I am the seller and had our house on market for 2 years with one offer of 260k in 2009. Shortsale offer submitted 8/16/10
Out of atty. review 9/10/10
Buyer submitted offer of 230k. In between all of this we got declined for HAFA a few weeks ago so waited almost 45 days to find out we weren't approved.
BOA declined-countered at 260k!
Buyer declined-counter offered at 235k,
BOA declined. Came back at 250k PLUS 10k from us *the sellers*.
Buyer declined-countered at same amt. of 235k. 11//23/10
Email we received:
BOADecline - Investor DeniedThis short sale was submitted to your Investor for approval and was denied due to (insufficient offer, not willing to sign a deficiency agreement, or contributing to the loss). However, if the seller is willing to sign the deficiency agreement or contribute to the loss or have the buyer increase their offer; we may be able to reconsider the short sale. Please send us any updated documents for the short sale to be reconsidered.
Deficiency agreement?
Don't have 10k to bring to table. If we had any money to spare we would not be doing a short sale!
Now what?
Buyer is going to run and there is no way the house will ever sell for the price BOA is demanding.
A brand new house right across the street from ours( 30ft away and the same model) only sold for 225K less than a year ago! How can BOA continue to demand more than the market would bring on a good day?
Tags:
Steve-This is a VERY common problem. In a nutshell what has probably happened is the investor ran whatever financial models they run and came up with a net price they should get for your property. They then add Realtor commissions and other typical closing expenses they feel they will have to pay to the net and that is the price they want. This is exemplified by the fact that they came down from $260 to $250, but then added the requirement that you bring $10k to closing - this gives them the same net.
Why is the price higher than what people are willing to pay?
There could be a lot of reasons, most mentioned already.
- The listing agent did not attend the BPO
- S/he attended the BPO but did not justify the offer based on current market conditions
- They did attend, did try to justify the price and the BPO agent just didn't buy it
- The comps the servicer has are old, or are not properly reflecting the value of your property
- Your property has some 'defect' in the eyes of buyers (busy corner, smaller yard, steep driveway ... ) which the lender will NOT factor into their assessment of value
- Your property was listed at a a higher price, perhaps close to the amount the investor is looking for and the investor is factoring that into their assessment of value ("the Realtor listed it at $260 so even s/he thinks it is worth more") and if they are aware of the previous $260 offer, then this helps lock them in at that price
- We have seen situations where the investor has thrown out a BPO and informed us it was "too low" and stuck with the financial models they ran to come up with their net figure.
- We had one situation this year where the BPO was done on the wrong property - two adjacent towns both had a "42 Smith Street" and the agent went to the wrong town because the servicer had the wrong town on the mortgage statement. Obviously this could only happen if your agent did not attend the BPO.
The big question is - OK, so now what do you do?
I think the best thing you can do is have an appraisal done to determine what the actual value is. We run into situations where a property will not appraise out for what the investor wants. Sometimes it changes their tune, and sometimes it does not.
The next best thing is have your agent get recent sold comps in front of the servicer/investor, and if you do this along with the appraisal, even better.
If you take the $260 price and back out commissions, tax stamps, lawyer fees, and all the other customary fees that the investor will pay for, this will tell you what the net is that they are looking for. You might have your agent try to do a cost analysis that shows that the current offer will net them 'x' and if they foreclose, they will probably net 'y' and make the case that the current offer is a far better deal.
The deficiency agreement they want you to sign basically says that you agree to repay the deficiency. If you sign it they may reconsider the current offer, but you are going to have to pay back at least part of the deficiency you owe. They may offer a promissory note, or give you the option of working it out with their Recovery Department after the fact.
On promissory notes: If an investor offers a $20,000 promissory note, you can typically get this reduced by about half if you agree to pay cash instead (which you have said you don't have). If they offer a note instead of cash, you can expect that the note will probably be double the cash contribution amount they are asking for. Personally, I think if they were going to offer a prom note they would have done so already.
Sometimes these strategies work and sometimes the investor just locks in on a price and won't budge.
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