Answers (14)
- Brian McCann, "brian_18"
- Contributions:89
Vaximily,
As Kathleen already stated, it's time to find out what the current Fair market value is. Do your homework and make sure you have preapproval for the price you want to buy it at. Show a large amount of earnest money $5000 and maybe you will get lucky. Write the offer at the price you are willing to pay, no negotiation (160k). However, if current fair market value is in the 190 to 220 range it is unlikely that the bank will give your offer serious consideration. Especially if they are already going to write off 40K in debt because of the difference in loan value versus market value. Once they own it for a while they will be more flexible. The other issue you need to consider is will others enter the bidding game?
As Kathleen already stated, it's time to find out what the current Fair market value is. Do your homework and make sure you have preapproval for the price you want to buy it at. Show a large amount of earnest money $5000 and maybe you will get lucky. Write the offer at the price you are willing to pay, no negotiation (160k). However, if current fair market value is in the 190 to 220 range it is unlikely that the bank will give your offer serious consideration. Especially if they are already going to write off 40K in debt because of the difference in loan value versus market value. Once they own it for a while they will be more flexible. The other issue you need to consider is will others enter the bidding game?
- Kathleen Wray, "realtorkathy"
- Contributions:130
We do many short sales out here in So. Cal. The lender gets a BPO (Broker Price Option) based on recent comps (usually 60 days), as that is what the appraisers use. If you want to go in lower, I suggest have a realtor help you and base your offer on comps, time on market, etc. You can always ask for closing costs, thereby getting some of your $$ back, depening on your loan program. The selling price is not random, but rather based on many factors.
Kathy
Kathy
- afonguardian
- Contributions:67
So I got some more info last night which I think will be helpful. According to the listing agent, there is only one mortgage on the property and they owe $260k on it.
It sounds like the bank will clear the seller's debt when / if the property sells, now it's just a matter of how low of an offer the bank will accept.
- Barbara Zapal, "barbarazapal"
- Contributions:80
SHORT SALE if it has one loan, it will be possible to try at $140k. If it has two loans, BEWARE! Second lien holder will fight for money from the BUYER! They say they don't care where it comes from, but since sellers are broke, agent stretched with assistance, buyer is there to bump-up the price. NOW, this will have to go DIRECTLY to 2nd lien holder - NOT on official contract as counteroffer, etc.
If the second lien holder is SUNTRUST, brace yourself - they are a rich bank and do not care if a house is foreclosed or not.
Do banks EVER care, btw?
If the second lien holder is SUNTRUST, brace yourself - they are a rich bank and do not care if a house is foreclosed or not.
Do banks EVER care, btw?
- Brian McCann, "brian_18"
- Contributions:89
Glad to know you are a fighter.
HELOC indicate maxim loan amount. So you need to have a title search that discloses the total borrowed against the HELOC. But again, there must be a refi ealier on that borrowed more than the 135K because if the only loans that have leins on the property total 162K, 190K would not be a short sale and listing it as such would be illegal. You need to get a clearer picture of the debt owed. You can call the Listing agent and ask them the total owed. They may not tell you but they may since it is technically public info. A Buyers agent should be able to get you that information.
HELOC indicate maxim loan amount. So you need to have a title search that discloses the total borrowed against the HELOC. But again, there must be a refi ealier on that borrowed more than the 135K because if the only loans that have leins on the property total 162K, 190K would not be a short sale and listing it as such would be illegal. You need to get a clearer picture of the debt owed. You can call the Listing agent and ask them the total owed. They may not tell you but they may since it is technically public info. A Buyers agent should be able to get you that information.
- afonguardian
- Contributions:67
Brian,
I'm a bit bull headed, so I'm up for the fight if this is the property I ultimately decide on.
From what I know, there was a HELOC (my understanding is this is basically a second mortgage?) for $27,000 in 2006. Beyond that, I haven't found anything else yet (except a simple title transfer in 2004).
So based on that, I don't see any way that they owe more than $160k on this place (and really if that's an Equity Loan they should be below $135k right?), so I am wondering now if they aren't still trying to turn a profit on this place.
I'm a bit bull headed, so I'm up for the fight if this is the property I ultimately decide on.
From what I know, there was a HELOC (my understanding is this is basically a second mortgage?) for $27,000 in 2006. Beyond that, I haven't found anything else yet (except a simple title transfer in 2004).
So based on that, I don't see any way that they owe more than $160k on this place (and really if that's an Equity Loan they should be below $135k right?), so I am wondering now if they aren't still trying to turn a profit on this place.
- Brian McCann, "brian_18"
- Contributions:89
more information for your consideration.
1. If they bought it for 135k and it is currently listed as a short sale, then how and when did they refinance? March 2006? Your challenge is to know how many different lien holders there are on the property.
