What percentage of value is the tradtional cut off for counters

I believe its pretty commonly known (or assumed) that many lenders will accept no less than 86% of "value" (net) on their negotiated ss.  At least I have heard that from several negotiators and other ss agents.  My question is: Does anyone know where the line in the sand is for a traditional short sale negotiator to say, "that is outside of investor guidelines and I cant even counter the offer."  I have had several lately (due to inflated BPOs - I know its hard to believe, but there are agents who do it on purpose) where the Wells negotiator simply said, "that is so far I out, I cant counter."  Ideas? 

Again not all cases, just rule of thumb kind of thing.  The Wells folks are great at allowing me to dispute because they are all starting to see that racket that BPOs have become amongst REO agents.  I have shown them a few cases of inflated BPOs and they were blown away, and then they said, "well, that makes sense why they do it."

Views: 964

▶ Reply to This

Replies to This Discussion

Permalink Reply by Wendy Rulnick on July 9, 2011 at 12:51pm
Rob - I honestly just try to get the highest and best possible from the buyer, instead of back-calculating what the investor wants.  I normally work with the listing side of short sales.  But even with the buyer side, it's really what the buyer is willing to pay.  VA Compromise is 88.13% of appraisal, but even then, if the net is too low, the negotiator will say,  "I need to net at least", normally, or hint at it.
Permalink Reply by Robert A. Carrino on July 9, 2011 at 3:14pm
Wise counsel.  Thanks
Permalink Reply by Jeff Payne on July 10, 2011 at 3:49am
I agree with Wendy, I always try to err on the side of getting as much as possible and as close to FMV as possible. VA, FHA, etc have real guidelines of 88% of appraisal for their NET
Permalink Reply by Rain Silverhawk on July 10, 2011 at 4:55am

Hi, I was a bit suprised by your 86% figure as the rule of thumb that we follow here is the bank usually accepts right around 60% of the loan value.  Usually when I have to figure out a listing price I will go above that figure, but I have yet to have a bank counter higher than list price. perhaps though this is due to our particular market conditions.  We had a boom here in 2005 that only lasted 3 months but inflated the prices.  Most of our short sales are coming from people that bought homes during that time.  The market is now priced equal to what prices were in 2003.  So technically 60% of loan price is within 10% of current market price.I had one recently though that was a low ball offer and the bank countered with an offer that 46% less than the fair market value, I was shocked.  While good to use the rule of thumbs to provide the best price for the selling banks and good values for the buyers, it is really up to the negotiators and investors what the final outcome will be.

 

Permalink Reply by Jeff Payne on July 10, 2011 at 5:05am
Rain, I get what you are saying but what would happen if you were in a market that 60% of the loan price was still 20 to 30% above market value.  Loan price or loan amount really means very little, current market value is the more important number. 
Permalink Reply by Robert A. Carrino on July 10, 2011 at 5:27am

Jeff,

That is what I was trying to communicate (albeit not well) that I believe the negotiators can justify the 86% of current documented value with little, or no regard for what is owed.  If they have the proper documentation that meets their delegated guidelines then they love to have the file worked successfully.  They are even comped on files they close is my understanding.  Give them what they need and make it harder for them to justify not approving than approving seems to be the only way to go.  There is financial incentive and CYA in play then.

 

This group is awesome!

Permalink Reply by Jeff Payne on July 10, 2011 at 5:53am
I see :)  86% of the appraised value for the net should be a no brainer all day long for the lenders.  Lately I believe BofA counteroffers EVERYTHING just to do it, even if the offer is over market value. 

Rob Carrino said:

Jeff,

That is what I was trying to communicate (albeit not well) that I believe the negotiators can justify the 86% of current documented value with little, or no regard for what is owed.  If they have the proper documentation that meets their delegated guidelines then they love to have the file worked successfully.  They are even comped on files they close is my understanding.  Give them what they need and make it harder for them to justify not approving than approving seems to be the only way to go.  There is financial incentive and CYA in play then.

 

This group is awesome!

Permalink Reply by Robert A. Carrino on July 10, 2011 at 6:06am

k, this is my last post on this subject : )) errr.... potentially.

