Replies to This Discussion

Permalink Reply by Bryant Tutas on August 1, 2010 at 12:19am

Carolyn. If the appraisal is correct then remember the next buyer may have the same issue if they need a mortgage. If the current contract is "subject to appraisal" and the buyer is not willing to move forward at the agreed contract price then just give them the deposit back and move forward. They don't have to withdraw from the sale. Their options are to close or walk.

Now if it were me and my seller and we had a Buyer already on contract (as you do) I'd rewrite the contract at appraised value, prepare a new prelim HUD and submit these with the complete appraisal to BofA and ask for a price reduction. This is a very common situation. Chances are BoA will agree to the new pricing and you can move towards closing.

Permalink Reply by Carolyn Rodgers on August 1, 2010 at 3:27am

Yes, the appraisal looks good. I think the issue is the from the time this process started (10 months ago) to now the most recent comps are other S/S or foreclosures that hurt our expected number.

I hear your advice to my seller about having a qualified buyer ready to close - we are 3 wks from the set closing date. My seller wants to take her chances with a new "cash" offer in the hope to lower her 1099 responsibility from the S/S. Prior to this buyer we had a cash offer walk.

Here is the heart of my question:

Am I obligated to present the new counteroffer to the BofA based on the appraisal? or does my seller have the sole right of refusal on the counteroffer based on the appraisal - can my seller leave BofA out of the decision? Since a S/S approval letter has been issued and the original contact had the contigency for the appraisal it seems that I would be obligated to notify BofA of the counteroffer... no?

Permalink Reply by Carol Muir on August 1, 2010 at 7:50am

Hi Carolyn, Bryant is correct. I just had a similar one. I had to resubmit with a new HUD-1 and they accepted. However they may counter again with different figures, HOA, contributions etc.

Also if you go to a cash offer remember the process starts all over again and I mean all over.

Permalink Reply by Carolyn Rodgers on August 1, 2010 at 7:54am

Thank you for all your help. I just want tomake sure I am not making a mistake and not obligated to present this to BofA.

Am I obligated to present the new counteroffer to the BofA based on the appraisal? or does my seller have the sole right of refusal on the counteroffer based on the appraisal - can my seller leave BofA out of the decision?

Permalink Reply by Carol Muir on August 1, 2010 at 8:52am

The Seller is almost out of it at this time if you want to close the deal. If you go to the cash buyer you have to start the process all over again, may not be worth it. The cash buyer may do an appraisal also and it could come in even worst. So what would you do then?

I would continue to work with the buyer to close and present the counter at the appraised value. BOA may counter anyway with some of the numbers. It is a process and you have a bird in hand.

Permalink Reply by Carolyn Rodgers on August 1, 2010 at 8:59am

Carol, I want to take the counter to BofA -- my seller will not let me. Can I ligitimately cancel the contract for my seller without passing the counter offer by BofA first?

The seller wants out at this point. Not the buyer. I have asked the buyer to write up a cancellation based on the low appraisal and they refuse to cancel and say that if the seller doesn't want the deal we should write up the cancellation.

I'm stuck in the middle. I can't seem to reason with my client.

Permalink Reply by Bryant Tutas on August 1, 2010 at 10:51am

Carolyn. I think you need to discuss this stuff with your broker. The contract has nothing to do with you. It's the seller and the buyer that need to decide what to do. Also if this is your sellers primary residence then the 1099 is a non issue. If you are working for the seller then write up the cancellation as they have requested.

The negotiating of the contract has nothing to do with BofA. BofA is the lien holder and you are asking them to remove the lien so the transaction will close. You do this by presenting a fully accepted and signed contract between the seller and the buyer.

Your questions lead me to believe that you need to get you broker involved in this transaction. Please counsel the seller to seek legal advice.

Permalink Reply by Carolyn Rodgers on August 2, 2010 at 5:00am

Thank you everyone for your support/advice. Yes, Bryant I will take your advice. Keep you posted if my seller changes their mind.

Permalink Reply by Bob Wienk on August 2, 2010 at 9:22am

Carolyn:

Just one comment... If this is your client's primary residence, the Mortgage Forgiveness Act relieves their obligation to pay taxes on the forgiven amount.

Carolyn Rodgers said:

Yes, the appraisal looks good. I think the issue is the from the time this process started (10 months ago) to now the most recent comps are other S/S or foreclosures that hurt our expected number.

I hear your advice to my seller about having a qualified buyer ready to close - we are 3 wks from the set closing date. My seller wants to take her chances with a new "cash" offer in the hope to lower her 1099 responsibility from the S/S. Prior to this buyer we had a cash offer walk.

Here is the heart of my question:

Am I obligated to present the new counteroffer to the BofA based on the appraisal? or does my seller have the sole right of refusal on the counteroffer based on the appraisal - can my seller leave BofA out of the decision? Since a S/S approval letter has been issued and the original contact had the contigency for the appraisal it seems that I would be obligated to notify BofA of the counteroffer... no?

Permalink Reply by Carolyn Rodgers on August 2, 2010 at 9:31am

Thanks Bob for your input. This is an investment property.