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Answers (10)
- Kamal Randhawa, "krandhawa333"
- Contributions:79
I suggest you check the buzz around the property to see what's going on as far as offers coming in. I had a client who insisted on making low ball offers regardless of anything, and we wrote about 30 offers until one was finally accepted to our elation!!! So, I say...don't give up..just work with someone who's patient and understands your needs.
Kamal Randhawa
Broker
[contact info removed by moderator]
- Will Pennycook, "Will Pennycook"
- Contributions:24
No. In my opinion. Usually with short sales, the owner and list agent do not spend much time figuring out the market value. The only people that might be insulted would be the owners of the home. It is often a very hard time they are getting through. That being said- try to get your realtor to figure out the market value and don't offer more. If the bank rejects your offer of market value, move to another property. If you do not have a Realtor- feel free to contact me-[contact info removed by moderator]
- Brian Porter, "brianbporter"
- Contributions:134
In my experience, your offer needs to be within 15% of the market value in order for the bank to consider it. Before a bank will accept a short sale offer, they will order a BPO (broker price opinion) which is similar to an appraisal, and they will respond to the offer based on what they believe the market value is. If the market value of the property is 700K then a 600K offer might get accepted.
- Karen Hunt, "realestgirl"
- Contributions:124
You've got some good advice here Jake. The banks are extremely unlikely to accept an offer that is $200K below the asking price especially when a $50k reduction was just made and it's only been on the market 40 days (days on market matter more to a homeowner than a bank who is happy to accrue more fees that need to be paid).
Servicers (the banks that service the loans and take your payments)-and that is primarily who you and your agent would be dealing with--make their money 4 ways, primarily by fees. With a foreclosure they would recoup those fees. With short sales they only get some of those. Meanwhile with loan modifications the get none of those fees and it actually costs them money since they have the added costs of extra staff and the time and expense of changing their systems and models. Since the servicers' bottom line is to make the most money and incur the least amount of expenses (ones they cannot recoup) they have very little incentive to work with the homeowners who want to modify their loans, the government who is asking them nicely, even their investors who actually own the mortgages or buyers like you who want to lowball them.
For the last 30 years it's been the wild west of banking where our mortgages have been bundled together and sold off, often to foreign investors. Here is a great article of how servicers make their money:
"Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior"
by The National Consumer Law Center
The Finance Committee is deciding this week on the Finance Reform bill and the House and Senate's versions. Urge them to make strong reforms before their July 1st recession. You can contact your representatives or learn more at Americans for Financial Reform.
Also other good info is at: U.S. PIRG, Consumers Union, Center for Responsible Lending.
Sorry for the long post. Hope this helps with your understanding of where these lenders are coming from. Have your agent get comps to see a realistic number to offer. Many of the BPO's are still coming in high.
Servicers (the banks that service the loans and take your payments)-and that is primarily who you and your agent would be dealing with--make their money 4 ways, primarily by fees. With a foreclosure they would recoup those fees. With short sales they only get some of those. Meanwhile with loan modifications the get none of those fees and it actually costs them money since they have the added costs of extra staff and the time and expense of changing their systems and models. Since the servicers' bottom line is to make the most money and incur the least amount of expenses (ones they cannot recoup) they have very little incentive to work with the homeowners who want to modify their loans, the government who is asking them nicely, even their investors who actually own the mortgages or buyers like you who want to lowball them.
For the last 30 years it's been the wild west of banking where our mortgages have been bundled together and sold off, often to foreign investors. Here is a great article of how servicers make their money:
"Why Servicers Foreclose When They Should Modify and Other Puzzles of Servicer Behavior"
by The National Consumer Law Center
The Finance Committee is deciding this week on the Finance Reform bill and the House and Senate's versions. Urge them to make strong reforms before their July 1st recession. You can contact your representatives or learn more at Americans for Financial Reform.
Also other good info is at: U.S. PIRG, Consumers Union, Center for Responsible Lending.
Sorry for the long post. Hope this helps with your understanding of where these lenders are coming from. Have your agent get comps to see a realistic number to offer. Many of the BPO's are still coming in high.
- wetdawgs
- Contributions:26833
Don't waste your time, the agent's time or the bank's time. Short sales are not fire sales. The bank is probably already losing money at $700k. It isn't a matter of insult, it is simply a waste of everyone's time.
The seller has to accept the offer before it goes to the bank, so chances are very good it won't get to the bank.
Then, in the future don't waste your time or your agent's time looking at houses so far above your ability to pay. It isn't surprising that they have more features or are nicer than the ones in your price range. That happens no matter what your price range.
If it had been on the market for a couple of years, then you might have had a chance.
The seller has to accept the offer before it goes to the bank, so chances are very good it won't get to the bank.
Then, in the future don't waste your time or your agent's time looking at houses so far above your ability to pay. It isn't surprising that they have more features or are nicer than the ones in your price range. That happens no matter what your price range.
If it had been on the market for a couple of years, then you might have had a chance.
- Antoine Pirson, "aepirson"
- Contributions:94
Hello home buyer Jake:
It seems to me from your questions that you are unfamiliar with the short sale process, and perhaps eevn the foreclosure process.
