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What's a good Rule-of-Thumb for a good risk offer to satistfy a lender when the 1st & 2nd combined value are w/in the market value range?

Posted by Richard on August 9, 2011 at 4:08pm in Short Sale Discussions

 

Assuming there are no other players involved (MI, investors, etc.), the real questions are:

  • Are lenders and negotiators considering 85-92% of real market values a good risk offer to satistfy the 1st & 2nd combined w/in the true market value range?
  • Will they occasionally go lower?
  • Does it vary with the price of the home? 
  • Or, does no such rule-of-thumb exist?

Thanks in advance everyone!

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Replies

  • Richard August 10, 2011 at 5:46am

    Thanks guys, I checked my numbers 5 different ways from Sunday and I just have to believe that I'm well within the ball park.  I know that they have guidelines, but hopefully those guidelines strongly consider the market value.  If the BPO does a good job and listens to reason from the listing agent, hopefully I'm right there on the price.  And (assuming) that their is no hidden agenda and the negotiator is looking at the real value numbers rather than a drop dead number that the lender have to have to satisfy it's books, I'm hoping I'm right there.  For instance:

     

    • I checked the average of 4 most recent comps within less than 1 block from the residence and my offer number came up 2% over those values.
    • Then I eliminated the 1 distressed property within the same 4 comp properties averaged prior, I came in at 94% of that value.
    • Then I took an intensively-detailed study that I did of 45 graded out comparable properties that are located within 1 1/2 miles of this residence and also sold within the last 8 months and I come up right up on the same $/per s.f. number.  However, due to the upgrades needed on this property, it graded below the top 15% of the 45, which graded it down about 10% in value.

    I received a call from the listing agent yesterday after he talked with the negotiator and he plans to be on site for the BPO.  Hopefully, this will help.  But as many have said in this forum before..........sometimes logic is thrown out the window.

  • Jeff Payne August 10, 2011 at 2:17am

    Smitty is correct once again :)  I would say that it depends also on the person that you are working with.  Some negotiators are so stuck on written guidelines that they have blinders on and can not always see the forest for the trees and can not think outside the boxes of their guidelines.

    VA and FHA have specific guidelines, I believe they need to NET 88% of the appraised value. 

     

  • Smitty August 10, 2011 at 1:30am

    I would say over all those are acceptable numbers.  I've seen them go lower only if the home is in need of major repairs, but you really need to be looking at what the market value "as is" value of the home is and go from there.

     

    I've also seen lenders NOT BUDGE from a certain number no matter what we show for market value.  It really depends on the servicer and investor involved. 

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