2.In a short sale, usually the foreclosure process has started. When you make your offer, all the lien holders have to be consulted and they each want to get paid something. You could be battling this thing for months (4 -6 easily) and still not get your offer accepted. You need to decide if you are up to the battle. As other have already stated, another offer could come in and bump your at any time in the process.
3. If you low ball too much, the bank will likely flat out refuse to deal with you. You need to know current market value of the property because the bank is going to look at current comparable sales to determine what they think they will be able to get for it after foreclosure is done. If they believe that they can get significantly more than you offer, they will not accept it.
4.Most Banks do not have departments that handle short sales. So there is not one person that can make the call, whereas they do have Departments that handle foreclosed properties. So expect a run around.
You should still employ a Real Estate Agent to help you in the buying process so that they can do the research you need about title, liens etc. They get paid at the time of closing so you will get the help without having to pay out of pocket.
My final advise to you is look at REO's (bank owned properties) they are usually priced below market value, usually they are willing to negotiate and they usually respond to an offer within 24hours. You may find a great deal this way and it will be less stressful.
1. If they bought it for 135k and it is currently listed as a short sale, then how and when did they refinance? March 2006? Your challenge is to know how many different lien holders there are on the property.
2.In a short sale, usually the foreclosure process has started. When you make your offer, all the lien holders have to be consulted and they each want to get paid something. You could be battling this thing for months (4 -6 easily) and still not get your offer accepted. You need to decide if you are up to the battle. As other have already stated, another offer could come in and bump your at any time in the process.
3. If you low ball too much, the bank will likely flat out refuse to deal with you. You need to know current market value of the property because the bank is going to look at current comparable sales to determine what they think they will be able to get for it after foreclosure is done. If they believe that they can get significantly more than you offer, they will not accept it.
4.Most Banks do not have departments that handle short sales. So there is not one person that can make the call, whereas they do have Departments that handle foreclosed properties. So expect a run around.
You should still employ a Real Estate Agent to help you in the buying process so that they can do the research you need about title, liens etc. They get paid at the time of closing so you will get the help without having to pay out of pocket.
My final advise to you is look at REO's (bank owned properties) they are usually priced below market value, usually they are willing to negotiate and they usually respond to an offer within 24hours. You may find a great deal this way and it will be less stressful.
- afonguardian
- Contributions:67
Thanks for the input, everyone!
Frank, that brings some light onto how the process works. I didn't realize that the Listing Agent&Seller set the listed price and not the bank.
Denise, I will check into this. I know there are two types of USDA loans -- a Direct loan from the government, and a Guaranteed Loan through a traditional lender -- I'm going through the Lender. The handbook for those loans is much longer than I've time to read all the way through!!
Barbara, you make a good point for the 'seller convincing the lender' instead of the 'buyer convincing the lender'. I have done some research and it looks like they transferred the Title from the husband to the wife in November 2004, then a Deed of Trust is listed in March 2006, so I'm thinking they've been struggling to keep up for quite some time.
I'm going to have another chat with the listing agent today to see if she can give me any insight into the sellers and their situation. Since the original purchase price was much lower ($135k) than what they are asking, I am having a hard time figuring out why it's so high other than market value... maybe it was refinanced for more based on the market value, but I'm not seeing that in the records anywhere so far.
Again, thanks for all the info! I'll let you know how it goes.
Frank, that brings some light onto how the process works. I didn't realize that the Listing Agent&Seller set the listed price and not the bank.
Denise, I will check into this. I know there are two types of USDA loans -- a Direct loan from the government, and a Guaranteed Loan through a traditional lender -- I'm going through the Lender. The handbook for those loans is much longer than I've time to read all the way through!!
Barbara, you make a good point for the 'seller convincing the lender' instead of the 'buyer convincing the lender'. I have done some research and it looks like they transferred the Title from the husband to the wife in November 2004, then a Deed of Trust is listed in March 2006, so I'm thinking they've been struggling to keep up for quite some time.
I'm going to have another chat with the listing agent today to see if she can give me any insight into the sellers and their situation. Since the original purchase price was much lower ($135k) than what they are asking, I am having a hard time figuring out why it's so high other than market value... maybe it was refinanced for more based on the market value, but I'm not seeing that in the records anywhere so far.
Again, thanks for all the info! I'll let you know how it goes.
- Barbara Fierro, "barbarafierro"
- Contributions:25
The way a short sale works is that the offer will go to the lender. Each lender has time estimates of how long before they will decide. If you put an offer of $140, the listing agent submits the offer to the lender along with a bunch of other paperwork from the seller that help to justify why they should accept a short-sale. The lender will take some time to evaluate all of it before they accept/reject your offer. If another offer comes in at a higher price, the agent is obligated to submit it to the lender as well. When they do this, usually the process starts all over again. A short sale is not like the traditional sale where you negotiate back and forth - I'm not saying there's no negotiation, I'm just saying there's a whole lot less. Remember this house is still being paid for - in many cases, if the lender thinks the owners can keep paying it, why will they accept less money than what is owed on it. So alot of the burden is actually on the seller to convince the bank to take the short-sale.
