The seller had an offer which was submitted to Wells Fargo in April. The property appraised at $70,000 in May. Wells Fargo sent the seller an Approval to Participate form dated May 26 which stated that he must list the property for $70,000 (HUD guidelines state he should list at 88% of that). The offer he had in hand was for $54,000, and Wells already had that offer, too, but the next step was waiting for 1 1/2 months until finally receiving Wells Fargo's response to the offer ... and rather than countering with 88%, Wells Fargo countered with $70,000.
The buyer responded to the full-price counter with an increased offer of $56,000. Meanwhile, the seller's realtor provided the Wells Fargo negotiator with documentation demonstrating that appraisal was $10,000 over what could be realistically expected, based on recent distressed comparable sales and finding no recent non-distressed sales which are comparable. Neither the seller nor the seller's realtor has been provided with copies of Wells Fargo's appraisal or comparables used for the property.
Wells Fargo denied the second offer without countering.
The seller's realtor contacted the Wells Fargo negotiator to ask why there was no further counter, and was told the file had already been re-assigned to someone else, because the second offer was considered to be 'final and best', although no such guidance had been received from the negotiator. He instructed the realtor that she should not attempt to contact Wells Fargo for a week, because of the file being transitioned to another negotiator.
Within one week, the realtor secured a third offer from the same potential buyer, for $59,500, and contacted the new Wells Fargo negotiator, who advised her that the file was being re-assigned for a third time, and she would not hear from the new negotiator for a week and a half, because that's how long it takes to transfer files to new negotiators!
On August 19, the third Wells Fargo negotiator countered the third offer from the same potential buyer with ... (wait for it...)$70,000 -- original appraised price. It is now at the point in HUD's timeline when Wells Fargo should be seeking $58,800, or 84% of the appraised value. The negotiator claims that Wells must net $70,000. It is hard to understand whether these negotiators do not understand HUD guidelines .. or are they under instruction to drive properties to the 'deed in lieu of' at end of 120 days because that's where their max profit is?? How can the bank collect on this FHA insured loan when they don't comply with the rules of the program?
What gives??
I know you'll ask -- I'm the buyer who is not going to offer more. The condo will definitely foreclose, because the realtor tells me we are the only nibble they've had since listing in December, although they kept the listing open for back-up offers.
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Good advice, thanks very much. The seller's realtor already put something like that together for Wells Fargo and they completely ignored it. Now, several months later, the comps would be even lower. So we'll try again! I understand from what the realtor says, that only the SELLER can request the variance -- perhaps that is why they ignored it before...
Tell WF you want to Request a Variance on their appraisal. Then, they'll tell you to send them some comps from the last year that support your claim......Start down that road....
The re-assigning of negotiators is difficult and frustrating. It is my understanding that FHA requires that the buyers are countered at the appraised price. It is just a negotiation. Go through the motion, then go back to WF and tell them the buyer said "NO". If you offer still passes the tiered net proceeds test, you should be in good shape. 88% is what WF must NET in the transaction, not the gross purchase price or list price.
Good luck