Back in December My wife and I put in an offer on a Short Sale. Yesterday my Realtor advised us that the sellers bank had completed the appraisal (Original loan is a VA loan) and our offer was too high. They advised us to re-submit for $40K less than our original offer. Is this common? Not that I'm complaining about paying less, but I most things I have read, the banks may counter at a higher price. My Realtor said that in his years of short sales this was the first time a bank has asked for a lower offer. Something about Federal Guidelines or something. I honestly can't remember I stopped listening after I heard $40K less :) The realtor did say after they received our new offer that it would go to quality check and we should have our offer accepted in about two weeks. I hope that is true.
I've never seen a bank say this but maybe it's possible that the bank sees you are paying above FMV and that the property won't appraise at closing? What's the price point?
The home was listed in August of 2016 at $129,900 In November the price was dropped to $119,900. We put in an offer of $110,000 in Late December. We reviewed all the comps in the area with our Realtor so $110,000 seemed like a fair price taking into account the repairs that need to be made. I'm not sure how a VA loan actually works but the realtor was told by the federal guidelines they have to follow, our offer had to be $70,000 for it to be accepted. Not that I'm complaining this leaves more money in our budget to tackle other things. The home last sold in 2008, before the housing crash for $172,000. We have re-submitted our offer as asked, and were told we should have our final approval very soon. the only other change was in our original offer sellers bank was to bring 4% to closing. They only agreed to 3% but we can live with that. :)
It may sound strange and is very uncommon, but it does happen. I have had at least 3 deals in the past decade where the short sale lender asked for a lower offer. In a nutshell, it sounds like the short sale lender completed their bank appraisal which came in at $70K. Because this is a VA loan they have to follow federal guidelines for the short sale which says they need to sell the property for the appraised value that they have on file. More often than not this means they ask for more than what was offered but in this case they have to ask for less. Even though they are required to ask for the appraised value they also would rather have you adjust your offer now instead of approving the deal at the price you offered only to find out during your appraisal that the property appraises for less and they have to go back through the whole value adjustment and approval process again. It is better to adjust the price now and get the deal approved and closed in the next 30-45 days rather than drag it out for another 3+ months.
The 3% in concessions is also standard for the short sale lender to agree to pay. I have never seen a short sale lender pay more.
If you are being told that your updated offer is just waiting for approval then you are in the home stretch. Just sit tight and you should have your approval shortly. Congratulations! :)