Replies to This Discussion

Permalink Reply by Steele V. Propp on February 14, 2010 at 10:45am

Not really such a thing. What is owed and what the value of the house is are two different things.

What most lenders will do is have a valuation done on the property. Usually a BPO (broker price opinion), sometimes a full appraisal. From there they may develop percentage formulas or have acceptable ranges that are part of their short sale policy.

Remember that they will be the one taking the hit. Not the owner. What they have to calculate is what it would cost them to do a full foreclosure and selling at market value sometime months in the future. Then compare it to what a current offer will net them.

While there are always particulars specific to an individual sale, most will be open to 10-15% off of market value.

The fly in the ointment so to speak is whether they have an accurate idea of market value. In other words is the BPO they are getting accurate.

As you are looking at a short sale as a buyer, you really won't know that number. And in most cases you have to have an accepted offer with the seller before the lender will even look at it. So you may be looking at a second round of negotiating with the lender if the number is not high enough.

What will be important is for you to be able to show that your offer is a good one and will save the lender money in the long run.

I can tell you from experience that if you offer 60-70% of value you will probably be rejected. You want to offer what you are comfortable with but something that either is in the normal range of acceptance or at least close enough for them to start the negotiating process.

Make sense?

Permalink Reply by Terry L. Osburn on February 14, 2010 at 11:11am

We are very upfront with buyer agents and their buyers.....Do not ask for the world....you won't get it and we will counter you up front......We clean up the offer as much as possible up front. Our experience has shown us the lenders will tend to pay what is usual and customary for a seller in their particular market to a degree.....
No matter how much you explain this property is not bank owned yet and we have comps to justify the list price there are agents and buyers who think the bank will dance circles around them because they are all cash and /or putting hefty some of money down.
Maybe with REO's but NOT short sales.... The key is to think realistically and to understand at issue is reducing the sellers debt and reducing the lenders loss..........Our fiduciary to the seller and fair play to the lender.
As Steele stated below the sellers lenders will do their own appraisals or BPO's and depending on if the price offered is within their scope of acceptable ranges will determine how a short sale proceeds.
If your buyer is serious than bring a serious offer with the comps to justify any purchase price offered.

Permalink Reply by Joseph D. C. on February 14, 2010 at 3:18pm

Thank you very much for the quick response. As you can imagine my wife and I, are trying to understand better where we can inject ourselves into the short sales process to push things along. Any Suggestions?

Permalink Reply by Steele V. Propp on February 14, 2010 at 5:42pm

You are potential buyers I take it? If so where are you at right now? Have you made an offer? Are you using an agent?

The more info we have the better we can help.

Joseph D. C. said:

Thank you very much for the quick response. As you can imagine my wife and I, are trying to understand better where we can inject ourselves into the short sales process to push things along. Any Suggestions?

Permalink Reply by Joseph D. C. on February 15, 2010 at 2:31am

We're the buyers and do have an agent - made an offer it was accepted by the seller. We had an inspection done about three weeks ago, and the house came back in good shape. The Sellers agent has said that our offer and paperwork has been submitted in the Equator system. Who gets access to Equator System during the span of the transaction? Is it just the seller and their agent, or do my wife and I get access as well. Just an off the wall quesiton. By the way, this website is fantastic and has been comforting and informational. it amazes me the lack of automation on the back end to service this market place. (I know equator is supposed to address this, but we'll see)

- Is it common for the Bank to pick up closing costs, or is tht a rare occurence.

Permalink Reply by Bryant Tutas on February 15, 2010 at 3:13am

Hi Joseph, The seller and their agent are the ones that will have access to equator. It sounds like this is a Bank of America deal. If that's true the process may take a few months BUT they do approve short sales. It is quite possible to have the lender agree to pay some closing costs. Usually they will max out at 3% of the purchase price. of course these would need to be addressed in the purchase agreement.

All of this depends on the purchase price being agreeable to the lender/investor/mortgage insurance company. The amount owed has no bearing on anything. It's all about current market value.

I'm glad you found the site and find it helpful. Let your agent know about us so they can join.

I hope this helps.

Joseph D. C. said:

We're the buyers and do have an agent - made an offer it was accepted by the seller. We had an inspection done about three weeks ago, and the house came back in good shape. The Sellers agent has said that our offer and paperwork has been submitted in the Equator system. Who gets access to Equator System during the span of the transaction? Is it just the seller and their agent, or do my wife and I get access as well. Just an off the wall quesiton. By the way, this website is fantastic and has been comforting and informational. it amazes me the lack of automation on the back end to service this market place. (I know equator is supposed to address this, but we'll see)

- Is it common for the Bank to pick up closing costs, or is tht a rare occurence.