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Permalink Reply by Smitty on July 22, 2011 at 1:38pm

You won't get written documentation of price unless the property was previously approved for another buyer.  Many times the listing agent does a CMA to determine list price.  The bank is likely going to want market value so you should expect that if the listing agent was correct in their valuation to pay somewhere in that range.  It could be more or less depending on the price of the home.  So for example if the listing agent determined the home to be $300,000, you can MAY be able to expect to pay somewhere between $250,000- $360,000.  If it's an FHA loan expect to pay a LOT closer to the $300,000 range. 

 

If the BPO agent (bank's valuator) has a completely different idea of value you could run into trouble.  So if the bank's agent determines a much higher price, expect to get a counter offer a lot higher than your offer price.

 

Typically you won't get anything in writing until approval time.

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Permalink Reply by Richard on July 22, 2011 at 2:24pm

Okay, I can understand them not wanting to show their hand.  However, will they normally entertain a counter offer if their BPO or appraisal is higher than the original settlement price between the seller and buyer?  I know they have all the cards in this game, however the only other bargaining power I have will be:

• My lender's own appraisal value
• My extensive market research
• And, the fact they they could lose a good buyer and go into foreclosure, but that's never stopped them before

My concern is, they may come back wanting a few more bucks from me even though the house is priced very well and because they can't get more money out of the seller.

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Permalink Reply by Smitty on July 22, 2011 at 2:53pm

Richard,

I have a long conversation with the buyer's agent.  We find out the range the buyer is willing to go up to and ALWAYS go in lower.  This way there is plenty of wiggle room in case the lender does want more money.  If you went in at your highest price, there isn't much you can do if they want more. 

There are no gaurantees in short sales and you can even offer ABOVE list price and the lender may opt to still foreclose.  There are sooo many variables.  If there is PMI on the loan it may cost the lender less to foreclose than accept a short sale.

 

They likely want market value for the property.  If you and the seller agree to a price of $200,000 and the value is $300,000 it unlikely your offer will be accepted.  If your lender appraises the property and it's UNDER what your contract price is, it's unlikley you'll get financing.  You could use that appraisal to fight the banks valuation if their value is too high, but again, it may not matter.

 

I wish there was something I could say to assure you, but unfortunately no one can.  I've seen houses go to foreclosure and go to auction for SOOO much less than a short sale offer on the same property. There is no rhyme or reason. 

 

Just be patient.  You'll know soon exactly what they want.

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Permalink Reply by Richard on July 22, 2011 at 3:43pm

Thanks for the advice Smitty.  Right now I'm in the top percentage of the market value for the home because we countered back and forth pretty good with the seller's agent, however I do have a little wiggle room.  So if that does happen, then I'll try and negotiate within the excess range that I've kept confidential.  If they are not willing to work within the range, then I may have to walk and let them go elsewhere.

 

Thanks a billion

 

 

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