuse the negotiator.

This is another case of a real estate agent that is treating a short sale like a real estate transaction rather than a debt settlement. Gotta love them.

Permalink Reply by Joseph Alfe on May 9, 2012 at 8:32pm

everything is irrelevant because most likely the BPO is expired and they will get a new one.  No guarantee that the bpo will not stay the same, go down, or go up.

Permalink Reply by Satar Naghshineh on May 10, 2012 at 5:59am

Good point. I was under the assumption the BPO was the result of the buyer's purchase offer but re-reading the question, it looks like that the BPO could be an old one.

Permalink Reply by Gab on May 10, 2012 at 3:00am

I see. Well I called her yesterday and she reassured me that she knows what she was doing and that she has been in the business since 1994 and done hundreds of short sales so...will see how it goes, my offer has been submitted to the bank.

 (Also what I gathered is that it was on a FHA loan and HAFA short sale program...dont know if its better for the buyer than a conventional short sale of what)

Thanks guys for your input!

 

 

Permalink Reply by Satar Naghshineh on May 10, 2012 at 5:57am

Makes no difference to you other than some lenders who are processing HAFA short sales are taking longer to do so than a normal short sale.

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