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Can VA beat out Homepath lending to get this bank owned house?

I was feeling pretty confident that we might actually get this bank owned house we put a bid on. We bid $14,000 over the asking price, which already seemed to be an inflated price compared to homes around it. It's a Fannie Mae Homepath house so with the Homepath financing there's no mortgage insurance and no appraisal.

Well we put in our bid with the Homepath financing, but then meet with a different lender (our previous one was not very straight forward or clear on things) and find that we are not eligible for the 3% down on a Homepath because my husband doesn't have a 660 credit score and we'd have to put 20% down instead. Well that's not going to happen so we went with the VA at 0% down. Our lender said everything looked good and wanted our agent to tell the listing agent that we would be able to close quickly. He also said that when listing agents see the name of the bank we are going with that they know it's a solid lender.

Going with that means that now we'd have to get an appraisal and I feel like that right there may sway a bank to choose someone else even if we were already offering the most and everything else seemed good. Because if the bank knows that we are offering way more than it should, they figure it's just going to be a hassle and take the 2nd best offer. We were told to offer not just the highest, but the best and I am afraid that having to change to VA at the last minute (our agent had to resubmit the paperwork) that that just knocked us out of the game.

Am I way off base on my thinking or is there some truth to that?
  • June 08 2013 - Everett
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Answers (3)

The bank does not "have" to lower the price to match appraisal. Many times they will, but you should be advised that they are not obligated to do so.

It's a negotiation, highest and best means just that. Also, with a VA loan, there are some buyer's fee's called non-allowables. This means the seller must pay some of the buyer's closing costs. You just need to take all these things in to consideration when offering. A good agent should be able to help advise you of the ins and outs of this process and help you decide what is in your best interest.
Good luck!
  • June 08 2013
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But the bank doesn't HAVE to lower the price. They could ask us to put down the extra money for it if we want it or say tough luck and find someone else. Frankly, with a bank owned Fannie Mae home I would think the bank would just automatically go with the highest bid on a Homepath not a VA so that they don't have to worry about the appraisal.
  • June 08 2013
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You can offer anything you want for the house, $100,000 over asking if you would like, the bank can accept your offer then when the appraisal comes in much lower the bank will have to lower the purchase amount to match the appraisal. This can be a wonderful negotiation tool for you when it comes to making sure you are not overpaying for the property. At that point you are already under contract and trying to find another buyer who is going to pay above appraisal value would just be a hassle.
  • June 08 2013
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