Replies to This Discussion

Permalink Reply by Cheri Smith on July 10, 2013 at 7:12am

The same thing happened to me with my 2 most recent Wells Fargo short sales. Most recent was listed at $175,000, full price offer submitted to Wells Fargo, Wells countered at $209,000 with request for seller to sign promissory note with payments of around $700/month for 120 months. We countered at $192,500 (still at the really high end of the comps) with no seller contribution and Wells said investor (Freddie Mac) rejected our counter and told us they were closing the file. It's maddening. I think they are trying to capitalize on increasing home values. They are partially responsible for the unsustainable value increases. We are submitting fair market value offers and they are countering, wanting more than market value. This has been an issue for awhile with Fannie backed loans but Freddie seems to be just as bad in my opinion.

Permalink Reply by Jeff Payne on July 10, 2013 at 7:46am

How old is your appraisal and what types of comparables did the appraiser use?  

If your appraisal is 130,000 and your offer was for 125,000 PLUS 3% for buyer closing costs, just playing devils advocate, why would Wells take that offer?   Why would they not want the value of the home instead of an offer that is essentially 7% below market value?  

Who is the investor? If it is Fannie, they are "projecting" their values to reflect what they believe is an improving market, regardless of where the house is located.  

As far as the seller contributing, not enough info for us, but obviously the lender believes they can afford it. Sellers do not always tell the truth :(

Permalink Reply by joe beauchamp on July 10, 2013 at 9:35am

Fannie/Freddie have been throwing in high arbitrary contribution requests for at least a couple of years (I'm pretty sure the guideline is: swing a dead cat overhead 3 times and let go - multiply the feet of travel by $2000 and add $10K for cash contribution - I've seen posters for missing cats near BofA and WF headquarters...). Oddly, on my last Freddie, the negotiator sounded apologetic when she asked for it - never had that before. But, as usual, I point out the bank accounts, cash flow, commonly new expenses and liabilities on the financial worksheet (the banks rarely ask for liabilities, but I put them there). I ask rhetorically where the seller is supposed to get this money (make the negotiator commit mentally to the fact that he did not answer).  After stating that the seller cannot afford to make a contribution, the request usually disappears.

Likely, the bank did a BPO. Do a value dispute, submit the appraisal, point out to the negotiator that an appraiser has a license to protect based upon correctly evaluating the property. Push them for their BPO/appraisal info - rub it in that you are using someone whose livelihood depends upon a proper evaluation. Keep digging for the info while pouring on the value of your appraisal vs. their tarot reading. Also, Freddie/Fannie have increasingly used a "fair market value" database that seems to be much farther from reality than the old zillow numbers of years past (I haven't looked at zillow in recent years - could be still nutty numbers). You need to try to bring them into the real world. Probably submitting the value dispute will help do that - make them reconsider the offer.

Go to the investor directly - ask what they are using as opposed to your licensed appraisal - basically, point out that you know you have a number based on fact, where did their number come from? Oh, really? Was it a plastic or real crystal ball.

Investors can be tough - mostly they don't care and you need to make them care. If you've rubbed their face in it, what will you do next? Go to the TV news with their absurd answer? Bring in a state senator? They probably need to know that you won't make 2 calls to them and then give up.  They want the problem (you) to go away. How easy will you make it?