My opinion is you should go with the firm offer. It will have a much better chance of getting accepted.
My opinion is you should go with the firm offer. It will have a much better chance of getting accepted.
- Denise Tower, "neighborhoodrealtor"
- Contributions:172
In my past dealings with USDA loans the terms are only "guaranteed" for a certain length of time before the buyer has to reapply. Not that it is a big deal, BUT for some buyers it is......Of course the rules have probably changed since my last dealings with them six months ago!
- Frank Becerra, "Las Vegas agent"
- Contributions:98
There are many factors involved in a short sale, and I do quiet a bit here in the las vegas real estate market. The lender will, just like any other transaction try to sell it for the most they can get for it. Every once in a while they will sell for a little less.
The sales price is based on our best guess as to what the bank will accept and we usually price them to be close to market value and go from there.
Such is the case with a transaction I currently have, list price 100,000, offer at 91,000, banks counter at 110,000. We never know what they will take until there is an offer, with a few exceptions. They will only work on these files when they get an offer.
Other factors to consider is how many banks, type of loans, your local laws and so on.
Start low as you wish, and they will let you know yes, no or otherwise.
Good luck.
Las Vegas foreclosures
The sales price is based on our best guess as to what the bank will accept and we usually price them to be close to market value and go from there.
Such is the case with a transaction I currently have, list price 100,000, offer at 91,000, banks counter at 110,000. We never know what they will take until there is an offer, with a few exceptions. They will only work on these files when they get an offer.
Other factors to consider is how many banks, type of loans, your local laws and so on.
Start low as you wish, and they will let you know yes, no or otherwise.
Good luck.
Las Vegas foreclosures
- afonguardian
- Contributions:67
Thanks for the input. Unfortunately very few realtors and brokers in my area have worked with short sales, but I think I found someone through Zillow who can help.
The general consensus seems to be make a firm offer rather than trying to negotiate.
Andrea, no one has mentioned to me that it is the lowest the bank will take, and I have been told by many people that it costs the bank $30k-$40k to foreclose on a property so I would hope that means I have a bit of room.
In the end, this is not a highly desirable property to most people, so I don't expect much 'competition'.
Denise, what do you mean by "USDA Loan has an expiration on the guarentee"? The loans are underwritten by a lender just like a standard loan...
The general consensus seems to be make a firm offer rather than trying to negotiate.
Andrea, no one has mentioned to me that it is the lowest the bank will take, and I have been told by many people that it costs the bank $30k-$40k to foreclose on a property so I would hope that means I have a bit of room.
In the end, this is not a highly desirable property to most people, so I don't expect much 'competition'.
Denise, what do you mean by "USDA Loan has an expiration on the guarentee"? The loans are underwritten by a lender just like a standard loan...
- Andrea Haitz, "RealEstateSuperDiva"
- Contributions:270
It has been my understanding that the short sale price is the lowest price the bank will take at that time. I had a client that wanted to make an offer on a property that was a short sale. They said the current list price, which was the short sale price, was the lowest the bank would go.
I personally don't understand why the bank wouldn't take an offer (aside from the extra paperwork etc), because if they don't get a buyer soon, then the property is likely to go into foreclosure.
Sorry I couldn't be of more help. This is a complicated process. However if you really like the property, get in touch with a lender and realtor you trust/ like and they can work through the process with you. Otherwise work with a realtor to help you find deals on homes that are priced low, but not a short sale. I did a search for price per square foot the other day and came across some great finds in my area.
Best of Luck!
I personally don't understand why the bank wouldn't take an offer (aside from the extra paperwork etc), because if they don't get a buyer soon, then the property is likely to go into foreclosure.
Sorry I couldn't be of more help. This is a complicated process. However if you really like the property, get in touch with a lender and realtor you trust/ like and they can work through the process with you. Otherwise work with a realtor to help you find deals on homes that are priced low, but not a short sale. I did a search for price per square foot the other day and came across some great finds in my area.
Best of Luck!
- Denise Tower, "neighborhoodrealtor"
- Contributions:172
The less back and forth you have to do with a short sale the better. The approval process for the actual sale can be cumbersome and every time there is a change most lenders do a complete re review of all information which can delay the sale. Your USDA loan has an expiration on the guarantee so why waste the time?
Denise
Low Balling on a Short-Sale
I am hoping to purchase the property in the $160k range with the USDA Guarenteed Loan program (100% financing, no down payment).
My question is, should I make a lowball offer at $140k and hope the bank will negotiate to $160k (like in a typical sale) or should I make a firm offer of $160k from the beginning because of the nature of short-sales.
In general, any information someone can provide to me on this process would be helpful. Most of the real estate agents and lenders I've talked to have never dealt with one before so I don't have much faith in them.
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