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Permalink Reply by joe beauchamp on June 30, 2013 at 4:51pm

Your terminology is confusing - you say "my agent" but also say "my buyer" and say "contribution" which only pertains to the seller. These don't fit. I'm guessing you are a buyers agent and that you have nothing to do with a contribution.

A little weird - why would you want to "continue" having the buyer pay too much for the property and pay for inspections, etc. and then decide they are paying too much - with no reason? I can only see that as a strategy if your buyer is willing to pay what the bank wants but you'd like to try to lower that. Getting the bank to the point of issuing an approval is a strategy that can help (they have more skin in the game at that point). I see this when the buyer's bank comes back with a reasonable appraisal and won't allow the buyer to proceed at the wild number given by the seller's bank. Banks believe everyone is a thief except a fellow bank, so they usually buckle to the reasonable appraisal.

I see contributions based upon seller's ability to pay and investor asking for it regardless of ability to pay (which is unethical but FNMA and FHLMC do it all the time - does grandma really need actual hospital care?). I don't see this based upon property sales price. Also, if there is an MI in there, they often have an agreement which sucks everything out of the MI so the MI may demand its own contribution such that they get something out of the deal.

It is unlikely that a value dispute will have any effect on a contribution request.  And, yes, you can continue and dispute the value later. At times, this comes as something discovered by the buyer that will cost $xx to repair before the property can get a C.O., etc. People expect a decent reason for a change, of course.

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Permalink Reply by Darlene Parker on June 30, 2013 at 5:04pm

Joe, I am the home owner. I want to be done with this process and be rid of this house. Please see all of the above comments I've made. My husband is deployed, the house is a short sale, we have an agent that may or may not know as much about short sales as we were led to believe. We also have people who have put an offer on the home, and Freddie has said we may not continue unless we pay Freddie Mac $25,000. Their value of the home is about $20,000 too high, we are disputing it, but I want to move forward while doing so. My understanding from my agent is that we have to agree to something in order for the buyer to do their inspection, etc. My confusion and my agents apparent lack of knowledge are what led me to this website. I'm the homeowner, and this process has all but ruined me. I want it over. I just want to know how to move forward in the process of this short sale while also disputing Freddie's value of the home. Please use layman's terms.

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Permalink Reply by joe beauchamp on June 30, 2013 at 5:40pm

Military has special rights - I have not followed them, so cannot say specifically, but be sure you have looked into what the bank can and cannot do to you.

Did you talk to Freddie? Or did you get that from your agent who got that from the bank "specialist"? A huge portion of bank employees gladly overreach and will say anything - partially because of ignorance, partially because they get praise for getting rid of your sale as fast as possible and only get in trouble for promising too much, never too little.

Not including retirement, do you have a bunch of money so that you can hand over $25K? Most of my sellers are on the verge of crazy and pretty much broke. I drag the negotiator through the bank statements and the expenses and debt and make him tell me where this extra money is. My contributions usually go to $0. Think of dealing with the bank as dealing with the lowest life used car salesman - or worse, politician. Their word is not to be counted on, they disappear, they say anything. And, as recently written about BofA from a court case, they are given incentives to destroy short sales and punished for letting them go through.

Freddie DOES tell the bank to ask for a contribution regardless of how clearly broke the seller is. Is that what you have or is a contribution reasonable? In the past, I have recommended $1K so that I could make sure that they would release the debt. I don't think that is necessary w/Freddie anymore - they will release upon a completion of the sale.

Dealing with these banks for short sales is difficult. Their boss, the investor, doesn't treat them as employees and lets them get away with murder. You could have a lousy agent or you could have an excellent one who has run into the "we don't care" buzzsaw of poorly managed bank people.

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