How can it be a legitimate arms length transaction to employ an entity/person, who only stands to benefit

by providing inflated and tainted values to an item (REO agents doing BPOs) to do any kind of service.

I mean, really.  How can this practice even border on realistic?  Just say it out loud, if sounds ludicrous, it probablly is. 

Everyone loses in this scenario except the BPO agent who fills their respective pipeline with endless REO listings - Insane.  There is NO motivation whatsover to provide legit/accurate values and this is beyond a conflict. It is outright fraud.

Thanks for the support on this issue all of you.  I kept thinking, "this cant just be me and a conspiracy theory."  The old addage holds true, follow the money.  

 

So, the conclusion, enough whining on my part and time for me to take action. 

Permalink Reply by Beverly Cibulsky on July 10, 2011 at 7:37am

I am confused here? Short sale or traditional sale, (I always see a short sales as a "traditional Sale" ) after all it is the current "tradition"  accept for one contingency, "lender agreeing to a short payoff".

Since the 80's (oh God!) I was trained you do a CMA, Market Evaluation, etc, To determine a "Fair Market Value" to list a property! I never took an "overpriceded listing". However some may have been trained to get the listing no matter what, to have your sign on the property. (this could be an entire debate on it's own)! I would list a short sale at FMV and would not pay any attention to the seller's loan balance or the amount of loss to the lender! (Lender's are getting a little savvy and asking for a listing history! So hopefully this is starting to "bite" some agents!

For a short sale.... market value, is market value! Of course we all know agents think listing at a rediculously low price is somehow effective (another debate!) my opinion, all this does is waste a selling agents time, and gives a buyer a false idea that they can "steal" a property. (and will not work as ultimately the lender researches the value as well "BPO")

 

BPO's!!!! First and Foremost!!!! Meet the BPO agent at the property (yes, this is not effective with a Drive-By). Get thier

Business Card, bring Comps!!!. Should you have a valuation issue, this is important info! I guess no one has had an

"assistant" show up to take photos etc!, or the Agent is from another market area! OR the Assistant and or agent, is noted to work foreclosures! Some agent's use BPO's as thier bussiness (BPO mills!)

Lastly- These are the percentages I use, and they are from like 2007, so maybe we can do a post if they have changed!

Conventional - Can range from 80%-100% (net of )of BPO (non GSE investor)

Fannie/Freddie - 92% (net of BPO)

FHA (which is kinda a cake deal!) and can vary 82% of BPO or better yet "appraised Value"

VA - 88% BPO or "appraised Value"

 

"hey can we get "spell check" on here or am I missing it somewhere!

Happy Short Sales All!!! I love this site!

Permalink Reply by Jeff Payne on July 10, 2011 at 9:44am
Beverly, I think he was asking if there is a "number" or threshold that the negotiators will approve the short sale.   I always try my best to present fair market value offers based on current market conditions and yes I do meet the BPO agent at the house and give them all of the info.  If I believe that the BPO agent does not know the market or the area or if they are known deal killers, I refuse access.
Permalink Reply by Beverly Cibulsky on July 10, 2011 at 12:07pm

Jeff..

Thanks for your constant input... You really tell it like it is!! Of course, no one has to agree, but you do open all issues up to conversation! Thanks for that! Yes, I believe that was the questions! I gave my take on the "number" "Threseold" a negotiatior should be expected to take! It seamed like it was relevant to the mortgage balance and not the Fair Market Value, BPO etc, etc. (we as agent like to abbreviate way too much! )

YOU JUST GAVE ME A GREAT INSITE! I would never consider refusing access for a BPO! "gutsy" OK but I can see the lender, BPO agent, servicer, etc putting the fault on the listing agent for no BPO... please do share more!!!!!

Permalink Reply by Jeff Payne on July 10, 2011 at 12:37pm
I have only done it a few times, they ordered a new BPO right away when I told them that the agent also listed REO properties for the same lender.  I guess you could easily not return their phone calls and the BPO would get reassigned to another agent. 

RSS

Members

© 2024   Created by Short Sale Superstars LLC.   Powered by

Badges  |  Report an Issue  |  Terms of Service

********************************** like buttons ************************