Short sale does not mean low ball offer. They are not related at all. Price is a really bad guide for writing an offer. Value is what you should be looking for. And together with your agent, should discuss ewhat that means to you.
As said, price is only one of four ( at least) parts of a purchase strategy.
I suggest you find a good short sale or real estate broker, and discuss these in details. It will help you make the right decision and not look like a fool, like you indicated.
Let me know if you need any advice for this situation.
Kind regards
Antoine
- Stephanie McCarty, "snellvilleagent"
- Contributions:521
An experienced short sale agent knows that the bank is only willing to sell at fair market value or the incentive to cooperative on a short sale will be lost. Fair market value is determined by recent comparable sales in the area of the subject property. Before the bank accepts any offer on a short sale listing it will hire 3 brokers independent of the listing broker and a certified appraisal on the property. All of this takes time. If you don't have months to wait for a "no", or a "yes", short sale is not for you. IMHO, an offer $200K below asking price, in this price range (under $1,000,000) may prove to be a big waste of time for all concerned and the bank may simply ignore it.
Good luck.
Good luck.
- Pacita Dimacali
- Contributions:1254
The list price shouldn't be your guide in how much to offer
Just because it's a short sale doesn't mean the bank is giving it away. Most of the time, the short sale will close at close to market value (which may still be a lot less than what the sellers paid for it).
Some listing agents will list the price artificially low to attract attention and stimulate demand. some agents will list at market value because they know that buyers will low-ball the offer.
Find out from your realtor: what is the fair market value of this property, who are the lenders (if more than one), how close is the seller to getting the property sold at a trustee sale, how much does the seller owe?
Armed with this information, you can then formulate an aggressive offer. Remember, even if the sellers accept your offer, it's the lenders who will make the decision to accept, reject or counter your offer.
In short sales, there are absolutely no guarantees. Unless the lender is Wachovia, you may not get a short sale negotiator assigned until 3-4 months after your offer is submitted as part of the short sale package.
If you want your offer accepted, you should be realistic. Simply low-balling the offer without having more facts in hand will be a waste of time on everyone's part.
Good luck.
Just because it's a short sale doesn't mean the bank is giving it away. Most of the time, the short sale will close at close to market value (which may still be a lot less than what the sellers paid for it).
Some listing agents will list the price artificially low to attract attention and stimulate demand. some agents will list at market value because they know that buyers will low-ball the offer.
Find out from your realtor: what is the fair market value of this property, who are the lenders (if more than one), how close is the seller to getting the property sold at a trustee sale, how much does the seller owe?
Armed with this information, you can then formulate an aggressive offer. Remember, even if the sellers accept your offer, it's the lenders who will make the decision to accept, reject or counter your offer.
In short sales, there are absolutely no guarantees. Unless the lender is Wachovia, you may not get a short sale negotiator assigned until 3-4 months after your offer is submitted as part of the short sale package.
If you want your offer accepted, you should be realistic. Simply low-balling the offer without having more facts in hand will be a waste of time on everyone's part.
Good luck.
- Linda Rozales, "Lrozales"
- Contributions:245
When a bank receives an offer for a short sale, they then start qualifying the seller and the buyer. At this point a Broker Price Opinion (BPO) is ordered. Sometimes they order two BPOs and if the value comes back too low than what the borrower owes, they then proceed to order a full appraisal. Sometimes, it is much more financially sound for the bank to just foreclose on the property rather than do a short sale. If you want to know if your offer is within the market value, I'd suggest you ask your agent to run the comparables for the home. If your offer price is a reasonable price, then you can go ahead. Yes, you are right. Listing agents do feel insulted everytime they receive a low-ball offer.
- Robert Walker, "So Cal Agent"
- Contributions:1425
Chances are, you will be rejected right outside the gate. The bank will not even counter you, but as you said, you have nothing to loose.
We kicked an escrow simply because of a $20K difference in appraisal because the buyer refused to make up the difference when the appraiser low-balled the property. We are putting it back into escrow with an all cash offer above list price, and more than $20K above the low-ball appraisal.
Usally banks are in the back ground on short sales telling the agent their low end. I think the bank will take their chances at the auction, to be honest with you.
Good luck, you never know. If you are coming in with all cash or a huge down, perhaps they will be more willing to work with you.
We kicked an escrow simply because of a $20K difference in appraisal because the buyer refused to make up the difference when the appraiser low-balled the property. We are putting it back into escrow with an all cash offer above list price, and more than $20K above the low-ball appraisal.
Usally banks are in the back ground on short sales telling the agent their low end. I think the bank will take their chances at the auction, to be honest with you.
Good luck, you never know. If you are coming in with all cash or a huge down, perhaps they will be more willing to work with you.
Low ball offer on a short sale??
I just found out that the house is a short sale. I want to make a low ball offer on it to see what happens. I'm thinking $500,000. Would the banks laugh at me for this "low ball" offer? Is it worth trying? I figure I have nothing to lose here but I also don't want to insult anybody. Any advise would be greatly appreciated!
Thanks,
J
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